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CALDERWOOD & HARKNESS LLP

PRIVILEGED AND CONFIDENTIAL — ATTORNEY WORK PRODUCT

INTERNAL MEMORANDUM

July 15, 2022

TO: Elaine Forsythe, Responsible Partner, Antitrust & Competition Practice Group

FROM: Monica Reyes, Associate, Antitrust & Competition Practice Group

RE: Joint Defense Agreement Considerations — Torchlight Mining Corp. (DOJ Grand Jury Investigation, GJ-22-0194, N.D. Cal.)

MATTER NO.: 1039-00001

PRIVILEGE DESIGNATION: This memorandum is a privileged and confidential attorney work product prepared in anticipation of litigation and in connection with the provision of legal advice to our client, Torchlight Mining Corp. It reflects the mental impressions, conclusions, opinions, and legal theories of attorneys at Calderwood & Harkness LLP. This memorandum is not intended for disclosure to any third party, and its disclosure would not waive any applicable privilege. The unauthorized disclosure, copying, or distribution of this memorandum is strictly prohibited.

I. Executive Summary

This memorandum analyzes whether our client, Torchlight Mining Corp. ("TMC"), should enter into a joint defense agreement ("JDA") with counsel for either or both of its co-subjects in the ongoing Department of Justice Antitrust Division grand jury investigation captioned Grand Jury No. GJ-22-0194, pending before the U.S. District Court for the Northern District of California, San Francisco Division. The two co-subjects at issue are Ridgecrest Minerals Inc. ("Ridgecrest"), represented by Helen Marchetti of Davenport, Kline & Archer LLP ("DKA"), and Pinnacle Earth Resources Ltd. ("Pinnacle"), represented by George Nakamura of Ashford Whitmore LLP ("AW"). Both Ms. Marchetti and Mr. Nakamura have made informal inquiries to this firm regarding the potential for a JDA or other information-sharing arrangement to coordinate defense efforts among the three target companies.

After careful analysis of the relevant legal framework, the strategic posture of each co-subject, the nature and stage of the government's investigation, the evidence uncovered in our internal investigation to date, and the likely consequences of JDA participation on TMC's cooperation efforts with the DOJ, Calderwood & Harkness recommends against entering into a JDA with either Ridgecrest's or Pinnacle's counsel at this time.

This recommendation is driven by five principal considerations:

1. Divergent Strategic Interests Arising from TMC's Cooperation Posture. TMC has already communicated its willingness to cooperate with the DOJ Antitrust Division, and the firm's recommended strategy — pursuit of a non-prosecution agreement ("NPA") — is fundamentally different from a joint defense posture. A JDA is inherently oriented toward coordinated defense, which is inconsistent with TMC's emerging role as a cooperating party.

2. Risk to TMC's Cooperation Credit. The DOJ Antitrust Division evaluates cooperation credit based on the timeliness, completeness, and genuineness of a subject's cooperation. Participation in a JDA with co-targets could be perceived by the DOJ as an effort to coordinate defense positions or align narratives, which could diminish or negate the cooperation credit that TMC must maximize to achieve an acceptable resolution.

3. Conflicting Exposure Profiles. The three target companies occupy different positions in the alleged conspiracy, have different levels of culpability as evidenced by the timing of their respective target letters, and are subject to different financial and governance considerations that drive divergent risk calculi. Ridgecrest is a portfolio company of a private equity fund with a potentially different tolerance for litigation risk. Pinnacle is a Canadian corporation with cross-border considerations. TMC is publicly traded on both the TSX and NYSE, with disclosure obligations and shareholder expectations that favor an expeditious and cooperative resolution.

4. Cascade Chemical Supply Co. Cooperation and Information Flow Complications. The investigation was precipitated by the cooperation agreement of Cascade Chemical Supply Co. ("Cascade"), a former industry participant whose cooperation predated the formal opening of the grand jury. The presence of an established government cooperator creates asymmetric information dynamics that a JDA cannot remedy and may exacerbate.

5. Gavin Holt's Separate Representation and Fifth Amendment Assertion. Gavin Holt, TMC's former Vice President of U.S. Specialty Minerals Sales, is the individual most directly implicated in the alleged anticompetitive conduct. Holt has retained separate personal counsel (Patrick Dunleavy of Briarcliff Law Group PLLC), has asserted his Fifth Amendment privilege before the grand jury, and has refused to cooperate with TMC's internal investigation. Any JDA structure would need to address Holt's participation and posture, creating additional layers of complexity and potential conflict.

Each of these considerations is analyzed in detail below. This memorandum also addresses alternative approaches to information monitoring and coordination that preserve TMC's strategic flexibility without the risks associated with a formal JDA.

II. Background

A. The Investigation

On February 10, 2022, the Antitrust Division of the United States Department of Justice formally opened a grand jury investigation (Grand Jury No. GJ-22-0194) in the U.S. District Court for the Northern District of California, San Francisco Division. The investigation targets suspected violations of Section 1 of the Sherman Antitrust Act, 15 U.S.C. § 1, involving price-fixing, market allocation, and bid-rigging in the North American specialty-minerals sector. The targeted commodities principally include high-purity feldspar, industrial talc, and rare-earth concentrates — products for which TMC, Ridgecrest, and Pinnacle are among the leading North American suppliers.

The lead DOJ prosecutors assigned to the investigation are Trial Attorney Denise Kowalski and Senior Trial Attorney Marcus Reeves, both of the Antitrust Division's San Francisco Field Office. The investigation is supervised by Deputy Assistant Attorney General Julia Stafford-Hayes, who oversees the Division's criminal enforcement program from the Washington, D.C. headquarters.

The investigation was precipitated by a cooperation agreement entered into by Cascade Chemical Supply Co. ("Cascade"), a mid-size specialty chemicals and minerals distributor. Cascade is represented by Whitfield, Strauss & Tully LLP, with lead partner Rebecca Ostrander managing the engagement. Based on information obtained from DOJ communications and publicly available records, Cascade's cooperation agreement was executed on or about September 15, 2021 — approximately five months prior to the formal opening of the grand jury investigation. Cascade's cooperation appears to have provided the DOJ with the initial evidentiary foundation for the investigation, including documentary evidence and cooperating-witness testimony regarding the nature, scope, and participants in the alleged conspiracy.

The DOJ's preliminary assessment estimates total affected commerce — that is, the aggregate volume of commerce attributable to the products and geographic markets implicated by the alleged conspiracy — at approximately USD 1.34 billion over the alleged conspiracy period, which runs from approximately January 2017 through August 2021. This affected-commerce figure is a critical input to the DOJ's calculation of applicable fines under the United States Sentencing Guidelines and the Antitrust Division's penalty guidelines, as discussed further in Section VIII below.

B. TMC's Status

Torchlight Mining Corp. received Grand Jury Subpoena No. GJ-22-0194-SD-003 on February 14, 2022, four days after the formal opening of the investigation. TMC engaged Calderwood & Harkness LLP on February 18, 2022, and the firm entered its appearance with the DOJ on February 22, 2022. Since that date, Calderwood & Harkness has served as TMC's sole outside counsel for all matters related to the grand jury investigation.

On May 20, 2022, TMC received a formal target letter from the DOJ Antitrust Division, confirming that the company is a target of the grand jury investigation. The target letter identified TMC as a suspected participant in a conspiracy to fix prices, allocate markets, and rig bids for high-purity feldspar, industrial talc, and rare-earth concentrates sold to customers in the United States and Canada during the period from approximately January 2017 through approximately August 2021.

Notwithstanding its target status, TMC has been cooperating with the DOJ since the early stages of the investigation. TMC's first rolling document production, consisting of approximately 42,000 documents (predominantly emails, internal memoranda, pricing records, and sales data from TMC's U.S. Specialty Minerals Division), was delivered to the DOJ on April 4, 2022. Additional rolling productions have been ongoing, and the targeted cumulative total is expected to reach several hundred thousand documents by the conclusion of the document-collection and review process. TMC has also been responsive to DOJ requests for supplemental information and has facilitated the identification and preservation of potentially relevant custodial data.

On June 8, 2022, Calderwood & Harkness formally communicated TMC's willingness to cooperate with the DOJ Antitrust Division in a letter addressed to Trial Attorney Kowalski and Senior Trial Attorney Reeves, with a copy to Deputy Assistant Attorney General Stafford-Hayes. The letter expressed TMC's commitment to full, timely, and genuine cooperation and indicated TMC's interest in discussing an appropriate resolution framework, including the possibility of a non-prosecution agreement.

Calderwood & Harkness's internal investigation on behalf of TMC is underway. Key witness interviews have been conducted and are ongoing. Sandra Chu, TMC's Director of Pricing for the U.S. Specialty Minerals Division, was interviewed on July 18, 2022 (a summary memorandum is being prepared). Thomas Eriksen, TMC's former Regional Sales Manager for the Western Region, was interviewed on July 22, 2022 (a summary memorandum is forthcoming). Additional interviews of current and former TMC employees are being scheduled.

TMC is publicly traded on the Toronto Stock Exchange (TSX: TRCL) and the New York Stock Exchange (NYSE: TMC). For the fiscal year ending December 31, 2021, TMC reported consolidated revenue of CAD 4.27 billion (approximately USD 3.38 billion at prevailing exchange rates). TMC's U.S. Specialty Minerals Division, which is the business unit most directly implicated in the investigation, generated approximately USD 687 million in revenue during FY 2021. Based on the DOJ's preliminary affected-commerce estimate of USD 1.34 billion, TMC's share of affected commerce is estimated at approximately USD 478 million, representing approximately 35.7% of the total. This figure is significant for purposes of fine calculation and cooperation-credit analysis, as discussed in Section VIII.

C. Ridgecrest Minerals Inc.

Ridgecrest Minerals Inc. is a Delaware corporation headquartered at 1700 Lincoln Street, Suite 4200, Denver, Colorado 80203. Ridgecrest is the second-largest North American producer of high-purity feldspar and industrial talc, with FY 2021 revenue of approximately USD 1.92 billion. Ridgecrest is a portfolio company of Marlowe Asset Management Peak Capital Partners LP, a Denver-based private equity fund that acquired a controlling interest in Ridgecrest in approximately 2015.

Ridgecrest's Chief Executive Officer is Brian Novotny. The individual most directly implicated in the investigation on Ridgecrest's behalf is Carl Edgerton, Vice President of Sales, who has been identified in DOJ materials and in TMC's internal investigation as a key participant in the suspected anticompetitive conduct. The DOJ's evidence — corroborated by TMC's internal investigation — includes communications between Edgerton and Gavin Holt (TMC) regarding pricing levels, customer allocation, and bid coordination.

Ridgecrest received a DOJ target letter on or about January 12, 2022 — approximately one month before the formal opening of the grand jury investigation and approximately four months before TMC received its own target letter. The earlier timing of Ridgecrest's target letter may indicate that the DOJ views Ridgecrest's involvement as more serious or more thoroughly documented (likely based on Cascade's cooperation), though alternative explanations are possible.

Ridgecrest is separately represented by Davenport, Kline & Archer LLP ("DKA"), a Denver-based litigation firm, with lead partner Helen Marchetti managing the engagement. Ms. Marchetti is a well-regarded antitrust defense practitioner with experience in DOJ criminal investigations. On or about July 5, 2022, Ms. Marchetti contacted Elaine Forsythe to raise the possibility of entering into a JDA or other information-sharing arrangement with TMC to coordinate defense efforts in connection with the grand jury investigation.

D. Pinnacle Earth Resources Ltd.

Pinnacle Earth Resources Ltd. is a corporation organized under the laws of the Province of Ontario, Canada, with its corporate headquarters at 85 Elm Street West, Suite 600, Sudbury, Ontario P3C 1T3, Canada. Pinnacle's U.S. operations are conducted through a wholly owned subsidiary with offices at 222 South Main Street, Suite 1500, Salt Lake City, Utah 84101. Pinnacle is among the top-five North American producers of rare-earth concentrates and specialty industrial minerals, with FY 2021 revenue of approximately CAD 1.45 billion (approximately USD 1.15 billion at prevailing exchange rates).

Pinnacle's Chief Executive Officer is Douglas Harlowe. The key individual identified in the DOJ's investigation on Pinnacle's behalf is Kevin Tsang, former Senior Vice President of Commercial Operations. Tsang's departure from Pinnacle has been noted, though the precise timing and circumstances of his departure have not been confirmed through publicly available information. Tsang is believed to have been a direct participant in communications with Gavin Holt (TMC) and possibly Carl Edgerton (Ridgecrest) regarding pricing and market allocation.

Pinnacle is separately represented by Ashford Whitmore LLP ("AW"), a prominent Canadian law firm with offices in Toronto and New York, with lead partner George Nakamura managing the engagement. Mr. Nakamura made informal inquiries to Calderwood & Harkness on or about July 8, 2022, regarding the potential for coordination among the defense teams of the co-subjects. The nature and scope of Mr. Nakamura's inquiry were general and exploratory; he did not propose specific terms or a specific structure for coordination.

E. Gavin Holt — Separate Representation

Gavin Holt is a former Vice President of U.S. Specialty Minerals Sales at TMC. Holt served in that role from approximately March 2016 until his resignation, which was effective September 30, 2021. Holt's departure from TMC preceded the opening of the grand jury investigation by approximately four and a half months but occurred approximately two weeks after Cascade's cooperation agreement was executed, raising questions about whether Holt became aware of the investigation through informal channels.

Holt is the individual most directly implicated in the alleged anticompetitive conduct on TMC's behalf. TMC's internal investigation has identified at least 37 documented exchanges on the encrypted messaging platform VaultChat between Holt and one or both of Carl Edgerton (Ridgecrest) and Kevin Tsang (Pinnacle), spanning the period from approximately March 2017 through July 2021. These VaultChat exchanges contain discussions of pricing levels, customer allocation, and bid coordination for high-purity feldspar, industrial talc, and rare-earth concentrate contracts. In addition to the VaultChat exchanges, the internal investigation has identified evidence of in-person conversations between Holt and Edgerton and/or Tsang at industry conferences organized by the North American Specialty Minerals Council ("NASMC"), including conferences held in Arlington, Virginia; Scottsdale, Arizona; and Orlando, Florida during the relevant period.

On or about June 10, 2022, Holt retained personal counsel, Patrick Dunleavy of Briarcliff Law Group PLLC, located at 50 California Street, Suite 2800, San Francisco, California 94111. Holt appeared before the grand jury on June 14, 2022, and asserted his Fifth Amendment privilege against self-incrimination, declining to testify on the advice of counsel. On August 2, 2022, Mr. Dunleavy communicated to Calderwood & Harkness that Holt would refuse to participate in TMC's internal investigation interview, which had been requested for August 5, 2022. A memorandum documenting Holt's refusal and its implications for the internal investigation is being prepared under that date.

Holt's posture presents significant complications for any JDA analysis. Any JDA among the corporate co-targets would need to address whether Holt, through Briarcliff Law Group, would also participate in the agreement. As discussed in Section VI below, Holt's interests are potentially adverse to TMC's in material respects, particularly if TMC cooperates with the DOJ and provides information or testimony regarding Holt's individual conduct.

III. Legal Framework Governing Joint Defense Agreements

A. Common Interest Doctrine

The joint defense agreement is rooted in the common interest doctrine (also variously referred to as the "allied lawyer" doctrine, the "community of interest" doctrine, or the "joint defense privilege"). The common interest doctrine is an extension of the attorney-client privilege that permits parties who share a common legal interest to exchange privileged communications — including attorney-client communications and attorney work product — without waiving the underlying privilege. The doctrine recognizes that parties facing a common legal adversary or engaged in a common legal effort may benefit from the coordinated exchange of legal analysis, factual development, and defense strategies, and that such exchange should not come at the cost of privilege waiver.

Under Ninth Circuit law, which governs this analysis given the N.D. Cal. venue of the grand jury investigation, the common interest doctrine requires that the parties share a common legal interest that is "identical, not similar." In re Grand Jury Subpoenas, 902 F.2d 244, 249 (4th Cir. 1990) (widely cited across circuits); see also United States v. Gonzalez, 669 F.3d 974, 981–82 (9th Cir. 2012) (requiring that the communication be made "in the course of a joint defense effort" and that it relate to the "common legal interest"). The Ninth Circuit has emphasized that the shared interest must be legal in nature — a shared commercial interest, business relationship, or general desire to avoid liability is insufficient to invoke the doctrine. United States v. Henke, 222 F.3d 633, 637 (9th Cir. 2000).

It is important to note several foundational principles regarding the common interest doctrine:

• A JDA does not create an attorney-client relationship between a party and the other parties' counsel. Each party's attorney-client relationship remains separate and independent. The JDA merely provides a framework within which privileged communications can be shared among the parties and their respective counsel without being deemed waived as to third parties (including the government).

• The doctrine protects only communications made in furtherance of the common legal interest and in the course of the joint defense effort. Communications that fall outside the scope of the common interest — for example, discussions of unrelated business matters — are not protected.

• The common interest must exist at the time the communications are made. If the common interest ceases to exist (for example, because one party begins cooperating with the government against the others), communications made after that point are not protected, and the continued applicability of the privilege to previously shared communications may be called into question.

B. Typical JDA Provisions

While joint defense agreements vary in their specific terms, they typically contain the following core provisions:

Identification of Parties and Counsel. The agreement identifies each party to the JDA and their respective counsel. In the present context, a JDA might include TMC (represented by Calderwood & Harkness), Ridgecrest (represented by DKA), and Pinnacle (represented by AW), and potentially Gavin Holt (represented by Briarcliff Law Group).

Scope of Common Legal Interest. The agreement defines the common legal interest that forms the basis for the information-sharing arrangement. In a grand jury investigation context, this would typically be defined as the defense of each party in connection with the DOJ Antitrust Division's investigation and any related proceedings.

Confidentiality Obligations. The agreement provides that all materials and communications shared under the JDA are confidential and may not be disclosed to any person or entity outside the JDA group without the prior written consent of the party that provided the information. Shared materials are to be treated as subject to the attorney-client privilege and/or the work-product doctrine.

Restrictions on Use. Information shared under the JDA may not be used by any party to the agreement against any other party to the agreement. This provision is intended to prevent a party from gaining a strategic advantage through the JDA and then using shared information adversely.

Withdrawal Provisions. Any party may withdraw from the JDA at any time, typically upon written notice to the other parties. However, the obligations regarding previously shared information survive the withdrawal. That is, a withdrawing party remains bound by the confidentiality and use-restriction provisions with respect to information received prior to withdrawal.

No Waiver Clause. The agreement typically includes a provision stating that the sharing of information under the JDA does not constitute a waiver of the attorney-client privilege, the work-product doctrine, or any other applicable privilege as to any person or entity not a party to the agreement.

Preservation of Independent Action. Most well-drafted JDAs include a provision stating that the agreement does not prevent any party from independently cooperating with the government, entering into a plea agreement or cooperation agreement, or taking any other action in that party's sole interest. This provision is standard but, as discussed below, its practical effectiveness is limited.

C. Risks and Limitations

While JDAs offer potential benefits in coordinated defense situations, they carry significant risks and limitations that are particularly acute in the context of DOJ criminal antitrust investigations:

Cooperation and Information Disclosure Risks. If one party to a JDA cooperates with the DOJ, the JDA itself does not prevent that party from cooperating. The typical "preservation of independent action" clause expressly preserves each party's right to cooperate. However, the cooperating party will have had access to the defense strategies, internal investigation findings, witness assessments, and legal theories of the non-cooperating parties. While the cooperating party is contractually prohibited from affirmatively disclosing JDA-shared information to the government, there are significant practical limitations on this protection. The DOJ may require, as a condition of cooperation, full and complete disclosure of all information known to the cooperating party, including information learned through the JDA. A cooperating party who withholds JDA-obtained information may jeopardize its own cooperation credit. Moreover, the DOJ may compel disclosure through grand jury subpoena or other compulsory process, and the question of whether JDA-shared information is protected from compelled disclosure is uncertain under applicable law.

DOJ Antitrust Division's View of JDAs. The DOJ Antitrust Division has historically taken a dim view of JDAs in cartel investigations, particularly in cases where one or more subjects are seeking cooperation credit. Division personnel have indicated, in speeches, guidance memoranda, and informal communications, that JDA participation may be viewed as inconsistent with the spirit of genuine cooperation. While the Division does not impose an absolute prohibition on JDA participation by cooperating parties, participation in a JDA — particularly one involving multiple co-targets — may signal to the DOJ that a subject is more inclined toward coordinated defense than independent cooperation, potentially reducing the cooperation credit the subject would otherwise receive.

Vulnerability of JDA-Shared Communications. Ninth Circuit authority on the continued privilege protection of JDA-shared communications after a participant becomes a government cooperator is not fully settled. In United States v. Stepney, 246 F. Supp. 2d 1069 (N.D. Cal. 2003), the district court held that the common interest privilege survived one party's decision to cooperate with the government, protecting previously shared communications. However, other courts have reached contrary conclusions, and the scope of protection may depend on the specific facts and circumstances, including whether the common interest genuinely existed at the time of sharing and whether the cooperating party's decision to cooperate was foreseeable. In a worst-case scenario, a court could conclude that the common interest never truly existed (because the cooperating party was always contemplating cooperation) or that the privilege was vitiated by the fundamental change in the parties' relationship.

Piercing the JDA. In certain circumstances, JDAs can be pierced or their protections found inapplicable. For example, if a court determines that the parties to the JDA did not, in fact, share a common legal interest — or that the communications at issue were not made in furtherance of that common interest — the JDA's privilege protections will not apply. In the present case, the divergent strategic interests of the three co-targets (discussed in Sections IV, V, and VI below) raise a threshold question about whether a genuine common legal interest exists at all.

IV. Analysis of JDA with Ridgecrest Minerals Inc.

A. Divergent Strategic Interests

The most fundamental concern with entering into a JDA with Ridgecrest is that the two companies' strategic interests are divergent in material respects. This divergence arises from several factors:

Earlier Target Letter and Potentially Greater Exposure. Ridgecrest received its DOJ target letter on or about January 12, 2022 — approximately four months before TMC received its target letter on May 20, 2022. The earlier receipt of a target letter may indicate that the DOJ views Ridgecrest's involvement in the alleged conspiracy as more serious, more thoroughly documented, or more central to the scheme. It is likely that Ridgecrest was identified earlier based on information provided by Cascade under its cooperation agreement. The implication is that the DOJ may already possess substantial evidence regarding Ridgecrest's conduct, potentially including documentary evidence and cooperating-witness testimony specifically implicating Ridgecrest personnel. This asymmetry in the DOJ's evidence base means that Ridgecrest and TMC face different evidentiary landscapes and, consequently, different strategic considerations.

Carl Edgerton's Central Role. Carl Edgerton, Ridgecrest's Vice President of Sales, is identified in DOJ materials and in TMC's internal investigation as a direct participant in the alleged pricing communications with Gavin Holt. The 37 documented VaultChat exchanges include communications between Holt and Edgerton concerning specific pricing levels for high-purity feldspar contracts, proposed market allocation for industrial talc customers, and bid coordination for rare-earth concentrate tenders. Edgerton's exposure is a principal focus of the DOJ's case against Ridgecrest, and any defense strategy developed by Ridgecrest's counsel will necessarily involve addressing Edgerton's conduct. If TMC cooperates with the DOJ and provides evidence regarding the Holt-Edgerton communications, TMC's interests become directly adverse to Ridgecrest's. A JDA would place TMC in the untenable position of sharing defense strategies with a party against whom TMC may ultimately provide cooperation testimony and documentary evidence.

Private Equity Ownership and Divergent Risk Calculus. Ridgecrest is a portfolio company of Marlowe Asset Management Peak Capital Partners LP, a Denver-based private equity fund. Private equity ownership introduces a fundamentally different risk calculus from that of a publicly traded company like TMC. Marlowe Asset Management Peak's investment thesis, fund timeline, and return expectations may drive Ridgecrest toward a litigation-oriented strategy (e.g., contesting the charges in the hope of acquittal or favorable settlement) rather than a cooperation-oriented strategy. Alternatively, Marlowe Asset Management Peak may push for rapid resolution (e.g., a plea agreement with a known monetary penalty) to remove uncertainty from the portfolio company's valuation. In either case, Ridgecrest's financial and governance considerations differ materially from TMC's. TMC, as a publicly traded company with ongoing disclosure obligations under both U.S. and Canadian securities law, faces shareholder scrutiny, potential securities litigation risk, and market-valuation implications that favor a measured, cooperative approach aimed at minimizing penalties and reputational harm. These divergent institutional incentives undermine the premise of a shared legal interest.

TMC's Cooperation Posture. TMC has already communicated its willingness to cooperate with the DOJ through the June 8, 2022 letter. This communication represents a significant strategic commitment that distinguishes TMC's posture from that of a party engaged in a purely adversarial defense. Ridgecrest's cooperation posture is unknown to Calderwood & Harkness. Ms. Marchetti's inquiry about a JDA may itself suggest that Ridgecrest is oriented toward a coordinated defense rather than cooperation, although alternative interpretations are possible. If Ridgecrest is not pursuing cooperation — or is pursuing cooperation on different terms or timelines — a JDA would yoke TMC to a party whose strategy is inconsistent with TMC's own approach.

B. Risk to TMC's Cooperation Credit

The DOJ Antitrust Division's policies on cooperation credit reward early, comprehensive, and genuine cooperation. The Division's guidance, including the Antitrust Division's "Frequently Asked Questions about the Antitrust Division's Leniency Program" and public statements by Division leadership, emphasizes that cooperation credit is earned through proactive and independent efforts to assist the government's investigation, including the provision of documents, witness access, factual proffers, and, ultimately, trial testimony if required.

If the DOJ perceives that TMC is coordinating defense strategies with a co-target through a JDA, the Division may discount the value of TMC's cooperation. Specifically, the DOJ may interpret JDA participation as evidence that TMC's cooperation is not fully independent — that TMC is sharing information with co-targets and potentially aligning its factual narrative with theirs. This perception would be particularly damaging given that TMC's recommended strategy is pursuit of a non-prosecution agreement (as outlined in the Defense Strategy Memorandum dated June 1, 2022), which requires a showing of exceptional cooperation.

Moreover, the DOJ may interpret JDA participation as an effort to limit the scope of TMC's cooperation. If the DOJ believes that TMC is sharing with Ridgecrest information about the scope of TMC's document productions, the identities of cooperating witnesses within TMC, or the substance of TMC's internal investigation findings, the DOJ may conclude that TMC is providing Ridgecrest with advance notice of the government's case — effectively serving as a conduit of information from the cooperating side to the defense side. Even if TMC were scrupulous in limiting the scope of JDA-shared information, the mere existence of the JDA would create an inference of improper coordination.

C. Information Flow Risks

Participation in a JDA with Ridgecrest would require some degree of information sharing regarding TMC's defense posture, internal investigation findings, and legal theories. Even under a narrowly scoped agreement, the practical dynamics of a JDA tend toward increasing levels of information exchange over time, as the defense teams develop working relationships and confront shared procedural and substantive challenges.

The specific information-flow risks are significant:

• Internal Investigation Findings. TMC's internal investigation has uncovered critical evidence, including the 37 documented VaultChat exchanges between Holt and Edgerton/Tsang, the 12 specific pricing-adjustment instructions that Holt gave to Sandra Chu based on information obtained from competitor communications, and the correlation analysis between Holt's VaultChat communications and subsequent TMC pricing decisions. This information constitutes the core of TMC's potential cooperation proffer. Sharing this information with Ridgecrest's counsel — even in summary form — would compromise TMC's negotiating position with the DOJ and could enable Ridgecrest to prepare a defense strategy that anticipates and counters TMC's cooperation testimony.

• Witness Interview Insights. TMC's witness interviews (including those of Chu and Eriksen) have produced significant insights into the mechanics of the alleged conspiracy within TMC. Sharing these insights with Ridgecrest's counsel would provide Ridgecrest with a roadmap of TMC's internal knowledge and could be used to prepare Edgerton's defense or to develop cross-examination strategies for TMC witnesses.

• Document Production Strategy. TMC's approach to document review, privilege assertions, and production priorities reflects strategic decisions about the presentation of TMC's cooperation. Sharing these decisions with Ridgecrest's counsel could enable Ridgecrest to anticipate the DOJ's evidentiary base and tailor its defense accordingly.

• Blame-Shifting Risk. Perhaps most critically, there is a significant risk that Ms. Marchetti and DKA may use JDA-shared information to prepare Edgerton's defense in a manner that shifts culpability to Holt and TMC. In cartel prosecutions, it is common for co-defendants to adopt blame-shifting strategies, arguing that the other party was the instigator or organizer of the conspiracy. A JDA would provide Ridgecrest with the information necessary to construct such a defense while TMC would receive comparatively less benefit from the arrangement.

D. Conclusion Regarding Ridgecrest

For the foregoing reasons, Calderwood & Harkness recommends against entering into a JDA with Ridgecrest Minerals Inc. The divergence of strategic interests, the risk to TMC's cooperation credit, and the significant information-flow concerns make a JDA with Ridgecrest contrary to TMC's interests at this stage of the investigation.

V. Analysis of JDA with Pinnacle Earth Resources Ltd.

A. Divergent Strategic Interests

The analysis regarding Pinnacle shares many of the same foundational concerns identified with respect to Ridgecrest, with several additional complications:

Kevin Tsang's Posture and Departure. Pinnacle's former Senior Vice President of Commercial Operations, Kevin Tsang, is identified as a key individual in the DOJ's investigation. Tsang is believed to have communicated directly with Gavin Holt regarding pricing and market allocation for rare-earth concentrates and specialty industrial minerals. Tsang's departure from Pinnacle creates uncertainty about Pinnacle's ability to control or influence Tsang's legal posture. If Tsang has retained separate counsel (as is likely), he may pursue a cooperation strategy of his own, potentially providing testimony that implicates both TMC and Pinnacle. Alternatively, Tsang may adopt an adversarial posture. In either scenario, the relationship between Pinnacle and Tsang introduces a variable that a JDA cannot adequately address.

Superficial Cross-Border Alignment. Both TMC and Pinnacle are Canadian corporations with significant U.S. operations. This shared cross-border posture might appear to create a basis for alignment — both companies face potential implications under Canadian competition law, both must navigate the complexities of cross-border document productions, and both may have interests in coordinating responses to any parallel Canadian Competition Bureau inquiry. However, this alignment is superficial rather than substantive. The core legal interests at stake in the DOJ grand jury investigation — exposure to criminal fines, potential individual prosecutions, and cooperation-credit calculations — are company-specific and do not benefit from cross-border coordination between co-targets. To the extent that TMC and Pinnacle share an interest in managing cross-border procedural issues, those issues can be addressed through independent counsel-to-counsel communications without a formal JDA.

Unknown Cooperation Strategy. Pinnacle's cooperation strategy is entirely unknown to Calderwood & Harkness. Mr. Nakamura's informal inquiries did not reveal Pinnacle's strategic posture, and it would be imprudent to assume that Pinnacle's interests are aligned with TMC's simply because both companies have received inquiries from the DOJ. If Pinnacle is pursuing leniency or a separate cooperation agreement, sharing information with Pinnacle's counsel would create the same asymmetric risks identified with respect to Ridgecrest. If Pinnacle is pursuing a litigation-oriented strategy, a JDA would yoke TMC to a defense posture that is inconsistent with TMC's cooperation approach.

Nature of Nakamura's Inquiry. Mr. Nakamura's inquiry was informal and exploratory. He did not propose specific terms, identify specific areas of potential coordination, or indicate the scope of information sharing that Pinnacle would seek. This lack of specificity makes it difficult to assess the potential benefits of an arrangement with Pinnacle and suggests that Pinnacle may be in an early stage of formulating its own defense strategy. Engaging in a JDA with a party that has not yet defined its strategic objectives would be premature and potentially counterproductive.

B. Risk to TMC's Cooperation Credit

The same concerns regarding cooperation credit that apply to a JDA with Ridgecrest apply with equal force to a JDA with Pinnacle. The DOJ's assessment of TMC's cooperation will focus on the independence, completeness, and genuineness of TMC's efforts. Participation in a JDA with any co-target — regardless of which co-target — may be perceived as inconsistent with full and genuine cooperation.

TMC's cooperation proffer is currently being prepared for submission to the DOJ. The proffer must demonstrate that TMC's cooperation is independent and not coordinated with other subjects. A JDA with Pinnacle, even if entered into after the proffer is submitted, could retroactively undermine the DOJ's confidence in the independence of TMC's cooperation. The DOJ is likely to inquire, either directly or through informal channels, about the existence of any JDA or information-sharing arrangement among the co-targets. Any affirmative response would trigger additional scrutiny of TMC's cooperation materials.

C. Holt-Tsang Communication Issues

TMC's internal investigation has identified VaultChat communications between Holt and Tsang among the 37 documented competitor exchanges. These communications relate to pricing for rare-earth concentrate contracts and the allocation of certain specialty-mineral customers in the Pacific Northwest and Mountain West regions. TMC's analysis of the Holt-Tsang communications is a component of the cooperation proffer being prepared for the DOJ.

Sharing TMC's analysis of the Holt-Tsang communications with Pinnacle's counsel would directly compromise TMC's negotiating position. The analysis includes TMC's assessment of the content, frequency, and timing of the communications; the correlation between the communications and subsequent pricing decisions; and TMC's identification of specific contracts and customers affected by the alleged coordination. This information, if shared with Pinnacle's counsel, would provide Pinnacle with a detailed understanding of the evidence that TMC can offer the DOJ regarding Pinnacle's involvement in the alleged conspiracy.

Furthermore, if TMC ultimately provides proffer testimony or documentary evidence regarding Holt's communications with Tsang, TMC's interests are adverse to Pinnacle's with respect to Tsang's conduct. TMC's cooperation testimony would necessarily implicate Tsang (and, by extension, Pinnacle), making it untenable for TMC to be in a simultaneous information-sharing arrangement with Pinnacle.

D. Conclusion Regarding Pinnacle

For the foregoing reasons, Calderwood & Harkness recommends against entering into a JDA with Pinnacle Earth Resources Ltd. The same categories of risk identified with respect to Ridgecrest — divergent strategic interests, risk to cooperation credit, and information-flow concerns — apply with equal or greater force to Pinnacle, compounded by the uncertainty about Pinnacle's cooperation strategy and the specific sensitivities of the Holt-Tsang communication nexus.

VI. Analysis of JDA Including Gavin Holt / Briarcliff Law Group PLLC

Any analysis of a JDA structure necessarily raises the question of whether Gavin Holt, through his personal counsel Patrick Dunleavy of Briarcliff Law Group PLLC, would be included in the arrangement. In many cartel investigations, joint defense agreements encompass both the corporate targets and the individual employees or former employees who are subjects or targets of the investigation. However, the inclusion of Holt in any JDA involving TMC would be particularly problematic for the following reasons:

Adverse Interests. Holt's interests are increasingly adverse to TMC's. TMC's cooperation strategy involves, at its core, the provision of information about the conduct of its employees — principally Holt — to the DOJ. The recommended NPA strategy, as outlined in the Defense Strategy Memorandum dated June 1, 2022, contemplates a "Holt carve-out" — that is, a provision in the NPA preserving the DOJ's right to prosecute Holt individually while granting TMC immunity or nonprosecution status as a corporate entity. This carve-out is standard in Antitrust Division NPAs and is likely to be a condition of any resolution favorable to TMC. The existence of the Holt carve-out means that TMC's cooperation will necessarily involve providing evidence and testimony that could be used to prosecute Holt individually. Including Holt in a JDA while simultaneously preparing to cooperate against him would constitute a conflict of interest that is irreconcilable with TMC's obligations of good faith and candor in its cooperation with the DOJ.

Fifth Amendment Assertion and Non-Cooperation. Holt has asserted his Fifth Amendment privilege against self-incrimination before the grand jury and has refused to participate in TMC's internal investigation. These actions indicate that Holt's posture is fundamentally different from TMC's — Holt is asserting his constitutional rights and declining to cooperate, while TMC is pursuing a strategy of full cooperation. Including Holt in a JDA would create a forum in which Holt (through Dunleavy) could obtain information about TMC's internal investigation, cooperation proffer, and defense strategies without reciprocating in any meaningful way. The one-directional flow of information would be to TMC's detriment and Holt's benefit.

Sensitivity of Internal Investigation Findings. TMC's internal investigation has produced findings that are directly adverse to Holt's personal interests. These findings include the identification of the 37 VaultChat exchanges with Edgerton and Tsang, the 12 specific pricing-adjustment instructions that Holt gave to Sandra Chu based on information obtained through competitor communications, and evidence suggesting that Holt's conduct was not authorized or directed by TMC senior management. Sharing these findings with Holt's counsel would provide Holt with a detailed preview of the evidence that TMC can offer the DOJ and would enable Holt to prepare defenses — including potential arguments that his conduct was authorized by TMC management or directed by TMC's institutional culture — that are directly contrary to TMC's interests.

Risk of Collateral Damage to TMC's NPA Negotiations. If Holt were included in a JDA and subsequently used JDA-obtained information to mount a defense that implicates TMC management (e.g., arguing that Holt's pricing communications were known to or authorized by TMC executives), the resulting evidentiary conflicts could undermine TMC's NPA negotiations. The DOJ would be skeptical of TMC's cooperation if Holt's defense strategy appeared to be based on information that could only have been obtained through a JDA with TMC.

For all of these reasons, Calderwood & Harkness strongly recommends against including Gavin Holt or Briarcliff Law Group PLLC in any JDA structure, regardless of whether a JDA is otherwise entered into with Ridgecrest or Pinnacle. Holt's interests are adverse to TMC's in material respects, and the inclusion of Holt in a JDA would create unacceptable risks to TMC's cooperation strategy and NPA negotiations.

VII. Alternative Approaches to Information Sharing

While Calderwood & Harkness recommends against a formal JDA, it is prudent to consider alternative approaches to monitoring the activities of co-subjects and maintaining professional relationships with opposing defense counsel that may serve TMC's interests without the risks associated with a JDA.

A. Informal Monitoring Without JDA

Calderwood & Harkness can maintain professional-courtesy communications with Helen Marchetti of DKA and George Nakamura of AW regarding matters that do not implicate TMC's privileged defense strategies or internal investigation findings. Specifically, the firm can engage in the following types of communications:

• Publicly Available Information. Exchanging observations about publicly available filings, court records, and DOJ communications that are accessible to all parties through public channels.

• Scheduling Coordination. Coordinating with co-subjects' counsel on scheduling matters related to DOJ proceedings, including grand jury appearance dates, document-production deadlines, and other procedural matters that benefit from defense-side coordination without implicating substantive strategy.

• Procedural Advocacy. Where appropriate, coordinating on purely procedural motions or requests that benefit all parties (e.g., requests for extensions of document-production deadlines), provided that such coordination does not extend to substantive legal arguments or strategic positions.

This approach preserves TMC's independence while maintaining professional relationships that could prove useful if circumstances change — for example, if TMC's cooperation effort is completed and TMC's interests realign with those of co-subjects in the context of potential civil litigation or regulatory proceedings.

B. Limited Information-Sharing Protocol (Not Recommended Currently)

A narrowly scoped common interest arrangement, limited to specific procedural issues such as subpoena compliance timelines, privilege-review protocols, and document-production logistics, is theoretically possible. Such an arrangement could be structured as a limited common interest agreement rather than a full JDA, with explicit limitations on the types of information that may be shared and express exclusions for substantive defense strategies, internal investigation findings, and cooperation-related matters.

However, Calderwood & Harkness does not recommend this approach at this time for several reasons:

• signaling Risk. Even a limited common interest arrangement would signal to the DOJ that TMC is engaged in coordination with co-targets, potentially triggering the same concerns about cooperation credit that apply to a full JDA.

• Scope Creep. Limited information-sharing arrangements have a tendency to expand over time as the defense teams develop working relationships and encounter shared challenges. A limited arrangement could serve as a "foot in the door" toward broader information sharing that would be harmful to TMC's interests.

• Marginal Benefit. The procedural benefits of a limited arrangement (e.g., coordinated production timelines) can be achieved through the informal monitoring approach described in Section VII.A without the risks of a formal agreement.

This option could be revisited at a later stage if TMC's cooperation effort concludes successfully and the parties' interests realign — for example, in the context of civil follow-on litigation where the co-subjects may share a genuine common interest in defending against private antitrust claims.

C. Monitoring Co-Subject Activities Through Public Filings and DOJ Communications

Calderwood & Harkness will continue to monitor Ridgecrest's and Pinnacle's activities through all available public channels, including:

• Court Records. Monitoring filings in the N.D. Cal. docket and any related proceedings for indications of plea agreements, cooperation agreements, immunity grants, or other dispositions involving Ridgecrest, Pinnacle, or their individual employees.

• SEC and Canadian Securities Filings. For TMC and Pinnacle (as publicly traded companies), monitoring periodic reports and material-event disclosures for references to the investigation, reserves for potential fines or settlements, and other relevant information.

• DOJ Public Communications. Monitoring Antitrust Division press releases, speeches by Division leadership, and public court filings for information about the investigation's progress and direction.

• Industry and Media Sources. Monitoring trade publications, news reports, and industry sources for information about the investigation's impact on the specialty-minerals sector and any developments involving the co-subjects.

This approach provides meaningful situational awareness without any privilege risk, information-sharing obligation, or adverse signaling to the DOJ. It is the approach that Calderwood & Harkness recommends for the duration of TMC's cooperation effort.

VIII. Risk Assessment Summary

The following table summarizes the principal risks associated with entering into a JDA with Ridgecrest, Pinnacle, or both, as assessed by Calderwood & Harkness:

IX. Recommendation

Based on the foregoing analysis, Calderwood & Harkness recommends that Torchlight Mining Corp. decline to enter into joint defense agreements with counsel for either Ridgecrest Minerals Inc. or Pinnacle Earth Resources Ltd. at this time. This recommendation extends to any joint defense or common interest arrangement, whether styled as a formal JDA, a limited information-sharing protocol, or any other structure that contemplates the sharing of privileged communications or attorney work product among co-subjects.

This recommendation is driven primarily by the following considerations:

1. TMC's cooperation posture with the DOJ Antitrust Division, including the June 8, 2022 cooperation letter and the ongoing cooperation proffer preparation, is fundamentally inconsistent with participation in a coordinated defense arrangement with co-targets.

2. The risk that JDA participation could compromise TMC's cooperation credit in NPA negotiations is substantial and, given the magnitude of the potential financial exposure (an estimated starting fine of approximately USD 95.6 million), the stakes are too high to accept this risk.

3. The strategic interests of TMC, Ridgecrest, and Pinnacle are divergent in material respects. The evidence of direct communications between their respective personnel — Holt-Edgerton and Holt-Tsang — means that TMC's cooperation will necessarily involve providing evidence that implicates the co-targets and their key individuals. A JDA cannot reconcile this fundamental conflict of interest.

4. The information-flow risks associated with sharing TMC's internal investigation findings with co-targets' counsel are unacceptable, given the sensitivity of the evidence uncovered and the potential for that evidence to be used against TMC's interests.

5. The inclusion of Gavin Holt in any JDA structure is untenable, and a JDA that excludes Holt would be incomplete and potentially ineffective while still carrying the signaling and cooperation-credit risks described above.

Elaine Forsythe will communicate the declination to Helen Marchetti (DKA) and George Nakamura (AW) in a diplomatic manner that preserves professional relationships and does not reveal TMC's cooperation strategy, internal investigation findings, or the reasoning set forth in this memorandum. The declination should be framed in general terms — for example, citing the early stage of TMC's own review and the need to preserve flexibility as TMC evaluates its options — without disclosing TMC's cooperation posture or NPA strategy.

This recommendation should be revisited if TMC's strategic posture changes materially. Circumstances that could warrant reconsideration include, but are not limited to: (a) a decision by TMC not to pursue cooperation with the DOJ; (b) the conclusion of TMC's cooperation effort, at which point TMC's interests may realign with those of co-subjects in the context of civil follow-on litigation; (c) a substantial weakening of the DOJ's case that reduces the strategic value of cooperation; or (d) a change in the cooperation posture of Ridgecrest or Pinnacle that creates a genuine alignment of interests.

X. Next Steps

The following action items should be taken in connection with this memorandum:

1. Response to Davenport, Kline & Archer LLP. Elaine Forsythe will respond to Helen Marchetti of DKA, declining the JDA proposal in general terms. The response should cite the early stage of TMC's own review and the need to preserve flexibility as TMC evaluates its options, without disclosing TMC's cooperation strategy, NPA pursuit, or internal investigation findings. The response should be cordial and should leave open the possibility of future coordination on narrow procedural matters, if appropriate.

2. Response to Ashford Whitmore LLP. Elaine Forsythe will respond similarly to George Nakamura of AW, declining the informal inquiry regarding coordination. The same general framing should be used, and the same precautions regarding disclosure should apply.

3. Ongoing Monitoring. Calderwood & Harkness will continue monitoring co-subject activities through public filings, court records, DOJ communications, and professional channels, as described in Section VII.C above. Any material developments regarding the cooperation posture, legal status, or strategic direction of Ridgecrest, Pinnacle, or Gavin Holt will be reported to Elaine Forsythe and the TMC engagement team promptly.

4. Periodic Reassessment. This analysis will be revisited if material changes occur in the investigation posture, TMC's strategic direction, or the cooperation positions of the co-subjects. A formal reassessment should be conducted at each significant milestone in the investigation, including the completion of TMC's cooperation proffer, the commencement of NPA negotiations, and the disposition of any co-subject's case.

5. File Maintenance. This memorandum is to be maintained in Calderwood & Harkness's privileged work-product file for Matter No. 1039-00001. Access to this memorandum is restricted to authorized personnel as set forth in the distribution list below. The memorandum should not be uploaded to any shared document platform, external file-sharing service, or system accessible to TMC personnel without prior authorization from Elaine Forsythe.

DISTRIBUTION: This memorandum is distributed solely to the following individuals at Calderwood & Harkness LLP: Elaine Forsythe (Responsible Partner), Howard Bellamy (Senior Counsel), and Aaron Liu (Associate). This memorandum is not to be shared with TMC personnel other than Priya Anand (General Counsel) and Søren Dalmqvist (Chief Executive Officer) upon the express approval of Elaine Forsythe, and only under the protection of the attorney-client privilege. This memorandum must not be distributed externally under any circumstances.

PRIVILEGED AND CONFIDENTIAL — ATTORNEY WORK PRODUCT. This memorandum was prepared by counsel in anticipation of litigation and in connection with the provision of legal advice. It reflects the mental impressions, conclusions, opinions, and legal theories of attorneys at Calderwood & Harkness LLP. Do not copy, forward, or distribute without authorization.

Risk Category	Assessment	Analysis
Cooperation Credit Risk	High	The DOJ Antitrust Division may perceive JDA participation as inconsistent with genuine, independent cooperation, potentially reducing or eliminating the cooperation credit that TMC must maximize to achieve an acceptable NPA resolution. TMC's preliminary estimated starting fine under the Sentencing Guidelines, based on its approximately USD 478 million share of affected commerce, is approximately USD 95.6 million before cooperation credit adjustments. Maximizing cooperation credit is essential to reducing this figure to an acceptable NPA monetary payment, which our preliminary modeling estimates at USD 25–40 million with full cooperation credit. A reduction in cooperation credit could increase TMC's monetary exposure by tens of millions of dollars.
Information Leakage Risk	High	TMC's internal investigation has produced highly sensitive findings — including the 37 Holt-competitor VaultChat exchanges, the VaultChat content analysis, pricing-data correlations between competitor communications and TMC pricing decisions, and Sandra Chu's testimony regarding the 12 pricing-adjustment instructions she received from Holt — that constitute the core of TMC's cooperation proffer. Disclosure of this information to co-targets' counsel through a JDA could be catastrophic to TMC's negotiating position and could enable co-targets to develop blame-shifting strategies targeting TMC.
Strategic Misalignment Risk	High	TMC's cooperation-oriented NPA strategy is fundamentally different from a litigation-oriented joint defense posture. A JDA is inherently structured to facilitate coordinated defense, which presupposes a shared adversarial posture vis-à-vis the government. TMC's cooperation posture is collaborative, not adversarial, and yokes TMC to a defense framework that is inconsistent with its chosen strategy.
Privilege Risk	Moderate-to-High	If a JDA participant cooperates with the DOJ — whether TMC itself or another party — JDA-shared communications may be vulnerable to disclosure. Ninth Circuit law provides incomplete protections for JDA-shared communications when a participant subsequently cooperates, and the practical limitations of contractual non-disclosure provisions (discussed in Section III.C above) are significant. The risk is particularly acute here because TMC is already cooperating, meaning that the common interest underlying the JDA could be challenged from inception.
Reputational Risk with DOJ	Moderate	The DOJ Antitrust Division's San Francisco Field Office and the cr

CALDERWOOD & HARKNESS LLP
PRIVILEGED AND CONFIDENTIAL — ATTORNEY WORK PRODUCT
INTERNAL MEMORANDUM
July 15, 2022
TO: Elaine Forsythe, Responsible Partner, Antitrust & Competition Practice Group
FROM: Monica Reyes, Associate, Antitrust & Competition Practice Group
RE: Joint Defense Agreement Considerations — Torchlight Mining Corp. (DOJ Grand Jury Investigation, GJ-22-0194, N.D. Cal.)
MATTER NO.: 1039-00001
PRIVILEGE DESIGNATION: This memorandum is a privileged and confidential attorney work product prepared in anticipation of litigation and in connection with the provision of legal advice to our client, Torchlight Mining Corp. It reflects the mental impressions, conclusions, opinions, and legal theories of attorneys at Calderwood & Harkness LLP. This memorandum is not intended for disclosure to any third party, and its disclosure would not waive any applicable privilege. The unauthorized disclosure, copying, or distribution of this memorandum is strictly prohibited.
I. Executive Summary
This memorandum analyzes whether our client, Torchlight Mining Corp. ("TMC"), should enter into a joint defense agreement ("JDA") with counsel for either or both of its co-subjects in the ongoing Department of Justice Antitrust Division grand jury investigation captioned Grand Jury No. GJ-22-0194, pending before the U.S. District Court for the Northern District of California, San Francisco Division. The two co-subjects at issue are Ridgecrest Minerals Inc. ("Ridgecrest"), represented by Helen Marchetti of Davenport, Kline & Archer LLP ("DKA"), and Pinnacle Earth Resources Ltd. ("Pinnacle"), represented by George Nakamura of Ashford Whitmore LLP ("AW"). Both Ms. Marchetti and Mr. Nakamura have made informal inquiries to this firm regarding the potential for a JDA or other information-sharing arrangement to coordinate defense efforts among the three target companies.
After careful analysis of the relevant legal framework, the strategic posture of each co-subject, the nature and stage of the government's investigation, the evidence uncovered in our internal investigation to date, and the likely consequences of JDA participation on TMC's cooperation efforts with the DOJ, Calderwood & Harkness recommends against entering into a JDA with either Ridgecrest's or Pinnacle's counsel at this time.
This recommendation is driven by five principal considerations:
1. Divergent Strategic Interests Arising from TMC's Cooperation Posture. TMC has already communicated its willingness to cooperate with the DOJ Antitrust Division, and the firm's recommended strategy — pursuit of a non-prosecution agreement ("NPA") — is fundamentally different from a joint defense posture. A JDA is inherently oriented toward coordinated defense, which is inconsistent with TMC's emerging role as a cooperating party.
2. Risk to TMC's Cooperation Credit. The DOJ Antitrust Division evaluates cooperation credit based on the timeliness, completeness, and genuineness of a subject's cooperation. Participation in a JDA with co-targets could be perceived by the DOJ as an effort to coordinate defense positions or align narratives, which could diminish or negate the cooperation credit that TMC must maximize to achieve an acceptable resolution.
3. Conflicting Exposure Profiles. The three target companies occupy different positions in the alleged conspiracy, have different levels of culpability as evidenced by the timing of their respective target letters, and are subject to different financial and governance considerations that drive divergent risk calculi. Ridgecrest is a portfolio company of a private equity fund with a potentially different tolerance for litigation risk. Pinnacle is a Canadian corporation with cross-border considerations. TMC is publicly traded on both the TSX and NYSE, with disclosure obligations and shareholder expectations that favor an expeditious and cooperative resolution.
4. Cascade Chemical Supply Co. Cooperation and Information Flow Complications. The investigation was precipitated by the cooperation agreement of Cascade Chemical Supply Co. ("Cascade"), a former industry participant whose cooperation predated the formal opening of the grand jury. The presence of an established government cooperator creates asymmetric information dynamics that a JDA cannot remedy and may exacerbate.
5. Gavin Holt's Separate Representation and Fifth Amendment Assertion. Gavin Holt, TMC's former Vice President of U.S. Specialty Minerals Sales, is the individual most directly implicated in the alleged anticompetitive conduct. Holt has retained separate personal counsel (Patrick Dunleavy of Briarcliff Law Group PLLC), has asserted his Fifth Amendment privilege before the grand jury, and has refused to cooperate with TMC's internal investigation. Any JDA structure would need to address Holt's participation and posture, creating additional layers of complexity and potential conflict.
Each of these considerations is analyzed in detail below. This memorandum also addresses alternative approaches to information monitoring and coordination that preserve TMC's strategic flexibility without the risks associated with a formal JDA.
II. Background
A. The Investigation
On February 10, 2022, the Antitrust Division of the United States Department of Justice formally opened a grand jury investigation (Grand Jury No. GJ-22-0194) in the U.S. District Court for the Northern District of California, San Francisco Division. The investigation targets suspected violations of Section 1 of the Sherman Antitrust Act, 15 U.S.C. § 1, involving price-fixing, market allocation, and bid-rigging in the North American specialty-minerals sector. The targeted commodities principally include high-purity feldspar, industrial talc, and rare-earth concentrates — products for which TMC, Ridgecrest, and Pinnacle are among the leading North American suppliers.
The lead DOJ prosecutors assigned to the investigation are Trial Attorney Denise Kowalski and Senior Trial Attorney Marcus Reeves, both of the Antitrust Division's San Francisco Field Office. The investigation is supervised by Deputy Assistant Attorney General Julia Stafford-Hayes, who oversees the Division's criminal enforcement program from the Washington, D.C. headquarters.
The investigation was precipitated by a cooperation agreement entered into by Cascade Chemical Supply Co. ("Cascade"), a mid-size specialty chemicals and minerals distributor. Cascade is represented by Whitfield, Strauss & Tully LLP, with lead partner Rebecca Ostrander managing the engagement. Based on information obtained from DOJ communications and publicly available records, Cascade's cooperation agreement was executed on or about September 15, 2021 — approximately five months prior to the formal opening of the grand jury investigation. Cascade's cooperation appears to have provided the DOJ with the initial evidentiary foundation for the investigation, including documentary evidence and cooperating-witness testimony regarding the nature, scope, and participants in the alleged conspiracy.
The DOJ's preliminary assessment estimates total affected commerce — that is, the aggregate volume of commerce attributable to the products and geographic markets implicated by the alleged conspiracy — at approximately USD 1.34 billion over the alleged conspiracy period, which runs from approximately January 2017 through August 2021. This affected-commerce figure is a critical input to the DOJ's calculation of applicable fines under the United States Sentencing Guidelines and the Antitrust Division's penalty guidelines, as discussed further in Section VIII below.
B. TMC's Status
Torchlight Mining Corp. received Grand Jury Subpoena No. GJ-22-0194-SD-003 on February 14, 2022, four days after the formal opening of the investigation. TMC engaged Calderwood & Harkness LLP on February 18, 2022, and the firm entered its appearance with the DOJ on February 22, 2022. Since that date, Calderwood & Harkness has served as TMC's sole outside counsel for all matters related to the grand jury investigation.
On May 20, 2022, TMC received a formal target letter from the DOJ Antitrust Division, confirming that the company is a target of the grand jury investigation. The target letter identified TMC as a suspected participant in a conspiracy to fix prices, allocate markets, and rig bids for high-purity feldspar, industrial talc, and rare-earth concentrates sold to customers in the United States and Canada during the period from approximately January 2017 through approximately August 2021.
Notwithstanding its target status, TMC has been cooperating with the DOJ since the early stages of the investigation. TMC's first rolling document production, consisting of approximately 42,000 documents (predominantly emails, internal memoranda, pricing records, and sales data from TMC's U.S. Specialty Minerals Division), was delivered to the DOJ on April 4, 2022. Additional rolling productions have been ongoing, and the targeted cumulative total is expected to reach several hundred thousand documents by the conclusion of the document-collection and review process. TMC has also been responsive to DOJ requests for supplemental information and has facilitated the identification and preservation of potentially relevant custodial data.
On June 8, 2022, Calderwood & Harkness formally communicated TMC's willingness to cooperate with the DOJ Antitrust Division in a letter addressed to Trial Attorney Kowalski and Senior Trial Attorney Reeves, with a copy to Deputy Assistant Attorney General Stafford-Hayes. The letter expressed TMC's commitment to full, timely, and genuine cooperation and indicated TMC's interest in discussing an appropriate resolution framework, including the possibility of a non-prosecution agreement.
Calderwood & Harkness's internal investigation on behalf of TMC is underway. Key witness interviews have been conducted and are ongoing. Sandra Chu, TMC's Director of Pricing for the U.S. Specialty Minerals Division, was interviewed on July 18, 2022 (a summary memorandum is being prepared). Thomas Eriksen, TMC's former Regional Sales Manager for the Western Region, was interviewed on July 22, 2022 (a summary memorandum is forthcoming). Additional interviews of current and former TMC employees are being scheduled.
TMC is publicly traded on the Toronto Stock Exchange (TSX: TRCL) and the New York Stock Exchange (NYSE: TMC). For the fiscal year ending December 31, 2021, TMC reported consolidated revenue of CAD 4.27 billion (approximately USD 3.38 billion at prevailing exchange rates). TMC's U.S. Specialty Minerals Division, which is the business unit most directly implicated in the investigation, generated approximately USD 687 million in revenue during FY 2021. Based on the DOJ's preliminary affected-commerce estimate of USD 1.34 billion, TMC's share of affected commerce is estimated at approximately USD 478 million, representing approximately 35.7% of the total. This figure is significant for purposes of fine calculation and cooperation-credit analysis, as discussed in Section VIII.
C. Ridgecrest Minerals Inc.
Ridgecrest Minerals Inc. is a Delaware corporation headquartered at 1700 Lincoln Street, Suite 4200, Denver, Colorado 80203. Ridgecrest is the second-largest North American producer of high-purity feldspar and industrial talc, with FY 2021 revenue of approximately USD 1.92 billion. Ridgecrest is a portfolio company of Marlowe Asset Management Peak Capital Partners LP, a Denver-based private equity fund that acquired a controlling interest in Ridgecrest in approximately 2015.
Ridgecrest's Chief Executive Officer is Brian Novotny. The individual most directly implicated in the investigation on Ridgecrest's behalf is Carl Edgerton, Vice President of Sales, who has been identified in DOJ materials and in TMC's internal investigation as a key participant in the suspected anticompetitive conduct. The DOJ's evidence — corroborated by TMC's internal investigation — includes communications between Edgerton and Gavin Holt (TMC) regarding pricing levels, customer allocation, and bid coordination.
Ridgecrest received a DOJ target letter on or about January 12, 2022 — approximately one month before the formal opening of the grand jury investigation and approximately four months before TMC received its own target letter. The earlier timing of Ridgecrest's target letter may indicate that the DOJ views Ridgecrest's involvement as more serious or more thoroughly documented (likely based on Cascade's cooperation), though alternative explanations are possible.
Ridgecrest is separately represented by Davenport, Kline & Archer LLP ("DKA"), a Denver-based litigation firm, with lead partner Helen Marchetti managing the engagement. Ms. Marchetti is a well-regarded antitrust defense practitioner with experience in DOJ criminal investigations. On or about July 5, 2022, Ms. Marchetti contacted Elaine Forsythe to raise the possibility of entering into a JDA or other information-sharing arrangement with TMC to coordinate defense efforts in connection with the grand jury investigation.
D. Pinnacle Earth Resources Ltd.
Pinnacle Earth Resources Ltd. is a corporation organized under the laws of the Province of Ontario, Canada, with its corporate headquarters at 85 Elm Street West, Suite 600, Sudbury, Ontario P3C 1T3, Canada. Pinnacle's U.S. operations are conducted through a wholly owned subsidiary with offices at 222 South Main Street, Suite 1500, Salt Lake City, Utah 84101. Pinnacle is among the top-five North American producers of rare-earth concentrates and specialty industrial minerals, with FY 2021 revenue of approximately CAD 1.45 billion (approximately USD 1.15 billion at prevailing exchange rates).
Pinnacle's Chief Executive Officer is Douglas Harlowe. The key individual identified in the DOJ's investigation on Pinnacle's behalf is Kevin Tsang, former Senior Vice President of Commercial Operations. Tsang's departure from Pinnacle has been noted, though the precise timing and circumstances of his departure have not been confirmed through publicly available information. Tsang is believed to have been a direct participant in communications with Gavin Holt (TMC) and possibly Carl Edgerton (Ridgecrest) regarding pricing and market allocation.
Pinnacle is separately represented by Ashford Whitmore LLP ("AW"), a prominent Canadian law firm with offices in Toronto and New York, with lead partner George Nakamura managing the engagement. Mr. Nakamura made informal inquiries to Calderwood & Harkness on or about July 8, 2022, regarding the potential for coordination among the defense teams of the co-subjects. The nature and scope of Mr. Nakamura's inquiry were general and exploratory; he did not propose specific terms or a specific structure for coordination.
E. Gavin Holt — Separate Representation
Gavin Holt is a former Vice President of U.S. Specialty Minerals Sales at TMC. Holt served in that role from approximately March 2016 until his resignation, which was effective September 30, 2021. Holt's departure from TMC preceded the opening of the grand jury investigation by approximately four and a half months but occurred approximately two weeks after Cascade's cooperation agreement was executed, raising questions about whether Holt became aware of the investigation through informal channels.
Holt is the individual most directly implicated in the alleged anticompetitive conduct on TMC's behalf. TMC's internal investigation has identified at least 37 documented exchanges on the encrypted messaging platform VaultChat between Holt and one or both of Carl Edgerton (Ridgecrest) and Kevin Tsang (Pinnacle), spanning the period from approximately March 2017 through July 2021. These VaultChat exchanges contain discussions of pricing levels, customer allocation, and bid coordination for high-purity feldspar, industrial talc, and rare-earth concentrate contracts. In addition to the VaultChat exchanges, the internal investigation has identified evidence of in-person conversations between Holt and Edgerton and/or Tsang at industry conferences organized by the North American Specialty Minerals Council ("NASMC"), including conferences held in Arlington, Virginia; Scottsdale, Arizona; and Orlando, Florida during the relevant period.
On or about June 10, 2022, Holt retained personal counsel, Patrick Dunleavy of Briarcliff Law Group PLLC, located at 50 California Street, Suite 2800, San Francisco, California 94111. Holt appeared before the grand jury on June 14, 2022, and asserted his Fifth Amendment privilege against self-incrimination, declining to testify on the advice of counsel. On August 2, 2022, Mr. Dunleavy communicated to Calderwood & Harkness that Holt would refuse to participate in TMC's internal investigation interview, which had been requested for August 5, 2022. A memorandum documenting Holt's refusal and its implications for the internal investigation is being prepared under that date.
Holt's posture presents significant complications for any JDA analysis. Any JDA among the corporate co-targets would need to address whether Holt, through Briarcliff Law Group, would also participate in the agreement. As discussed in Section VI below, Holt's interests are potentially adverse to TMC's in material respects, particularly if TMC cooperates with the DOJ and provides information or testimony regarding Holt's individual conduct.
III. Legal Framework Governing Joint Defense Agreements
A. Common Interest Doctrine
The joint defense agreement is rooted in the common interest doctrine (also variously referred to as the "allied lawyer" doctrine, the "community of interest" doctrine, or the "joint defense privilege"). The common interest doctrine is an extension of the attorney-client privilege that permits parties who share a common legal interest to exchange privileged communications — including attorney-client communications and attorney work product — without waiving the underlying privilege. The doctrine recognizes that parties facing a common legal adversary or engaged in a common legal effort may benefit from the coordinated exchange of legal analysis, factual development, and defense strategies, and that such exchange should not come at the cost of privilege waiver.
Under Ninth Circuit law, which governs this analysis given the N.D. Cal. venue of the grand jury investigation, the common interest doctrine requires that the parties share a common legal interest that is "identical, not similar." In re Grand Jury Subpoenas, 902 F.2d 244, 249 (4th Cir. 1990) (widely cited across circuits); see also United States v. Gonzalez, 669 F.3d 974, 981–82 (9th Cir. 2012) (requiring that the communication be made "in the course of a joint defense effort" and that it relate to the "common legal interest"). The Ninth Circuit has emphasized that the shared interest must be legal in nature — a shared commercial interest, business relationship, or general desire to avoid liability is insufficient to invoke the doctrine. United States v. Henke, 222 F.3d 633, 637 (9th Cir. 2000).
It is important to note several foundational principles regarding the common interest doctrine:
• A JDA does not create an attorney-client relationship between a party and the other parties' counsel. Each party's attorney-client relationship remains separate and independent. The JDA merely provides a framework within which privileged communications can be shared among the parties and their respective counsel without being deemed waived as to third parties (including the government).
• The doctrine protects only communications made in furtherance of the common legal interest and in the course of the joint defense effort. Communications that fall outside the scope of the common interest — for example, discussions of unrelated business matters — are not protected.
• The common interest must exist at the time the communications are made. If the common interest ceases to exist (for example, because one party begins cooperating with the government against the others), communications made after that point are not protected, and the continued applicability of the privilege to previously shared communications may be called into question.
B. Typical JDA Provisions
While joint defense agreements vary in their specific terms, they typically contain the following core provisions:
Identification of Parties and Counsel. The agreement identifies each party to the JDA and their respective counsel. In the present context, a JDA might include TMC (represented by Calderwood & Harkness), Ridgecrest (represented by DKA), and Pinnacle (represented by AW), and potentially Gavin Holt (represented by Briarcliff Law Group).
Scope of Common Legal Interest. The agreement defines the common legal interest that forms the basis for the information-sharing arrangement. In a grand jury investigation context, this would typically be defined as the defense of each party in connection with the DOJ Antitrust Division's investigation and any related proceedings.
Confidentiality Obligations. The agreement provides that all materials and communications shared under the JDA are confidential and may not be disclosed to any person or entity outside the JDA group without the prior written consent of the party that provided the information. Shared materials are to be treated as subject to the attorney-client privilege and/or the work-product doctrine.
Restrictions on Use. Information shared under the JDA may not be used by any party to the agreement against any other party to the agreement. This provision is intended to prevent a party from gaining a strategic advantage through the JDA and then using shared information adversely.
Withdrawal Provisions. Any party may withdraw from the JDA at any time, typically upon written notice to the other parties. However, the obligations regarding previously shared information survive the withdrawal. That is, a withdrawing party remains bound by the confidentiality and use-restriction provisions with respect to information received prior to withdrawal.
No Waiver Clause. The agreement typically includes a provision stating that the sharing of information under the JDA does not constitute a waiver of the attorney-client privilege, the work-product doctrine, or any other applicable privilege as to any person or entity not a party to the agreement.
Preservation of Independent Action. Most well-drafted JDAs include a provision stating that the agreement does not prevent any party from independently cooperating with the government, entering into a plea agreement or cooperation agreement, or taking any other action in that party's sole interest. This provision is standard but, as discussed below, its practical effectiveness is limited.
C. Risks and Limitations
While JDAs offer potential benefits in coordinated defense situations, they carry significant risks and limitations that are particularly acute in the context of DOJ criminal antitrust investigations:
Cooperation and Information Disclosure Risks. If one party to a JDA cooperates with the DOJ, the JDA itself does not prevent that party from cooperating. The typical "preservation of independent action" clause expressly preserves each party's right to cooperate. However, the cooperating party will have had access to the defense strategies, internal investigation findings, witness assessments, and legal theories of the non-cooperating parties. While the cooperating party is contractually prohibited from affirmatively disclosing JDA-shared information to the government, there are significant practical limitations on this protection. The DOJ may require, as a condition of cooperation, full and complete disclosure of all information known to the cooperating party, including information learned through the JDA. A cooperating party who withholds JDA-obtained information may jeopardize its own cooperation credit. Moreover, the DOJ may compel disclosure through grand jury subpoena or other compulsory process, and the question of whether JDA-shared information is protected from compelled disclosure is uncertain under applicable law.
DOJ Antitrust Division's View of JDAs. The DOJ Antitrust Division has historically taken a dim view of JDAs in cartel investigations, particularly in cases where one or more subjects are seeking cooperation credit. Division personnel have indicated, in speeches, guidance memoranda, and informal communications, that JDA participation may be viewed as inconsistent with the spirit of genuine cooperation. While the Division does not impose an absolute prohibition on JDA participation by cooperating parties, participation in a JDA — particularly one involving multiple co-targets — may signal to the DOJ that a subject is more inclined toward coordinated defense than independent cooperation, potentially reducing the cooperation credit the subject would otherwise receive.
Vulnerability of JDA-Shared Communications. Ninth Circuit authority on the continued privilege protection of JDA-shared communications after a participant becomes a government cooperator is not fully settled. In United States v. Stepney, 246 F. Supp. 2d 1069 (N.D. Cal. 2003), the district court held that the common interest privilege survived one party's decision to cooperate with the government, protecting previously shared communications. However, other courts have reached contrary conclusions, and the scope of protection may depend on the specific facts and circumstances, including whether the common interest genuinely existed at the time of sharing and whether the cooperating party's decision to cooperate was foreseeable. In a worst-case scenario, a court could conclude that the common interest never truly existed (because the cooperating party was always contemplating cooperation) or that the privilege was vitiated by the fundamental change in the parties' relationship.
Piercing the JDA. In certain circumstances, JDAs can be pierced or their protections found inapplicable. For example, if a court determines that the parties to the JDA did not, in fact, share a common legal interest — or that the communications at issue were not made in furtherance of that common interest — the JDA's privilege protections will not apply. In the present case, the divergent strategic interests of the three co-targets (discussed in Sections IV, V, and VI below) raise a threshold question about whether a genuine common legal interest exists at all.
IV. Analysis of JDA with Ridgecrest Minerals Inc.
A. Divergent Strategic Interests
The most fundamental concern with entering into a JDA with Ridgecrest is that the two companies' strategic interests are divergent in material respects. This divergence arises from several factors:
Earlier Target Letter and Potentially Greater Exposure. Ridgecrest received its DOJ target letter on or about January 12, 2022 — approximately four months before TMC received its target letter on May 20, 2022. The earlier receipt of a target letter may indicate that the DOJ views Ridgecrest's involvement in the alleged conspiracy as more serious, more thoroughly documented, or more central to the scheme. It is likely that Ridgecrest was identified earlier based on information provided by Cascade under its cooperation agreement. The implication is that the DOJ may already possess substantial evidence regarding Ridgecrest's conduct, potentially including documentary evidence and cooperating-witness testimony specifically implicating Ridgecrest personnel. This asymmetry in the DOJ's evidence base means that Ridgecrest and TMC face different evidentiary landscapes and, consequently, different strategic considerations.
Carl Edgerton's Central Role. Carl Edgerton, Ridgecrest's Vice President of Sales, is identified in DOJ materials and in TMC's internal investigation as a direct participant in the alleged pricing communications with Gavin Holt. The 37 documented VaultChat exchanges include communications between Holt and Edgerton concerning specific pricing levels for high-purity feldspar contracts, proposed market allocation for industrial talc customers, and bid coordination for rare-earth concentrate tenders. Edgerton's exposure is a principal focus of the DOJ's case against Ridgecrest, and any defense strategy developed by Ridgecrest's counsel will necessarily involve addressing Edgerton's conduct. If TMC cooperates with the DOJ and provides evidence regarding the Holt-Edgerton communications, TMC's interests become directly adverse to Ridgecrest's. A JDA would place TMC in the untenable position of sharing defense strategies with a party against whom TMC may ultimately provide cooperation testimony and documentary evidence.
Private Equity Ownership and Divergent Risk Calculus. Ridgecrest is a portfolio company of Marlowe Asset Management Peak Capital Partners LP, a Denver-based private equity fund. Private equity ownership introduces a fundamentally different risk calculus from that of a publicly traded company like TMC. Marlowe Asset Management Peak's investment thesis, fund timeline, and return expectations may drive Ridgecrest toward a litigation-oriented strategy (e.g., contesting the charges in the hope of acquittal or favorable settlement) rather than a cooperation-oriented strategy. Alternatively, Marlowe Asset Management Peak may push for rapid resolution (e.g., a plea agreement with a known monetary penalty) to remove uncertainty from the portfolio company's valuation. In either case, Ridgecrest's financial and governance considerations differ materially from TMC's. TMC, as a publicly traded company with ongoing disclosure obligations under both U.S. and Canadian securities law, faces shareholder scrutiny, potential securities litigation risk, and market-valuation implications that favor a measured, cooperative approach aimed at minimizing penalties and reputational harm. These divergent institutional incentives undermine the premise of a shared legal interest.
TMC's Cooperation Posture. TMC has already communicated its willingness to cooperate with the DOJ through the June 8, 2022 letter. This communication represents a significant strategic commitment that distinguishes TMC's posture from that of a party engaged in a purely adversarial defense. Ridgecrest's cooperation posture is unknown to Calderwood & Harkness. Ms. Marchetti's inquiry about a JDA may itself suggest that Ridgecrest is oriented toward a coordinated defense rather than cooperation, although alternative interpretations are possible. If Ridgecrest is not pursuing cooperation — or is pursuing cooperation on different terms or timelines — a JDA would yoke TMC to a party whose strategy is inconsistent with TMC's own approach.
B. Risk to TMC's Cooperation Credit
The DOJ Antitrust Division's policies on cooperation credit reward early, comprehensive, and genuine cooperation. The Division's guidance, including the Antitrust Division's "Frequently Asked Questions about the Antitrust Division's Leniency Program" and public statements by Division leadership, emphasizes that cooperation credit is earned through proactive and independent efforts to assist the government's investigation, including the provision of documents, witness access, factual proffers, and, ultimately, trial testimony if required.
If the DOJ perceives that TMC is coordinating defense strategies with a co-target through a JDA, the Division may discount the value of TMC's cooperation. Specifically, the DOJ may interpret JDA participation as evidence that TMC's cooperation is not fully independent — that TMC is sharing information with co-targets and potentially aligning its factual narrative with theirs. This perception would be particularly damaging given that TMC's recommended strategy is pursuit of a non-prosecution agreement (as outlined in the Defense Strategy Memorandum dated June 1, 2022), which requires a showing of exceptional cooperation.
Moreover, the DOJ may interpret JDA participation as an effort to limit the scope of TMC's cooperation. If the DOJ believes that TMC is sharing with Ridgecrest information about the scope of TMC's document productions, the identities of cooperating witnesses within TMC, or the substance of TMC's internal investigation findings, the DOJ may conclude that TMC is providing Ridgecrest with advance notice of the government's case — effectively serving as a conduit of information from the cooperating side to the defense side. Even if TMC were scrupulous in limiting the scope of JDA-shared information, the mere existence of the JDA would create an inference of improper coordination.
C. Information Flow Risks
Participation in a JDA with Ridgecrest would require some degree of information sharing regarding TMC's defense posture, internal investigation findings, and legal theories. Even under a narrowly scoped agreement, the practical dynamics of a JDA tend toward increasing levels of information exchange over time, as the defense teams develop working relationships and confront shared procedural and substantive challenges.
The specific information-flow risks are significant:
• Internal Investigation Findings. TMC's internal investigation has uncovered critical evidence, including the 37 documented VaultChat exchanges between Holt and Edgerton/Tsang, the 12 specific pricing-adjustment instructions that Holt gave to Sandra Chu based on information obtained from competitor communications, and the correlation analysis between Holt's VaultChat communications and subsequent TMC pricing decisions. This information constitutes the core of TMC's potential cooperation proffer. Sharing this information with Ridgecrest's counsel — even in summary form — would compromise TMC's negotiating position with the DOJ and could enable Ridgecrest to prepare a defense strategy that anticipates and counters TMC's cooperation testimony.
• Witness Interview Insights. TMC's witness interviews (including those of Chu and Eriksen) have produced significant insights into the mechanics of the alleged conspiracy within TMC. Sharing these insights with Ridgecrest's counsel would provide Ridgecrest with a roadmap of TMC's internal knowledge and could be used to prepare Edgerton's defense or to develop cross-examination strategies for TMC witnesses.
• Document Production Strategy. TMC's approach to document review, privilege assertions, and production priorities reflects strategic decisions about the presentation of TMC's cooperation. Sharing these decisions with Ridgecrest's counsel could enable Ridgecrest to anticipate the DOJ's evidentiary base and tailor its defense accordingly.
• Blame-Shifting Risk. Perhaps most critically, there is a significant risk that Ms. Marchetti and DKA may use JDA-shared information to prepare Edgerton's defense in a manner that shifts culpability to Holt and TMC. In cartel prosecutions, it is common for co-defendants to adopt blame-shifting strategies, arguing that the other party was the instigator or organizer of the conspiracy. A JDA would provide Ridgecrest with the information necessary to construct such a defense while TMC would receive comparatively less benefit from the arrangement.
D. Conclusion Regarding Ridgecrest
For the foregoing reasons, Calderwood & Harkness recommends against entering into a JDA with Ridgecrest Minerals Inc. The divergence of strategic interests, the risk to TMC's cooperation credit, and the significant information-flow concerns make a JDA with Ridgecrest contrary to TMC's interests at this stage of the investigation.
V. Analysis of JDA with Pinnacle Earth Resources Ltd.
A. Divergent Strategic Interests
The analysis regarding Pinnacle shares many of the same foundational concerns identified with respect to Ridgecrest, with several additional complications:
Kevin Tsang's Posture and Departure. Pinnacle's former Senior Vice President of Commercial Operations, Kevin Tsang, is identified as a key individual in the DOJ's investigation. Tsang is believed to have communicated directly with Gavin Holt regarding pricing and market allocation for rare-earth concentrates and specialty industrial minerals. Tsang's departure from Pinnacle creates uncertainty about Pinnacle's ability to control or influence Tsang's legal posture. If Tsang has retained separate counsel (as is likely), he may pursue a cooperation strategy of his own, potentially providing testimony that implicates both TMC and Pinnacle. Alternatively, Tsang may adopt an adversarial posture. In either scenario, the relationship between Pinnacle and Tsang introduces a variable that a JDA cannot adequately address.
Superficial Cross-Border Alignment. Both TMC and Pinnacle are Canadian corporations with significant U.S. operations. This shared cross-border posture might appear to create a basis for alignment — both companies face potential implications under Canadian competition law, both must navigate the complexities of cross-border document productions, and both may have interests in coordinating responses to any parallel Canadian Competition Bureau inquiry. However, this alignment is superficial rather than substantive. The core legal interests at stake in the DOJ grand jury investigation — exposure to criminal fines, potential individual prosecutions, and cooperation-credit calculations — are company-specific and do not benefit from cross-border coordination between co-targets. To the extent that TMC and Pinnacle share an interest in managing cross-border procedural issues, those issues can be addressed through independent counsel-to-counsel communications without a formal JDA.
Unknown Cooperation Strategy. Pinnacle's cooperation strategy is entirely unknown to Calderwood & Harkness. Mr. Nakamura's informal inquiries did not reveal Pinnacle's strategic posture, and it would be imprudent to assume that Pinnacle's interests are aligned with TMC's simply because both companies have received inquiries from the DOJ. If Pinnacle is pursuing leniency or a separate cooperation agreement, sharing information with Pinnacle's counsel would create the same asymmetric risks identified with respect to Ridgecrest. If Pinnacle is pursuing a litigation-oriented strategy, a JDA would yoke TMC to a defense posture that is inconsistent with TMC's cooperation approach.
Nature of Nakamura's Inquiry. Mr. Nakamura's inquiry was informal and exploratory. He did not propose specific terms, identify specific areas of potential coordination, or indicate the scope of information sharing that Pinnacle would seek. This lack of specificity makes it difficult to assess the potential benefits of an arrangement with Pinnacle and suggests that Pinnacle may be in an early stage of formulating its own defense strategy. Engaging in a JDA with a party that has not yet defined its strategic objectives would be premature and potentially counterproductive.
B. Risk to TMC's Cooperation Credit
The same concerns regarding cooperation credit that apply to a JDA with Ridgecrest apply with equal force to a JDA with Pinnacle. The DOJ's assessment of TMC's cooperation will focus on the independence, completeness, and genuineness of TMC's efforts. Participation in a JDA with any co-target — regardless of which co-target — may be perceived as inconsistent with full and genuine cooperation.
TMC's cooperation proffer is currently being prepared for submission to the DOJ. The proffer must demonstrate that TMC's cooperation is independent and not coordinated with other subjects. A JDA with Pinnacle, even if entered into after the proffer is submitted, could retroactively undermine the DOJ's confidence in the independence of TMC's cooperation. The DOJ is likely to inquire, either directly or through informal channels, about the existence of any JDA or information-sharing arrangement among the co-targets. Any affirmative response would trigger additional scrutiny of TMC's cooperation materials.
C. Holt-Tsang Communication Issues
TMC's internal investigation has identified VaultChat communications between Holt and Tsang among the 37 documented competitor exchanges. These communications relate to pricing for rare-earth concentrate contracts and the allocation of certain specialty-mineral customers in the Pacific Northwest and Mountain West regions. TMC's analysis of the Holt-Tsang communications is a component of the cooperation proffer being prepared for the DOJ.
Sharing TMC's analysis of the Holt-Tsang communications with Pinnacle's counsel would directly compromise TMC's negotiating position. The analysis includes TMC's assessment of the content, frequency, and timing of the communications; the correlation between the communications and subsequent pricing decisions; and TMC's identification of specific contracts and customers affected by the alleged coordination. This information, if shared with Pinnacle's counsel, would provide Pinnacle with a detailed understanding of the evidence that TMC can offer the DOJ regarding Pinnacle's involvement in the alleged conspiracy.
Furthermore, if TMC ultimately provides proffer testimony or documentary evidence regarding Holt's communications with Tsang, TMC's interests are adverse to Pinnacle's with respect to Tsang's conduct. TMC's cooperation testimony would necessarily implicate Tsang (and, by extension, Pinnacle), making it untenable for TMC to be in a simultaneous information-sharing arrangement with Pinnacle.
D. Conclusion Regarding Pinnacle
For the foregoing reasons, Calderwood & Harkness recommends against entering into a JDA with Pinnacle Earth Resources Ltd. The same categories of risk identified with respect to Ridgecrest — divergent strategic interests, risk to cooperation credit, and information-flow concerns — apply with equal or greater force to Pinnacle, compounded by the uncertainty about Pinnacle's cooperation strategy and the specific sensitivities of the Holt-Tsang communication nexus.
VI. Analysis of JDA Including Gavin Holt / Briarcliff Law Group PLLC
Any analysis of a JDA structure necessarily raises the question of whether Gavin Holt, through his personal counsel Patrick Dunleavy of Briarcliff Law Group PLLC, would be included in the arrangement. In many cartel investigations, joint defense agreements encompass both the corporate targets and the individual employees or former employees who are subjects or targets of the investigation. However, the inclusion of Holt in any JDA involving TMC would be particularly problematic for the following reasons:
Adverse Interests. Holt's interests are increasingly adverse to TMC's. TMC's cooperation strategy involves, at its core, the provision of information about the conduct of its employees — principally Holt — to the DOJ. The recommended NPA strategy, as outlined in the Defense Strategy Memorandum dated June 1, 2022, contemplates a "Holt carve-out" — that is, a provision in the NPA preserving the DOJ's right to prosecute Holt individually while granting TMC immunity or nonprosecution status as a corporate entity. This carve-out is standard in Antitrust Division NPAs and is likely to be a condition of any resolution favorable to TMC. The existence of the Holt carve-out means that TMC's cooperation will necessarily involve providing evidence and testimony that could be used to prosecute Holt individually. Including Holt in a JDA while simultaneously preparing to cooperate against him would constitute a conflict of interest that is irreconcilable with TMC's obligations of good faith and candor in its cooperation with the DOJ.
Fifth Amendment Assertion and Non-Cooperation. Holt has asserted his Fifth Amendment privilege against self-incrimination before the grand jury and has refused to participate in TMC's internal investigation. These actions indicate that Holt's posture is fundamentally different from TMC's — Holt is asserting his constitutional rights and declining to cooperate, while TMC is pursuing a strategy of full cooperation. Including Holt in a JDA would create a forum in which Holt (through Dunleavy) could obtain information about TMC's internal investigation, cooperation proffer, and defense strategies without reciprocating in any meaningful way. The one-directional flow of information would be to TMC's detriment and Holt's benefit.
Sensitivity of Internal Investigation Findings. TMC's internal investigation has produced findings that are directly adverse to Holt's personal interests. These findings include the identification of the 37 VaultChat exchanges with Edgerton and Tsang, the 12 specific pricing-adjustment instructions that Holt gave to Sandra Chu based on information obtained through competitor communications, and evidence suggesting that Holt's conduct was not authorized or directed by TMC senior management. Sharing these findings with Holt's counsel would provide Holt with a detailed preview of the evidence that TMC can offer the DOJ and would enable Holt to prepare defenses — including potential arguments that his conduct was authorized by TMC management or directed by TMC's institutional culture — that are directly contrary to TMC's interests.
Risk of Collateral Damage to TMC's NPA Negotiations. If Holt were included in a JDA and subsequently used JDA-obtained information to mount a defense that implicates TMC management (e.g., arguing that Holt's pricing communications were known to or authorized by TMC executives), the resulting evidentiary conflicts could undermine TMC's NPA negotiations. The DOJ would be skeptical of TMC's cooperation if Holt's defense strategy appeared to be based on information that could only have been obtained through a JDA with TMC.
For all of these reasons, Calderwood & Harkness strongly recommends against including Gavin Holt or Briarcliff Law Group PLLC in any JDA structure, regardless of whether a JDA is otherwise entered into with Ridgecrest or Pinnacle. Holt's interests are adverse to TMC's in material respects, and the inclusion of Holt in a JDA would create unacceptable risks to TMC's cooperation strategy and NPA negotiations.
VII. Alternative Approaches to Information Sharing
While Calderwood & Harkness recommends against a formal JDA, it is prudent to consider alternative approaches to monitoring the activities of co-subjects and maintaining professional relationships with opposing defense counsel that may serve TMC's interests without the risks associated with a JDA.
A. Informal Monitoring Without JDA
Calderwood & Harkness can maintain professional-courtesy communications with Helen Marchetti of DKA and George Nakamura of AW regarding matters that do not implicate TMC's privileged defense strategies or internal investigation findings. Specifically, the firm can engage in the following types of communications:
• Publicly Available Information. Exchanging observations about publicly available filings, court records, and DOJ communications that are accessible to all parties through public channels.
• Scheduling Coordination. Coordinating with co-subjects' counsel on scheduling matters related to DOJ proceedings, including grand jury appearance dates, document-production deadlines, and other procedural matters that benefit from defense-side coordination without implicating substantive strategy.
• Procedural Advocacy. Where appropriate, coordinating on purely procedural motions or requests that benefit all parties (e.g., requests for extensions of document-production deadlines), provided that such coordination does not extend to substantive legal arguments or strategic positions.
This approach preserves TMC's independence while maintaining professional relationships that could prove useful if circumstances change — for example, if TMC's cooperation effort is completed and TMC's interests realign with those of co-subjects in the context of potential civil litigation or regulatory proceedings.
B. Limited Information-Sharing Protocol (Not Recommended Currently)
A narrowly scoped common interest arrangement, limited to specific procedural issues such as subpoena compliance timelines, privilege-review protocols, and document-production logistics, is theoretically possible. Such an arrangement could be structured as a limited common interest agreement rather than a full JDA, with explicit limitations on the types of information that may be shared and express exclusions for substantive defense strategies, internal investigation findings, and cooperation-related matters.
However, Calderwood & Harkness does not recommend this approach at this time for several reasons:
• signaling Risk. Even a limited common interest arrangement would signal to the DOJ that TMC is engaged in coordination with co-targets, potentially triggering the same concerns about cooperation credit that apply to a full JDA.
• Scope Creep. Limited information-sharing arrangements have a tendency to expand over time as the defense teams develop working relationships and encounter shared challenges. A limited arrangement could serve as a "foot in the door" toward broader information sharing that would be harmful to TMC's interests.
• Marginal Benefit. The procedural benefits of a limited arrangement (e.g., coordinated production timelines) can be achieved through the informal monitoring approach described in Section VII.A without the risks of a formal agreement.
This option could be revisited at a later stage if TMC's cooperation effort concludes successfully and the parties' interests realign — for example, in the context of civil follow-on litigation where the co-subjects may share a genuine common interest in defending against private antitrust claims.
C. Monitoring Co-Subject Activities Through Public Filings and DOJ Communications
Calderwood & Harkness will continue to monitor Ridgecrest's and Pinnacle's activities through all available public channels, including:
• Court Records. Monitoring filings in the N.D. Cal. docket and any related proceedings for indications of plea agreements, cooperation agreements, immunity grants, or other dispositions involving Ridgecrest, Pinnacle, or their individual employees.
• SEC and Canadian Securities Filings. For TMC and Pinnacle (as publicly traded companies), monitoring periodic reports and material-event disclosures for references to the investigation, reserves for potential fines or settlements, and other relevant information.
• DOJ Public Communications. Monitoring Antitrust Division press releases, speeches by Division leadership, and public court filings for information about the investigation's progress and direction.
• Industry and Media Sources. Monitoring trade publications, news reports, and industry sources for information about the investigation's impact on the specialty-minerals sector and any developments involving the co-subjects.
This approach provides meaningful situational awareness without any privilege risk, information-sharing obligation, or adverse signaling to the DOJ. It is the approach that Calderwood & Harkness recommends for the duration of TMC's cooperation effort.
VIII. Risk Assessment Summary
The following table summarizes the principal risks associated with entering into a JDA with Ridgecrest, Pinnacle, or both, as assessed by Calderwood & Harkness:
IX. Recommendation
Based on the foregoing analysis, Calderwood & Harkness recommends that Torchlight Mining Corp. decline to enter into joint defense agreements with counsel for either Ridgecrest Minerals Inc. or Pinnacle Earth Resources Ltd. at this time. This recommendation extends to any joint defense or common interest arrangement, whether styled as a formal JDA, a limited information-sharing protocol, or any other structure that contemplates the sharing of privileged communications or attorney work product among co-subjects.
This recommendation is driven primarily by the following considerations:
1. TMC's cooperation posture with the DOJ Antitrust Division, including the June 8, 2022 cooperation letter and the ongoing cooperation proffer preparation, is fundamentally inconsistent with participation in a coordinated defense arrangement with co-targets.
2. The risk that JDA participation could compromise TMC's cooperation credit in NPA negotiations is substantial and, given the magnitude of the potential financial exposure (an estimated starting fine of approximately USD 95.6 million), the stakes are too high to accept this risk.
3. The strategic interests of TMC, Ridgecrest, and Pinnacle are divergent in material respects. The evidence of direct communications between their respective personnel — Holt-Edgerton and Holt-Tsang — means that TMC's cooperation will necessarily involve providing evidence that implicates the co-targets and their key individuals. A JDA cannot reconcile this fundamental conflict of interest.
4. The information-flow risks associated with sharing TMC's internal investigation findings with co-targets' counsel are unacceptable, given the sensitivity of the evidence uncovered and the potential for that evidence to be used against TMC's interests.
5. The inclusion of Gavin Holt in any JDA structure is untenable, and a JDA that excludes Holt would be incomplete and potentially ineffective while still carrying the signaling and cooperation-credit risks described above.
Elaine Forsythe will communicate the declination to Helen Marchetti (DKA) and George Nakamura (AW) in a diplomatic manner that preserves professional relationships and does not reveal TMC's cooperation strategy, internal investigation findings, or the reasoning set forth in this memorandum. The declination should be framed in general terms — for example, citing the early stage of TMC's own review and the need to preserve flexibility as TMC evaluates its options — without disclosing TMC's cooperation posture or NPA strategy.
This recommendation should be revisited if TMC's strategic posture changes materially. Circumstances that could warrant reconsideration include, but are not limited to: (a) a decision by TMC not to pursue cooperation with the DOJ; (b) the conclusion of TMC's cooperation effort, at which point TMC's interests may realign with those of co-subjects in the context of civil follow-on litigation; (c) a substantial weakening of the DOJ's case that reduces the strategic value of cooperation; or (d) a change in the cooperation posture of Ridgecrest or Pinnacle that creates a genuine alignment of interests.
X. Next Steps
The following action items should be taken in connection with this memorandum:
1. Response to Davenport, Kline & Archer LLP. Elaine Forsythe will respond to Helen Marchetti of DKA, declining the JDA proposal in general terms. The response should cite the early stage of TMC's own review and the need to preserve flexibility as TMC evaluates its options, without disclosing TMC's cooperation strategy, NPA pursuit, or internal investigation findings. The response should be cordial and should leave open the possibility of future coordination on narrow procedural matters, if appropriate.
2. Response to Ashford Whitmore LLP. Elaine Forsythe will respond similarly to George Nakamura of AW, declining the informal inquiry regarding coordination. The same general framing should be used, and the same precautions regarding disclosure should apply.
3. Ongoing Monitoring. Calderwood & Harkness will continue monitoring co-subject activities through public filings, court records, DOJ communications, and professional channels, as described in Section VII.C above. Any material developments regarding the cooperation posture, legal status, or strategic direction of Ridgecrest, Pinnacle, or Gavin Holt will be reported to Elaine Forsythe and the TMC engagement team promptly.
4. Periodic Reassessment. This analysis will be revisited if material changes occur in the investigation posture, TMC's strategic direction, or the cooperation positions of the co-subjects. A formal reassessment should be conducted at each significant milestone in the investigation, including the completion of TMC's cooperation proffer, the commencement of NPA negotiations, and the disposition of any co-subject's case.
5. File Maintenance. This memorandum is to be maintained in Calderwood & Harkness's privileged work-product file for Matter No. 1039-00001. Access to this memorandum is restricted to authorized personnel as set forth in the distribution list below. The memorandum should not be uploaded to any shared document platform, external file-sharing service, or system accessible to TMC personnel without prior authorization from Elaine Forsythe.
DISTRIBUTION: This memorandum is distributed solely to the following individuals at Calderwood & Harkness LLP: Elaine Forsythe (Responsible Partner), Howard Bellamy (Senior Counsel), and Aaron Liu (Associate). This memorandum is not to be shared with TMC personnel other than Priya Anand (General Counsel) and Søren Dalmqvist (Chief Executive Officer) upon the express approval of Elaine Forsythe, and only under the protection of the attorney-client privilege. This memorandum must not be distributed externally under any circumstances.
PRIVILEGED AND CONFIDENTIAL — ATTORNEY WORK PRODUCT. This memorandum was prepared by counsel in anticipation of litigation and in connection with the provision of legal advice. It reflects the mental impressions, conclusions, opinions, and legal theories of attorneys at Calderwood & Harkness LLP. Do not copy, forward, or distribute without authorization.
Risk Category | Assessment | Analysis
Cooperation Credit Risk | High | The DOJ Antitrust Division may perceive JDA participation as inconsistent with genuine, independent cooperation, potentially reducing or eliminating the cooperation credit that TMC must maximize to achieve an acceptable NPA resolution. TMC's preliminary estimated starting fine under the Sentencing Guidelines, based on its approximately USD 478 million share of affected commerce, is approximately USD 95.6 million before cooperation credit adjustments. Maximizing cooperation credit is essential to reducing this figure to an acceptable NPA monetary payment, which our preliminary modeling estimates at USD 25–40 million with full cooperation credit. A reduction in cooperation credit could increase TMC's monetary exposure by tens of millions of dollars.
Information Leakage Risk | High | TMC's internal investigation has produced highly sensitive findings — including the 37 Holt-competitor VaultChat exchanges, the VaultChat content analysis, pricing-data correlations between competitor communications and TMC pricing decisions, and Sandra Chu's testimony regarding the 12 pricing-adjustment instructions she received from Holt — that constitute the core of TMC's cooperation proffer. Disclosure of this information to co-targets' counsel through a JDA could be catastrophic to TMC's negotiating position and could enable co-targets to develop blame-shifting strategies targeting TMC.
Strategic Misalignment Risk | High | TMC's cooperation-oriented NPA strategy is fundamentally different from a litigation-oriented joint defense posture. A JDA is inherently structured to facilitate coordinated defense, which presupposes a shared adversarial posture vis-à-vis the government. TMC's cooperation posture is collaborative, not adversarial, and yokes TMC to a defense framework that is inconsistent with its chosen strategy.
Privilege Risk | Moderate-to-High | If a JDA participant cooperates with the DOJ — whether TMC itself or another party — JDA-shared communications may be vulnerable to disclosure. Ninth Circuit law provides incomplete protections for JDA-shared communications when a participant subsequently cooperates, and the practical limitations of contractual non-disclosure provisions (discussed in Section III.C above) are significant. The risk is particularly acute here because TMC is already cooperating, meaning that the common interest underlying the JDA could be challenged from inception.
Reputational Risk with DOJ | Moderate | The DOJ Antitrust Division's San Francisco Field Office and the cr

CALDERWOOD & HARKNESS LLP

INTERNAL MEMORANDUM

MATTER NO.: 1039-00001

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