NON-PROSECUTION AGREEMENT
DOJ Reference No.: ATR-SF-2024-00312
Grand Jury No.: GJ-22-0194 (United States District Court, Northern District of California, San Francisco Division)
Execution Date: May 6, 2024
Between
THE UNITED STATES DEPARTMENT OF JUSTICE, ANTITRUST DIVISION ("the United States" or "the Department")
and
TORCHLIGHT MINING CORP. ("TMC" or "the Company")
Represented by Calderwood & Harkness LLP 555 California Street, 40th Floor San Francisco, California 94104
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I. PREAMBLE
1. This Non-Prosecution Agreement ("Agreement") is entered into between the United States of America, acting through the Department of Justice, Antitrust Division, by and through Deputy Assistant Attorney General Julia Stafford-Hayes, and Trial Attorneys Denise Kowalski and Marcus Reeves of the Antitrust Division, San Francisco Field Office, 450 Golden Gate Avenue, Room 10-0101, San Francisco, California 94102 (collectively, "the Department" or "the United States"), and Torchlight Mining Corp. ("TMC" or "the Company"), a corporation organized and existing under the Canada Business Corporations Act (CBCA Corporation No. 7841526-1), with its registered office located at 200 Bay Street, Suite 3400, Toronto, Ontario M5J 2J2, Canada, and its principal United States operations conducted through its wholly owned subsidiary, Torchlight Mining (U.S.) Inc., a Nevada corporation (Nevada Entity No. NV20160438721), with offices at 8750 West Sahara Avenue, Suite 210, Reno, Nevada 89117, acting through its Chief Executive Officer, Søren Dalmqvist, and represented in this matter by counsel, Elaine Forsythe and Howard Bellamy of Calderwood & Harkness LLP, 555 California Street, 40th Floor, San Francisco, California 94104.
2. TMC is a publicly traded corporation whose common shares are listed and traded on the Toronto Stock Exchange (ticker symbol: TRCL) and the New York Stock Exchange (ticker symbol: TMC). For fiscal year 2021, TMC reported consolidated revenue of approximately CAD 4.27 billion (approximately USD 3.38 billion at applicable exchange rates).
3. This Agreement relates to a grand jury investigation opened on February 10, 2022, in the United States District Court for the Northern District of California, San Francisco Division, designated Grand Jury No. GJ-22-0194 (the "Investigation"), into suspected violations of Section 1 of the Sherman Antitrust Act, 15 U.S.C. § 1. The Investigation concerns suspected price-fixing, market allocation, and bid-rigging in the North American specialty-minerals sector, principally involving the sale of high-purity feldspar, industrial talc, and rare-earth concentrates to United States industrial and chemical-manufacturing customers.
4. The Department and TMC (collectively, the "Parties") enter into this Agreement voluntarily and in good faith, for the purpose of resolving the Department's Investigation as it relates to TMC, on the terms and conditions set forth herein. TMC enters into this Agreement after having been advised by its counsel, Calderwood & Harkness LLP, and with full knowledge and understanding of its rights and obligations hereunder.
II. RELEVANT CONDUCT
5. The conduct that is the subject of this Agreement is described in detail in the Agreed Statement of Facts set forth in Appendix B to this Agreement (the "Agreed Statement of Facts"), which is incorporated herein by reference in its entirety and constitutes an integral part of this Agreement.
6. In summary, and as more fully set forth in Appendix B, from approximately January 2017 through approximately August 2021 (the "Relevant Period"), senior commercial personnel at TMC, Ridgecrest Minerals Inc. ("Ridgecrest"), a Delaware corporation headquartered at 1700 Lincoln Street, Suite 4200, Denver, Colorado 80203, and Pinnacle Earth Resources Ltd. ("Pinnacle"), an Ontario corporation headquartered at 85 Elm Street West, Suite 600, Sudbury, Ontario P3C 1T3, Canada, engaged in an unlawful agreement to fix prices, allocate customers, and rig bids for the sale of high-purity feldspar, industrial talc, and rare-earth concentrates to United States industrial and chemical-manufacturing customers, in violation of Section 1 of the Sherman Act, 15 U.S.C. § 1.
7. The key individuals who participated in the unlawful conduct on behalf of their respective companies were as follows:
(a) Gavin Holt, TMC's former Vice President, U.S. Specialty Minerals Sales, who held that position from approximately 2016 through his departure from TMC effective September 30, 2021;
(b) Carl Edgerton, Vice President of Sales at Ridgecrest Minerals Inc.; and
(c) Kevin Tsang, former Senior Vice President, Commercial Operations, at Pinnacle Earth Resources Ltd.
8. The participants coordinated their anticompetitive conduct through multiple channels, including:
(a) In-person meetings held on the margins of quarterly conferences organized by the North American Specialty Minerals Council ("NASMC"), which took place at various locations including Arlington, Virginia; Scottsdale, Arizona; and Orlando, Florida;
(b) Encrypted messaging via the "VaultChat" application, a commercially available encrypted communications platform, through which participants exchanged competitively sensitive pricing information and coordinated pricing actions and customer allocations; and
(c) Occasional telephone calls between participants to discuss and further the objectives of the unlawful agreement.
9. The Department estimates that the total volume of affected commerce — that is, the aggregate United States sales of high-purity feldspar, industrial talc, and rare-earth concentrates by TMC, Ridgecrest, and Pinnacle during the Relevant Period — was approximately USD 1.34 billion. TMC's share of affected commerce during the Relevant Period is estimated at approximately USD 478 million, representing approximately 35.7% of total affected commerce.
10. The Department's Investigation was informed, in part, by the cooperation of Cascade Chemical Supply Co. ("Cascade"), a Washington state corporation headquartered at 901 West Riverside Avenue, Suite 300, Spokane, Washington 99201, which entered into a cooperation agreement with the Department in approximately September 2021. Cascade provided documents and testimony to the Department that provided significant evidentiary support for the Investigation into the conduct described herein.
III. TMC'S COOPERATION AND REMEDIATION
A. Cooperation.
11. Upon being notified of the Investigation, TMC engaged Calderwood & Harkness LLP on February 18, 2022, for the purpose of conducting a thorough internal investigation and facilitating TMC's full cooperation with the Department.
12. TMC issued a company-wide litigation hold on March 1, 2022, directing all relevant personnel to preserve documents and electronically stored information potentially relevant to the Investigation. TMC subsequently issued supplemental targeted preservation directives to personnel within the U.S. Specialty Minerals Division to ensure comprehensive preservation of all potentially relevant materials.
13. TMC retained Redstone Digital Forensics Inc., a forensic technology firm based in McLean, Virginia, to conduct forensic data collection, processing, and hosting of electronically stored information generated by TMC employees in connection with the conduct under investigation.
14. In response to Grand Jury Subpoena No. GJ-22-0194-SD-003, served on February 14, 2022, and Grand Jury Subpoena No. GJ-22-0194-SD-007, issued on May 15, 2023, TMC produced to the Department approximately 555,000 documents comprising approximately 3.2 million pages. These productions were made on a rolling basis, with the first production commencing on April 4, 2022, and continuing through the completion of the collection and review process. TMC made substantial efforts to expedite the review and production of the highest-priority custodial and non-custodial document collections.
15. TMC's internal investigation encompassed interviews of twenty-three (23) current and former employees, including employees at various levels within the U.S. Specialty Minerals Division and related corporate functions. The internal investigation also included a comprehensive review of TMC's pricing data from calendar years 2015 through 2022, to identify patterns and anomalies in TMC's pricing decisions for high-purity feldspar, industrial talc, and rare-earth concentrates during and around the Relevant Period.
16. TMC made its current employees Sandra Chu, Director of Pricing Analytics, and Thomas Eriksen, Regional Sales Manager for the Western Region, available for voluntary proffer sessions with the Department. Ms. Chu participated in a proffer session on March 10, 2023, and Mr. Eriksen participated in a proffer session on April 22, 2023. Both employees provided candid and complete information to the Department during their respective sessions.
17. TMC submitted a comprehensive cooperation proffer to the Department on February 15, 2023, which set forth in detail the findings of TMC's internal investigation, including the nature and scope of the conduct identified, the individuals involved, the methods of coordination, and the affected products and customers. TMC thereafter provided supplemental cooperation submissions to the Department as additional information was identified during the course of the internal investigation.
18. TMC further engaged Hargrove Forensic Advisory LLC, a forensic economics and advisory firm based in Chicago, Illinois, under the direction of engagement partner Dr. Vanessa Tremblay, to conduct an independent economic analysis of pricing patterns and affected-commerce volumes for the products at issue during the Relevant Period. TMC made the results of that economic analysis available to the Department and cooperated with the Department in reconciling TMC's economic analysis with the Department's own calculations of affected commerce.
B. Remediation.
19. TMC has acknowledged to the Department that its existing antitrust compliance program, which had been adopted in approximately 2014, was deficient in several material respects at the time of the conduct at issue. Specifically, TMC acknowledged that it had not conducted annual antitrust compliance training for its commercial personnel since approximately 2018, that its compliance program did not include any monitoring of employee interactions at trade-association events or industry conferences, and that it had no audit mechanisms to detect or deter unauthorized contacts with competitors.
20. In August 2023, TMC retained Meridian Compliance Partners LLC, a compliance consulting firm based in Washington, D.C. (engagement lead Claudia Ferraro), to design and implement an Enhanced Antitrust Compliance Program (the "Compliance Program") tailored to address the specific deficiencies identified during the Investigation and to reflect current best practices in antitrust compliance.
21. TMC submitted a detailed proposal for the Compliance Program to the Department on September 15, 2023. The Department reviewed the proposal and provided feedback, which TMC incorporated into the final design of the Compliance Program.
22. TMC has committed to implementing and maintaining the Compliance Program as described in Appendix A to this Agreement, and to doing so in accordance with the timelines and requirements set forth therein. The Compliance Program is an integral component of this Agreement, and TMC's failure to implement or maintain the Compliance Program in accordance with Appendix A may constitute a material breach of this Agreement.
IV. TERMS AND CONDITIONS
A. Agreement Not to Prosecute
23. Subject to TMC's full and complete compliance with all obligations set forth in this Agreement, the Department agrees that it will not bring any criminal charges against TMC, or against any current employee of TMC, for the conduct described in this Agreement and in Appendix B. This agreement not to prosecute applies to criminal charges under Section 1 of the Sherman Act, 15 U.S.C. § 1, or any other federal criminal statute, that could be based on the conduct described herein.
24. Notwithstanding the foregoing, the agreement not to prosecute set forth in paragraph 23 above does not extend to Gavin Holt, individually, as more fully set forth in Section IV.F below.
25. This Agreement is binding only upon the Antitrust Division of the United States Department of Justice and does not bind any other component of the Department of Justice, any other federal department or agency, any state or local prosecuting authority, or any foreign government or prosecuting authority. The Department will, however, bring the cooperation of TMC and the existence of this Agreement to the attention of any such authority upon request by TMC.
26. This Agreement does not constitute a deferred prosecution agreement within the meaning of the Department of Justice's policies and practices. No criminal information, indictment, or other criminal charging document has been or will be filed against TMC in connection with this Agreement. No court approval of this Agreement is required.
B. Monetary Payment
27. TMC shall pay a monetary amount of USD 48,500,000 (Forty-Eight Million Five Hundred Thousand United States Dollars) to the United States Treasury (the "Monetary Payment") as a condition of this Agreement.
28. The Monetary Payment was calculated by applying the Department's standard methodology for NPA payments in antitrust matters. The starting point for the calculation was twenty percent (20%) of TMC's estimated affected commerce of USD 478,000,000, yielding a base amount of USD 95,600,000. The Department then applied a reduction of approximately forty-nine point two percent (49.2%) from the base amount in recognition of TMC's timely, thorough, and proactive cooperation with the Department's Investigation and TMC's significant remediation efforts, including the implementation of the Enhanced Antitrust Compliance Program described in Appendix A. The resulting Monetary Payment is USD 48,500,000.
29. Payment shall be made by electronic funds transfer (wire transfer) within sixty (60) calendar days following the date of execution of this Agreement — that is, no later than July 5, 2024. Wire transfer instructions, including the appropriate Treasury account number and routing information, shall be provided by the Antitrust Division, San Francisco Field Office, 450 Golden Gate Avenue, Room 10-0101, San Francisco, California 94102, upon request by TMC or its counsel.
30. Failure by TMC to make the Monetary Payment in full by the deadline specified in paragraph 29 above shall constitute a material breach of this Agreement. In the event of late payment, simple interest shall accrue on the unpaid balance at the rate established by 28 U.S.C. § 1961, calculated from the date on which payment was due until the date on which payment is received by the United States Treasury.
31. The Monetary Payment is not deductible by TMC for United States federal income tax purposes, in accordance with 26 U.S.C. § 162(f), and TMC acknowledges that it will not claim any such deduction.
C. Cooperation Obligations
32. TMC shall continue to cooperate fully and truthfully with the Department in any investigation or prosecution related to the conduct described in this Agreement and in Appendix B for a period of three (3) years from the date of execution of this Agreement (the "Cooperation Period"), extending through and including May 6, 2027.
33. TMC's cooperation obligations during the Cooperation Period include, but are not limited to, the following:
(a) Making current employees of TMC and its subsidiaries reasonably available for interviews, proffer sessions, grand jury testimony, and trial testimony, upon reasonable notice by the Department, at times and locations mutually agreed upon by the Parties or, in the absence of agreement, as directed by the Department;
(b) Producing documents, records, and other tangible evidence as requested by the Department, including documents generated after the date of this Agreement that are relevant to the subject matter of the Investigation or any related investigation or prosecution, in accordance with applicable legal process or upon voluntary request;
(c) Using best efforts to make former employees of TMC and its subsidiaries available for interviews, proffer sessions, and testimony, including by facilitating contact between the Department and such former employees and, where appropriate, by encouraging such individuals to cooperate voluntarily;
(d) Providing truthful, complete, and accurate information to the Department in connection with any request made pursuant to this Agreement, whether such information is provided orally or in writing, and whether in the form of factual proffers, declarations, affidavits, or testimony;
(e) Not engaging in any conduct that obstructs, impedes, or otherwise interferes with the Department's Investigation or any related investigation or prosecution, and not encouraging, counseling, or assisting any person to engage in such conduct; and
(f) Promptly disclosing to the Department any information that comes to TMC's attention after the date of this Agreement that is relevant to the conduct described herein or to any related investigation or prosecution, including but not limited to information regarding previously unknown participants, previously unknown conduct, or new evidence bearing on the scope of the anticompetitive agreement described in Appendix B.
34. TMC's cooperation obligations apply to investigations or prosecutions of individuals or entities other than TMC, including but not limited to any investigation or prosecution of Gavin Holt, Ridgecrest Minerals Inc., Pinnacle Earth Resources Ltd., and the current or former employees, officers, directors, and agents of such entities.
35. TMC shall designate Priya Anand, General Counsel of Torchlight Mining Corp., as the primary point of contact for all cooperation requests from the Department under this Agreement. Calderwood & Harkness LLP shall serve as counsel for TMC in connection with all cooperation-related matters during the Cooperation Period. Any changes in the designated point of contact or cooperation counsel shall be communicated to the Department in writing promptly.
D. Enhanced Antitrust Compliance Program
36. TMC shall implement and maintain the Enhanced Antitrust Compliance Program described in Appendix A to this Agreement (the "Compliance Program") throughout the Term of this Agreement and thereafter, as a continuing corporate obligation. The Compliance Program is designed to prevent, detect, and remediate antitrust violations, including price-fixing, market allocation, bid-rigging, and unlawful exchanges of competitively sensitive information.
37. The key elements of the Compliance Program include, without limitation, the following:
(a) Mandatory Annual Antitrust Compliance Training. TMC shall provide mandatory annual antitrust compliance training for all employees involved in pricing, sales, marketing, business development, and procurement functions, as well as for all members of senior management. Training shall be conducted in person or via live virtual sessions for senior commercial personnel, and may be provided through e-learning modules for other covered personnel, in accordance with the specifications set forth in Appendix A.
(b) Independent Chief Compliance Officer. TMC shall appoint an independent Chief Compliance Officer ("CCO") who shall have a direct reporting line to the Audit Committee of the TMC Board of Directors. The CCO shall be independent and shall not hold dual responsibilities that could create conflicts of interest, such as simultaneously serving as General Counsel or in a revenue-generating role.
(c) Annual Compliance Certifications. TMC's Chief Executive Officer (currently Søren Dalmqvist) and General Counsel (currently Priya Anand) shall each execute annual compliance certifications attesting to TMC's adherence to and implementation of the Compliance Program. The form and content of such certifications shall be consistent with the template specified in Appendix A.
(d) Competitor-Contact and Trade-Association Policies. TMC shall maintain written policies governing all contacts with competitors, including pre-approval requirements and mandatory post-event reporting obligations for all interactions with competitors at trade-association events, industry conferences, and other gatherings, including without limitation all NASMC conferences.
(e) Confidential Reporting Hotline. TMC shall maintain a confidential reporting hotline or other mechanism through which employees may report suspected antitrust violations anonymously and without fear of retaliation.
(f) Periodic Internal Audits. TMC shall conduct internal audits of compliance with its antitrust policies no less frequently than annually, with audit findings reported to the CCO and the Audit Committee of the Board of Directors.
(g) Disciplinary Procedures. TMC shall maintain clear disciplinary procedures for violations of its antitrust compliance policies, up to and including termination of employment and referral to law enforcement authorities.
38. TMC shall provide the Department with copies of all annual compliance certifications executed pursuant to paragraph 37(c) above within thirty (30) calendar days of their execution.
E. Independent Compliance Monitor
39. TMC shall retain an independent compliance monitor (the "Monitor") for a period of two (2) years from the date of execution of this Agreement, that is, through and including May 6, 2026 (the "Monitor Term").
40. The Department has approved the retention of Meridian Compliance Partners LLC, 1100 Connecticut Avenue NW, Suite 730, Washington, D.C. 20036 (engagement lead Claudia Ferraro), as the Monitor for purposes of this Agreement. Meridian Compliance Partners LLC was selected through a process in which TMC proposed the candidate and the Department reviewed and approved the selection, taking into account the firm's qualifications, independence, and experience in antitrust compliance monitoring.
41. The Monitor shall perform the following functions during the Monitor Term:
(a) Review and evaluate TMC's implementation of the Compliance Program described in Appendix A to this Agreement, including the adequacy of the program's design and the effectiveness of its operation;
(b) Conduct at least two (2) comprehensive compliance reviews during the Monitor Term — the first at approximately twelve (12) months following the date of execution of this Agreement (i.e., on or about May 2025) and the second at approximately twenty-two (22) months following the date of execution of this Agreement (i.e., on or about March 2026);
(c) Prepare written reports of each comprehensive compliance review, setting forth the Monitor's findings, conclusions, and recommendations, and provide copies of such reports to both TMC and the Department within thirty (30) calendar days of the completion of each review;
(d) Have reasonable access to TMC's personnel, documents, records, facilities, and systems as necessary to carry out the monitoring function described herein, subject to reasonable accommodations for TMC's business operations and applicable privilege protections;
(e) Report promptly to the Department any material failure by TMC to implement or comply with the Compliance Program, or any other conduct that, in the Monitor's judgment, may constitute a violation of this Agreement; and
(f) Respond to reasonable inquiries from the Department regarding the status of TMC's compliance efforts and the Monitor's observations during the Monitor Term.
42. TMC shall bear all reasonable fees and expenses of the Monitor incurred in connection with the performance of the monitoring function described in this Section IV.E. TMC shall not unreasonably withhold or delay payment of the Monitor's invoices.
43. The Monitor shall be independent of TMC and shall not serve as legal counsel, business advisor, or consultant to TMC on any matter other than the monitoring function described in this Agreement. The Monitor shall not have any financial interest in TMC, other than the fees and expenses payable for the monitoring engagement.
44. The Monitor's reports prepared pursuant to paragraph 41(c) above shall not be subject to any claim of attorney-client privilege, work-product protection, or other privilege as between TMC and the Department. TMC expressly waives any such privilege with respect to the Monitor's reports to the extent necessary to effectuate this provision. The Monitor's reports may, however, be treated as confidential by the Department to the extent consistent with applicable law and the Department's policies.
F. Gavin Holt Carve-Out
45. This Agreement does not cover, protect, or confer any benefit whatsoever upon Gavin Holt, individually. Mr. Holt is not a party to this Agreement and is not a beneficiary of the Department's agreement not to prosecute set forth in Section IV.A above.
46. The Department reserves all rights to investigate, indict, and prosecute Gavin Holt for any conduct whatsoever, including without limitation the conduct described in this Agreement and in Appendix B. Nothing in this Agreement shall be construed to limit, constrain, or condition the Department's exercise of prosecutorial discretion with respect to Mr. Holt.
47. TMC's obligation to cooperate with the Department under Section IV.C of this Agreement expressly includes cooperation in any investigation or prosecution of Gavin Holt, whether arising from the conduct described in this Agreement or otherwise. TMC shall make its current employees, documents, records, and other resources available to the Department in connection with any such investigation or prosecution, in accordance with the cooperation obligations set forth in Section IV.C.
48. Nothing in this Agreement shall be construed to create any rights, benefits, or entitlements for Gavin Holt, or any obligation on the part of the Department to refrain from the investigation or prosecution of Gavin Holt, or to afford Gavin Holt any notice or opportunity to be heard in connection with any determination made by the Department under this Agreement.
49. TMC represents that Gavin Holt's employment with TMC terminated effective September 30, 2021, approximately four months before the commencement of the grand jury investigation on February 10, 2022. TMC further represents that Mr. Holt is separately represented by counsel in connection with the Department's Investigation, specifically by Patrick Dunleavy of Briarcliff Law Group PLLC, 50 California Street, Suite 2800, San Francisco, California 94111.
G. Term.
50. This Agreement shall be in effect for a period of three (3) years commencing on the date of execution hereof, that is, from May 6, 2024, through and including May 6, 2027 (the "Term").
51. Upon the successful completion of the Term by TMC, including the full satisfaction of all obligations set forth in this Agreement — including, without limitation, payment of the Monetary Payment, fulfillment of all cooperation obligations, implementation and maintenance of the Compliance Program, and completion of the Monitor Term without material deficiency — this Agreement shall expire, and the Department's agreement not to prosecute TMC set forth in Section IV.A shall thereupon become permanent and unconditional. Following such expiration, the Department shall have no further right to prosecute TMC for the conduct described in this Agreement and in Appendix B.
V. BREACH
A. Material Breach by TMC
52. If the Department determines, in its sole reasonable discretion, that TMC has committed a material breach of any obligation set forth in this Agreement, the Department may take the following actions:
(a) Prosecute TMC for any federal criminal violation of which the Department has knowledge, including but not limited to violations of Section 1 of the Sherman Act, 15 U.S.C. § 1, based on the conduct described in this Agreement and in Appendix B, as well as any other federal criminal offense arising from or related to such conduct;
(b) Use against TMC in any such prosecution any and all statements, documents, testimony, or other information provided by TMC or its employees pursuant to this Agreement, including the Agreed Statement of Facts set forth in Appendix B, and TMC hereby waives any objection to the admissibility of such statements, documents, testimony, or information in any such prosecution, including but not limited to objections based on Federal Rules of Evidence 410 and 801(d)(2), and any analogous rule, statute, or constitutional provision; and
(c) Pursue any other remedy available to it under applicable law.
53. Before making a final determination that a material breach has occurred, the Department shall provide TMC with written notice specifying the nature of the alleged breach and the factual basis therefor. TMC shall have a period of thirty (30) calendar days from the date of receipt of such written notice to respond to the Department's allegations and, where applicable, to cure the alleged breach. The Department shall consider TMC's response and any curative actions taken by TMC before making a final breach determination.
B. Determination of Breach
54. In determining whether a material breach has occurred, the Department shall consider the totality of the circumstances, including the nature, severity, and duration of the conduct at issue; the degree to which the breach was intentional, knowing, or the result of negligence; any remedial actions taken or proposed by TMC; the impact of the breach on the objectives of this Agreement; and any other factors the Department deems relevant.
55. Any disputes regarding whether a material breach has occurred shall be resolved by the Department in its reasonable discretion. The Department's determination shall be subject to judicial review only in the context of any subsequent criminal prosecution of TMC, and the standard of review shall be whether the Department's determination was reasonable under the circumstances.
VI. REPRESENTATIONS
A. TMC Representations
56. TMC represents and warrants that it has been advised by its counsel, Calderwood & Harkness LLP, regarding the terms, consequences, and implications of this Agreement, and that it enters into this Agreement voluntarily and knowingly, with a full understanding of its rights, obligations, and potential liabilities hereunder.
57. TMC represents and warrants that the information it has provided to the Department during the course of its cooperation, including in its cooperation proffer of February 15, 2023, in all subsequent cooperation submissions, and in the voluntary proffer sessions of its employees, has been truthful, complete, and accurate to the best of TMC's knowledge, information, and belief after diligent inquiry.
58. TMC represents and warrants that it has the full legal authority to enter into this Agreement. The execution of this Agreement by Søren Dalmqvist, in his capacity as Chief Executive Officer of TMC, has been duly authorized by a resolution of the Board of Directors of TMC adopted on April 25, 2024. This Agreement constitutes a valid and binding obligation of TMC, enforceable against TMC in accordance with its terms.
59. TMC represents and warrants that it has disclosed to the Department all material facts known to it regarding the conduct described in this Agreement and in Appendix B, including all facts regarding the identities of the individuals who participated in or had knowledge of the conduct, the methods of coordination, the products and customers affected, and the duration of the conduct.
60. TMC makes no admission of criminal liability by entering into this Agreement. The Department acknowledges that this Agreement does not constitute an adjudication of TMC's guilt or innocence on any criminal charge.
B. Department Representations
61. The Department represents and warrants that this Agreement has been duly authorized by the Antitrust Division of the United States Department of Justice, including by Deputy Assistant Attorney General Julia Stafford-Hayes, and that the undersigned representatives of the Department have the authority to execute this Agreement and to bind the Antitrust Division to its terms.
VII. PUBLIC DISCLOSURE
62. TMC may disclose the existence and terms of this Agreement in its public filings with the United States Securities and Exchange Commission and applicable Canadian securities regulators, including on Form 40-F or other applicable filing forms, and in filings on the SEDAR+ system, as required by applicable United States and Canadian securities laws and regulations. TMC may also disclose the existence and terms of this Agreement in press releases, investor communications, and other public disclosures as TMC's counsel determines to be required or appropriate under applicable disclosure obligations.
63. TMC shall provide the Department with advance written notice of any public disclosure of this Agreement, or any portion thereof, at least five (5) business days prior to such disclosure. Such notice shall include a copy of the proposed disclosure or, in the case of an SEC or SEDAR+ filing, the relevant portions of the proposed filing. The Department shall have the opportunity to review and comment on the proposed disclosure, but the Department's review and comment shall not unreasonably delay TMC's compliance with its legal disclosure obligations.
64. The Department may publicly disclose the existence and terms of this Agreement, including through press releases, public statements, and postings on the Department of Justice website, consistent with the Department's standard practices for the public announcement of resolutions in antitrust investigations.
VIII. INTEGRATION AND MODIFICATION
65. This Agreement, including Appendix A (Enhanced Antitrust Compliance Program) and Appendix B (Agreed Statement of Facts), which are attached hereto and incorporated herein by reference, constitutes the entire agreement between the Parties with respect to the subject matter hereof. There are no other agreements, understandings, promises, representations, or conditions, whether written or oral, between the Parties with respect to the matters addressed herein, except as expressly set forth in this Agreement.
66. No amendment, modification, supplement, or waiver of any provision of this Agreement shall be effective unless made in writing and signed by duly authorized representatives of both Parties. No oral agreement or understanding shall modify, supplement, or waive any provision of this Agreement.
67. This Agreement supersedes all prior negotiations, discussions, representations, and agreements, whether written or oral, between the Parties with respect to the matters addressed herein.
IX. GOVERNING LAW AND JURISDICTION
68. This Agreement shall be governed by and construed in accordance with the laws of the United States of America, including the Constitution, statutes, and federal common law of the United States.
69. Any dispute arising under or relating to this Agreement, including any dispute regarding the interpretation, enforcement, breach, or validity of this Agreement, shall be subject to the exclusive jurisdiction of the United States District Court for the Northern District of California, San Francisco Division. The Parties consent to the personal jurisdiction of such court and waive any objection to venue therein.
X. NOTICES
70. All notices, requests, demands, and other communications required or permitted under this Agreement shall be in writing and shall be deemed to have been duly given when delivered by hand, sent by overnight courier with confirmed delivery, or sent by certified mail, return receipt requested, postage prepaid, to the following addresses (or to such other address as a Party may designate by written notice to the other Party):
For the Department:
Denise Kowalski Trial Attorney Antitrust Division, San Francisco Field Office U.S. Department of Justice 450 Golden Gate Avenue, Room 10-0101 San Francisco, California 94102
With a copy to:
Julia Stafford-Hayes Deputy Assistant Attorney General Antitrust Division U.S. Department of Justice 950 Pennsylvania Avenue NW Washington, D.C. 20530
For TMC:
Priya Anand General Counsel Torchlight Mining Corp. 200 Bay Street, Suite 3400 Toronto, Ontario M5J 2J2 Canada
With a copy to:
Elaine Forsythe Partner Calderwood & Harkness LLP 555 California Street, 40th Floor San Francisco, California 94104
XI. COUNTERPARTS
71. This Agreement may be executed in one or more counterparts, including by facsimile or electronic transmission (including PDF), each of which shall be deemed an original, and all of which together shall constitute one and the same instrument. Signatures transmitted by facsimile or electronic means shall have the same force and effect as original signatures.
SIGNATURE PAGE
IN WITNESS WHEREOF, the Parties have executed this Non-Prosecution Agreement as of the date first set forth above.
FOR TORCHLIGHT MINING CORP.:
TORCHLIGHT MINING CORP.
By: ________
Name: Søren Dalmqvist
Title: Chief Executive Officer
Date: May 6, 2024
Address: 200 Bay Street, Suite 3400
Toronto, Ontario M5J 2J2, Canada
FOR THE UNITED STATES DEPARTMENT OF JUSTICE, ANTITRUST DIVISION:
________________________________________
Julia Stafford-Hayes Deputy Assistant Attorney General Antitrust Division U.S. Department of Justice
Date: May 6, 2024
________________________________________
Denise Kowalski Trial Attorney Antitrust Division, San Francisco Field Office U.S. Department of Justice
Date: May 6, 2024
________________________________________
Marcus Reeves Senior Trial Attorney Antitrust Division, San Francisco Field Office U.S. Department of Justice
Date: May 6, 2024
APPROVED AS TO FORM ON BEHALF OF TORCHLIGHT MINING CORP.:
________________________________________
Elaine Forsythe Partner Calderwood & Harkness LLP 555 California Street, 40th Floor San Francisco, California 94104 Counsel for Torchlight Mining Corp.
Date: May 6, 2024
APPENDIX A
ENHANCED ANTITRUST COMPLIANCE PROGRAM
This Appendix A is attached to and forms an integral part of the Non-Prosecution Agreement, DOJ Reference No. ATR-SF-2024-00312, dated May 6, 2024 (the "Agreement"), between the United States Department of Justice, Antitrust Division, and Torchlight Mining Corp. ("TMC"). All capitalized terms used but not defined in this Appendix A shall have the meanings ascribed to them in the Agreement.
A.1 Purpose and Scope
A.1.1 Purpose. The purpose of this Enhanced Antitrust Compliance Program (the "Compliance Program") is to establish a robust, effective, and sustainable framework for antitrust compliance throughout TMC and all of its subsidiaries, affiliates, and controlled entities, including Torchlight Mining (U.S.) Inc. The Compliance Program is designed to prevent, detect, and remediate violations of the antitrust and competition laws of the United States and other jurisdictions in which TMC operates, with particular emphasis on preventing the types of cartel conduct — price-fixing, market allocation, bid-rigging, and unlawful exchanges of competitively sensitive information — that are the subject of the Agreement.
A.1.2 Scope. The Compliance Program shall apply to all employees, officers, directors, and agents of TMC and its subsidiaries who are involved in, or whose responsibilities relate to, pricing, sales, marketing, business development, procurement, competitive intelligence, strategic planning, and senior management functions. The Compliance Program shall have particular focus on the personnel of the U.S. Specialty Minerals Division, given that the conduct underlying the Agreement originated within that division, but its reach shall not be limited to that division.
A.1.3 Covered Conduct. The Compliance Program is designed to address all forms of anticompetitive conduct prohibited by Section 1 of the Sherman Act, 15 U.S.C. § 1, and analogous provisions of applicable state and foreign competition laws, including but not limited to: horizontal agreements to fix prices, allocate markets or customers, rig bids, or restrict output; unlawful exchanges of competitively sensitive information among competitors; hub-and-spoke conspiracies; and any other concerted action that unreasonably restrains trade.
A.2 Governance and Oversight
A.2.1 Chief Compliance Officer. TMC shall appoint an independent Chief Compliance Officer ("CCO") who shall have primary responsibility for the design, implementation, and day-to-day management of the Compliance Program. The CCO shall have the authority to report directly to the Audit Committee of the TMC Board of Directors, currently chaired by Janet Moreau-Shaw, on all matters relating to antitrust compliance. The CCO shall have direct and unfettered access to the Chair of the Audit Committee at all times.
A.2.2 Resources and Budget. The CCO shall have adequate resources, budget, and staff to carry out the functions of the Compliance Program effectively. TMC shall ensure that the CCO's budget and staffing levels are commensurate with the size, complexity, and geographic scope of TMC's operations. Any reduction in the CCO's budget or staffing during the Term of the Agreement shall be reported to the Monitor and the Department.
A.2.3 Independence. The CCO shall not hold dual responsibilities that would create actual or potential conflicts of interest with the compliance function. Without limitation, the CCO shall not simultaneously serve as TMC's General Counsel, Chief Financial Officer, or in any revenue-generating or business-development role. The CCO's compensation shall not be tied to the financial performance of any particular business unit or division.
A.2.4 Annual Reporting. The CCO shall prepare and deliver an annual written report to the Board of Directors and the Audit Committee on the state of the Compliance Program, including: a summary of compliance activities conducted during the year; the results of any internal audits or investigations; training completion statistics; any compliance incidents or concerns reported through the hotline or otherwise; and any recommendations for enhancements to the Compliance Program. The CCO shall also be available to present such report in person at a meeting of the Audit Committee.
A.3 Policies and Procedures
A.3.1 Written Antitrust Compliance Policy. TMC shall maintain a comprehensive written antitrust compliance policy (the "Policy"), which shall be updated and re-issued within ninety (90) calendar days of the execution of the Agreement (i.e., no later than August 4, 2024). The Policy shall be drafted in clear, accessible language and shall be made available to all covered personnel in English, French, and Portuguese, to reflect the primary languages spoken by TMC's global workforce.
A.3.2 Competitor-Contact Policy. The Policy shall include specific provisions governing all contacts with competitors, including prohibitions on the exchange of competitively sensitive information such as current or future pricing, output levels, costs, customer identities, customer allocations, bid terms, and strategic plans. The Policy shall require that all contacts with competitors be documented and reported to the CCO or a designated compliance representative.
A.3.3 Trade-Association Participation Policy. The Policy shall include detailed provisions governing TMC employees' participation in trade associations, industry conferences, and similar gatherings, including without limitation the NASMC and any successor or similar organization. These provisions shall require:
(a) Pre-approval by the CCO or a designated compliance representative before any TMC employee attends a trade-association event or industry conference at which competitors are expected to be present;
(b) Mandatory post-event reporting by all TMC employees who attend such events, including a written summary of all interactions with competitors, submitted to the CCO within five (5) business days of the event;
(c) A prohibition on bilateral meetings with competitors on the margins of trade-association events or industry conferences, except where pre-approved by the CCO and attended by a compliance representative or outside counsel; and
(d) Attendance at any trade-association meeting or committee session only where a written agenda has been distributed in advance and the session is conducted in accordance with antitrust-compliant guidelines.
A.3.4 Communications Policy. The Policy shall require that all business communications be conducted exclusively through company-approved, archivable platforms. The use of encrypted messaging applications such as VaultChat, or any other application that is not subject to TMC's document-retention and archiving systems, for business communications of any kind is strictly prohibited. TMC shall implement technical controls, to the extent reasonably practicable, to enforce this prohibition on company-owned devices.
A.3.5 Competitive intelligence Policy. The Policy shall include provisions governing the gathering and use of competitive intelligence, requiring that all competitive intelligence be obtained only through lawful and ethical means and that competitively sensitive information received from competitors be reported immediately to the CCO.
A.3.6 Disciplinary Procedures. The Policy shall set forth clear disciplinary procedures for violations of antitrust compliance policies, up to and including termination of employment and referral of the matter to law enforcement authorities. Disciplinary actions shall be applied consistently and without regard to the seniority, title, or tenure of the employee involved.
A.4 Training
A.4.1 Annual Training Requirement. TMC shall provide mandatory annual antitrust compliance training to all covered personnel as defined in Section A.1.2 above. The annual training obligation shall commence no later than ninety (90) calendar days following the execution of the Agreement and shall continue throughout the Term and thereafter.
A.4.2 Training Format. For senior commercial personnel, including all personnel in the U.S. Specialty Minerals Division and all members of senior management, training shall be conducted in person or via live virtual sessions that allow for real-time interaction with the instructor. For other covered personnel, training may be provided through interactive e-learning modules, provided that such modules include knowledge assessments and require a passing score for completion.
A.4.3 Training Content. Training content shall cover, at a minimum: the fundamentals of United States and Canadian antitrust and competition law; the specific prohibitions against price-fixing, market allocation, bid-rigging, and information exchanges; the criminal penalties for antitrust violations (including individual imprisonment); the requirements of TMC's antitrust compliance policies, including the competitor-contact, trade-association, and communications policies; the procedures for reporting suspected violations; and case studies based on the types of conduct underlying the Agreement. Case studies shall be designed to illustrate the methods, risks, and consequences of anticompetitive conduct in the specialty-minerals industry without identifying individual TMC employees by name.
A.4.4 New-Hire Training. All new employees who fall within the scope of the Compliance Program shall receive antitrust compliance training within thirty (30) calendar days of their commencement of employment with TMC or its subsidiaries.
A.4.5 Training Records. TMC shall maintain records of training attendance and completion, including the dates of training sessions, the names of attendees, the training format, and the results of any knowledge assessments. Such records shall be retained for at least five (5) years and shall be made available to the Monitor and the Department upon request.
A.5 Reporting and Investigations
A.5.1 Confidential Reporting Hotline. TMC shall establish and maintain a confidential reporting hotline or web-based reporting platform through which any employee, officer, director, or agent of TMC or its subsidiaries may report suspected antitrust violations or concerns regarding compliance with the Compliance Program. The hotline shall be operated by an independent third-party provider and shall accept reports on an anonymous basis where permitted by applicable law.
A.5.2 Non-Retaliation Policy. TMC shall maintain and enforce a non-retaliation policy that prohibits any form of retaliation, including adverse employment action, harassment, or intimidation, against any individual who in good faith reports a suspected antitrust violation or participates in an internal or government investigation. The non-retaliation policy shall be communicated prominently to all covered personnel as part of the annual training program and shall be included in the written Policy.
A.5.3 Investigation Protocols. TMC shall establish written protocols for the internal investigation of reports and concerns received through the hotline or otherwise, including procedures for timely intake, assessment, investigation, and resolution of reported matters. Investigations shall be conducted by or under the supervision of the CCO and, where appropriate, outside counsel. The results of all internal investigations shall be documented and retained, and summaries shall be included in the CCO's annual report to the Audit Committee.
A.6 Periodic Auditing
A.6.1 Annual Internal Audits. TMC shall conduct internal audits of compliance with its antitrust policies no less frequently than once per calendar year. Audits shall be conducted by the CCO and compliance staff, or by an independent third party retained for that purpose, and shall cover, at a minimum: a review of competitor contacts and trade-association participation records; a review of pricing decisions and any communications surrounding such decisions; a review of compliance with the communications policy, including sampling of electronic communications for prohibited application usage; and an assessment of the adequacy and effectiveness of the Compliance Program's design and operation.