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PRIVILEGED AND CONFIDENTIAL — ATTORNEY-CLIENT PRIVILEGE / ATTORNEY WORK PRODUCT

MEMORANDUM

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

PRIVILEGE LEGEND

This memorandum was prepared by counsel at Calderwood & Harkness LLP at the direction of and in anticipation of litigation, and in connection with the provision of legal advice to Torchlight Mining Corp. ("TMC") regarding the above-referenced investigation by the Antitrust Division of the United States Department of Justice. This memorandum reflects attorney mental impressions, conclusions, opinions, and legal theories and is protected in its entirety by the attorney-client privilege and the work-product doctrine. The protections afforded by these doctrines are not waived by the limited internal distribution of this memorandum within Calderwood & Harkness LLP. This memorandum shall not be disclosed, disseminated, distributed, copied, or otherwise communicated to any person or entity — including any employee, officer, or director of TMC — without the express prior authorization of Calderwood & Harkness LLP. Any unauthorized disclosure may constitute a waiver of privilege. All recipients are directed to maintain this memorandum in strict confidence and to take all reasonable steps to preserve its privileged status.

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I. Interview Logistics

Date of Interview: August 19, 2022.

Location: The interview was conducted in person at the offices of Calderwood & Harkness LLP, 555 California Street, 40th Floor, San Francisco, California 94104, in Conference Room 40-B. The conference room was secured for the duration of the interview, and no other persons were present other than those identified below.

Duration: The interview commenced at approximately 10:00 a.m. Pacific Time and concluded at approximately 12:45 p.m. Pacific Time, for a total duration of approximately two hours and forty-five minutes. A brief break of approximately ten minutes was taken at approximately 11:15 a.m. at the witness's request.

Interviewers: The interview was conducted by Monica Reyes, Associate, Antitrust & Competition Practice Group, Calderwood & Harkness LLP. Aaron Liu, Lead Associate, was also present and participated in the questioning for approximately the first ninety minutes of the interview before departing at approximately 11:30 a.m. for another previously scheduled commitment. The remainder of the interview was conducted by Monica Reyes alone.

Interviewee: Richard Fong, Chief Financial Officer, Torchlight Mining Corp. ("TMC"). Mr. Fong traveled from TMC's Toronto headquarters to San Francisco for purposes of this interview and related meetings with Calderwood & Harkness.

Counsel for Witness: Mr. Fong was not accompanied by personal counsel at the interview. At the outset of the interview, prior to the administration of the Upjohn warning described below, Mr. Fong was expressly advised that Calderwood & Harkness LLP represents Torchlight Mining Corp. as an entity and does not represent Mr. Fong in his individual capacity. Mr. Fong was further informed that he has the right to retain personal counsel, at his own expense, to represent his individual interests in connection with the DOJ investigation and this internal investigation. Mr. Fong acknowledged his understanding of these advisements and affirmatively elected to proceed with the interview without retaining or consulting separate counsel.

Upjohn Warning: An Upjohn warning was administered orally by Monica Reyes at the outset of the interview, prior to the commencement of any substantive questioning. Specifically, Mr. Fong was informed of the following:

(a) Calderwood & Harkness LLP represents Torchlight Mining Corp., the corporate entity, and does not represent Mr. Fong personally or in his individual capacity;

(b) The purpose of the interview is to gather facts in connection with Calderwood & Harkness's internal investigation relating to the investigation being conducted by the Antitrust Division of the United States Department of Justice, including the grand jury proceedings in the Northern District of California (Grand Jury No. GJ-22-0194);

(c) The conversation between Mr. Fong and Calderwood & Harkness attorneys during this interview is protected by the attorney-client privilege; however, the privilege belongs to TMC as the corporate entity and not to Mr. Fong individually;

(d) TMC, as the holder of the privilege, may in its sole discretion choose to waive the privilege and disclose the substance of this interview, including any statements made by Mr. Fong, to third parties, including the Department of Justice or other governmental authorities; and

(e) Mr. Fong should not discuss the substance of this interview, including the questions asked and the answers provided, with other TMC employees, officers, directors, or any other person outside of this privileged setting.

Mr. Fong confirmed that he understood each of the foregoing advisements. He did not raise any questions or express any reservations, and he affirmatively consented to proceed with the interview.

Recording: No audio or video recording of the interview was made. Handwritten notes were taken by Monica Reyes during the course of the interview. These notes will be maintained in the Calderwood & Harkness privilege file for Matter No. 1039-00001 and are subject to the same privilege protections as this memorandum.

Documents Reviewed During Interview: No documents were provided to Mr. Fong in advance of the interview. During the course of the interview, certain TMC financial reports and internal budget documents were referenced and shown to Mr. Fong for purposes of refreshing his recollection and eliciting testimony. These documents are identified in context in the relevant sections of this memorandum below.

II. Background on Richard Fong

Mr. Fong provided the following background information at the outset of the interview.

Full Name: Richard Fong.

Title: Chief Financial Officer, Torchlight Mining Corp.

Reporting Line: Mr. Fong reports directly to Søren Dalmqvist, the Chief Executive Officer of TMC. In addition, Mr. Fong reports functionally to the Audit Committee of the TMC Board of Directors. The Audit Committee is currently chaired by Janet Moreau-Shaw, an independent director. Mr. Fong stated that he attends all regular and special meetings of the Audit Committee and provides financial updates, audit reports, and risk assessments to the Committee on a quarterly basis, and more frequently as circumstances require.

Tenure: Mr. Fong stated that he has served as Chief Financial Officer of TMC since approximately 2015, representing approximately seven years of service in the CFO role at the time of this interview. Prior to his appointment as CFO, Mr. Fong held the position of Vice President, Finance at TMC for approximately three years (from approximately 2012 to 2015). In total, Mr. Fong has been employed by TMC in various senior finance capacities for approximately ten years.

Office Location: Mr. Fong is based at TMC's registered corporate office in Toronto, Ontario, Canada, located at 200 Bay Street, Suite 3400, Toronto, ON M5J 2J2. He noted that he travels periodically to TMC's operational sites and to the offices of advisors and auditors, but his primary base of operations is the Toronto headquarters.

Responsibilities: Mr. Fong described his responsibilities as encompassing all financial operations of TMC on a global basis. Specifically, his areas of responsibility include:

• Financial reporting and controls;

• Treasury and cash management;

• Tax planning and compliance (including cross-border tax matters in Canada, the United States, Australia, Chile, and other jurisdictions in which TMC operates);

• Internal audit oversight;

• Investor relations (in coordination with TMC's external investor relations advisors);

• Financial planning and analysis ("FP&A") for all operating divisions, including the U.S. Specialty Minerals Division;

• Certification of TMC's consolidated financial statements as filed on SEDAR+ (the Canadian securities regulatory filing system) and with the United States Securities and Exchange Commission on Form 40-F (as a foreign private issuer); and

• Co-signing (with CEO Dalmqvist) all quarterly and annual financial filings and the associated management certifications required under applicable Canadian and U.S. securities laws.

Mr. Fong stated that TMC's consolidated revenue for fiscal year 2021 was approximately CAD 4.27 billion (approximately USD 3.38 billion at prevailing exchange rates), and that TMC's consolidated EBITDA for the same period was approximately CAD 812 million.

Relationship to the U.S. Specialty Minerals Division: Mr. Fong provided the following information regarding his relationship to the U.S. Specialty Minerals Division, which is the TMC business unit at the center of the DOJ investigation:

Mr. Fong stated that the U.S. Specialty Minerals Division is one of several operating divisions within TMC's corporate structure. TMC is organized into multiple operating divisions, each with its own management team, operational infrastructure, and financial reporting unit. The U.S. Specialty Minerals Division generated approximately USD 687 million in revenue in fiscal year 2021, representing approximately 20% of TMC's consolidated revenue for that year.

As CFO, Mr. Fong receives monthly and quarterly financial reports from the Division's finance team, including revenue summaries, margin analyses, variance reports against the annual operating plan, and capital expenditure updates. However, Mr. Fong emphasized that he does not have day-to-day involvement in the Division's commercial or pricing operations. Those operational decisions are handled by the Division's management team. The Division's financial performance is reported through a divisional controller, who ultimately reports up through the corporate finance structure to Mr. Fong's office in Toronto. Mr. Fong characterized his role vis-à-vis the Division as one of "oversight and review" rather than "hands-on management."

III. Knowledge of the U.S. Specialty Minerals Division's Financial Performance

A. Revenue and Profitability Trends

Mr. Fong was questioned at length regarding the financial performance of the U.S. Specialty Minerals Division during the period relevant to the DOJ investigation (approximately January 2017 through August 2021).

Mr. Fong described the U.S. Specialty Minerals Division as a "steady performer" within the TMC portfolio. He stated that the Division's revenue had grown from approximately USD 520 million in fiscal year 2016 to approximately USD 687 million in fiscal year 2021, representing a compound annual growth rate ("CAGR") of roughly 5.7% over the five-year period. He characterized this growth trajectory as consistent with what one would expect given the overall growth in demand for specialty mineral products in the North American market during this period, as well as the Division's ongoing efforts to expand its customer base and product offerings.

Mr. Fong stated that the Division's margins were "in line with industry norms" for specialty-minerals producers. He did not observe any anomalous margin expansion or compression during the period under investigation. When asked to elaborate on what he considered to be "industry norms," Mr. Fong referred generally to EBITDA margins in the range of approximately 18% to 24% for North American specialty-minerals producers of comparable scale, noting that the Division's margins fluctuated within a similar range depending on market conditions, input costs, and product mix in any given quarter.

Mr. Fong was asked directly whether he had ever been alerted to, or had independently identified, any unusual or unexplained revenue or margin trends in the U.S. Specialty Minerals Division. Mr. Fong stated that he had not. He explained that the Division's performance was "consistent with management's projections and the overall market environment." He noted that while there were minor quarter-to-quarter fluctuations — which he attributed to normal seasonality, variations in order timing, and raw material cost movements — there was nothing in the Division's financial results that, from his vantage point as CFO, appeared anomalous or warranted further investigation.

B. Product Categories at Issue

Mr. Fong was asked about the three product categories that are the focus of the DOJ investigation: high-purity feldspar, industrial talc, and rare-earth concentrates. These three product categories are the principal products of the U.S. Specialty Minerals Division and constitute the core of the Division's revenue base.

Mr. Fong confirmed that he was generally aware of these product categories and their significance to the Division's operations. He stated that he was generally aware of industry pricing trends for these products through TMC's quarterly business reviews ("QBRs"), which include presentations by divisional management on market conditions, competitive dynamics, and pricing trends. However, Mr. Fong emphasized that he did not personally track product-level pricing. Rather, product-level pricing detail was managed at the divisional level by the Division's commercial and pricing teams. Mr. Fong's focus, as CFO, was on the Division's aggregate financial performance — total revenue, margins, cash flow — rather than the pricing of individual product lines or specific customer contracts.

When asked whether any specific price increases or pricing actions taken by the Division had ever seemed incongruent with market conditions or had raised concerns from a financial-reporting perspective, Mr. Fong stated that they had not. He explained that the Division's pricing actions, to the extent he was aware of them at a high level, appeared to track general market trends. He did not recall any instance in which a pricing action resulted in a revenue outcome that diverged materially from expectations or that prompted questions from his office, from the Audit Committee, or from TMC's external auditors.

C. Budget and Forecasting Process

Mr. Fong was asked to describe TMC's annual budgeting and forecasting process as it relates to the U.S. Specialty Minerals Division. Mr. Fong provided the following description.

Each fiscal year, TMC's operating divisions are required to prepare and submit an annual operating plan ("AOP") during the fourth quarter of the preceding fiscal year. The AOP is the primary planning and budgeting document for each division and serves as the benchmark against which actual performance is measured throughout the year. The U.S. Specialty Minerals Division's AOP includes, among other things:

• Revenue forecasts broken down by product line (including high-purity feldspar, industrial talc, and rare-earth concentrates);

• Pricing assumptions for each product line, typically expressed as a range or an average expected realized price per unit;

• Volume estimates, including projected production volumes and sales volumes by product;

• Margin targets at the gross profit and EBITDA levels;

• Capital expenditure plans; and

• Headcount and operating expense budgets.

Mr. Fong stated that the Division's AOP is reviewed by TMC's corporate finance team and is discussed during annual budget review meetings attended by the CEO, CFO, and senior management of each division. Once the AOP is approved, the Division's management is expected to execute against the plan, and the corporate finance team monitors actual results against the AOP on a monthly and quarterly basis through variance reporting.

Mr. Fong stated that the Division's actual results consistently tracked within a reasonable range of the AOP during the 2017–2021 period. He defined "reasonable range" as within approximately plus or minus 5% of the revenue forecast and within a comparable range for margin targets, allowing for normal market fluctuations. He did not recall any fiscal year during the relevant period in which the Division's results were so far above or below the forecast as to trigger a special review or an escalation to the CEO or the Audit Committee for further inquiry.

Mr. Fong was asked whether the pricing assumptions embedded in the Division's AOP were ever questioned or flagged — either by TMC's internal audit function, by the corporate finance team during the budget review process, or by TMC's external auditor, Calvert & Associates LLP (engagement partner Daniel Moreau). Mr. Fong stated that they were not. He explained that the pricing assumptions in the AOP were prepared by the Division's management, were reviewed by the corporate finance team for general reasonableness, and were subjected to Calvert & Associates' standard audit procedures in connection with the annual financial statement audit, but that no concerns were raised.

IV. Pricing Authority and Delegation Structure

A. Authority for Pricing Decisions

A significant portion of the interview was devoted to understanding the delegation of pricing authority within TMC, particularly as it relates to the U.S. Specialty Minerals Division.

Mr. Fong explained that pricing authority within TMC is delegated to divisional management. This is consistent with TMC's decentralized organizational structure, in which operating divisions have substantial autonomy over commercial and operational decisions, subject to corporate-level financial oversight. The CEO sets the overall strategic direction for the company, and the CFO's office monitors financial performance and ensures the accuracy and integrity of financial reporting, but specific pricing decisions for individual products and customer contracts are made at the divisional Vice President level and below.

For the U.S. Specialty Minerals Division, Mr. Fong stated that the relevant pricing authority during the period in question resided with Gavin Holt, who held the title of Vice President, U.S. Specialty Minerals Sales. Mr. Holt had the authority to set and adjust published price lists for the Division's products and to approve customer-specific contract pricing, including pricing for multi-year supply agreements and spot transactions.

Mr. Fong stated that Holt had "broad latitude" on pricing, subject to one key constraint: the Division's actual financial results needed to stay within the margin targets as approved in the annual operating plan. As long as the Division was delivering results within the parameters of the AOP — and, in particular, was not falling below the margin floors approved by corporate management — there was no requirement for Holt to seek additional approval from the corporate level for individual pricing decisions.

Mr. Fong was asked specifically whether there was any requirement for Holt or other divisional managers to seek approval from the CFO's office or the CEO before implementing pricing changes. Mr. Fong stated that there was no such formal requirement. He explained that TMC's governance framework contemplated that divisional management would exercise judgment on pricing within the guardrails established by the AOP, and that the corporate finance function would monitor outcomes through after-the-fact variance reporting rather than through pre-approval of individual pricing actions.

Mr. Fong further stated that there was no formal sign-off or approval workflow at the corporate level for individual pricing decisions. He described this arrangement as "typical for a decentralized mining and chemicals company" and noted that TMC's organizational structure was designed to empower divisional management to respond to market conditions quickly and effectively without the delays that would be associated with a more centralized approval process.

B. Sandra Chu's Role

Mr. Fong was asked about his knowledge of Sandra Chu, who served as Director of Pricing Analytics within the U.S. Specialty Minerals Division during the relevant period. Ms. Chu has been identified as a person of interest in the investigation and was previously interviewed by Calderwood & Harkness on July 18, 2022.

Mr. Fong stated that he was aware of Ms. Chu's role within the Division, though he did not interact with her regularly and had no direct reporting relationship with her. Ms. Chu reported to Gavin Holt, not to Mr. Fong or to anyone in the corporate finance organization. Mr. Fong described Ms. Chu's function as "the analytical backbone" of the Division's pricing process. He understood that she was responsible for compiling market data, analyzing competitive pricing trends, preparing pricing recommendations for Holt's consideration, and implementing approved price adjustments in TMC's enterprise resource planning ("ERP") systems.

Mr. Fong stated that he had no knowledge of any specific pricing instructions that Holt may have given to Chu beyond what would be normal in the course of their reporting relationship. He had not reviewed any communications between Holt and Chu and had not been made aware of any such communications prior to the commencement of the internal investigation.

C. Controls Over Pricing

Mr. Fong was asked whether TMC had any internal controls specifically designed to monitor or audit pricing decisions at the divisional level for antitrust compliance purposes.

Mr. Fong stated that TMC had a general antitrust compliance policy, which had been adopted in approximately 2014. He was aware of the existence of the policy in general terms but acknowledged that the CFO's office did not have specific financial controls designed to detect anticompetitive pricing coordination. He stated that the finance function's controls were oriented toward ensuring the accuracy of financial reporting, the proper recognition of revenue, the integrity of intercompany transactions, and the prevention and detection of fraud — not toward monitoring the competitive dynamics of pricing decisions or detecting collusion with competitors.

Mr. Fong further stated that TMC's internal audit team, which reports to the Audit Committee through the CFO's office, conducts periodic operational audits of the divisions. These audits encompass a range of topics, including financial accuracy, revenue recognition, expense management, compliance with internal policies, and controls testing. However, Mr. Fong acknowledged that these audits did not include any specific procedures designed to test for anticompetitive behavior, such as reviews of communications with competitors, analysis of pricing patterns for evidence of coordination, or testing of adherence to the antitrust compliance policy. The audits were financial in nature, not competitive-compliance-oriented.

V. Knowledge of Gavin Holt and Holt's Departure

Mr. Fong was questioned regarding his personal knowledge of Gavin Holt and the circumstances of Holt's departure from TMC.

Mr. Fong stated that he knew Holt professionally. Holt was a "senior commercial leader" within TMC's U.S. operations and held the title of Vice President, U.S. Specialty Minerals Sales. Mr. Fong and Holt interacted at TMC's annual leadership meetings, which bring together senior executives from all divisions and geographies, as well as at the quarterly business reviews at which divisional management presents financial and operational results to the CEO, CFO, and other members of the executive leadership team. Mr. Fong described these interactions as professional and business-focused; he did not characterize his relationship with Holt as a personal one outside of the work environment.

Mr. Fong described Holt as "commercially aggressive" in the sense that Holt was a results-oriented manager who was focused on revenue growth, market share, and financial performance. Mr. Fong noted that the U.S. Specialty Minerals Division under Holt's leadership generally met or exceeded its financial targets during the years that Holt led the commercial function. Mr. Fong stated that Holt's performance was viewed positively within the company and that Holt was regarded as a capable and effective commercial leader.

Regarding Holt's departure from TMC, Mr. Fong provided the following account. Mr. Fong stated that Holt resigned from TMC effective September 30, 2021. Mr. Fong understood that the resignation was presented as voluntary and that Holt represented to TMC management that he was leaving to pursue "other opportunities." Mr. Fong was not involved in the details of Holt's separation and did not participate in any discussions regarding the circumstances of Holt's departure beyond being informed that Holt was leaving the company. Mr. Fong stated that he was not aware at the time of any connection between Holt's departure and any potential DOJ investigation, grand jury proceedings, or antitrust concerns of any kind.

Mr. Fong stated that he did not learn of the DOJ investigation until TMC received the grand jury subpoena duces tecum — Subpoena No. GJ-22-0194-SD-003 — on February 14, 2022. He was informed of the receipt of the subpoena by Priya Anand, TMC's General Counsel, on the same day. Prior to receiving that notification from Ms. Anand, Mr. Fong stated that he had no knowledge or awareness of any investigation or inquiry by the DOJ or any other governmental agency relating to anticompetitive conduct in the specialty-minerals industry.

Mr. Fong was asked whether, with the benefit of hindsight and knowledge of the investigation, he could now identify any financial "red flags" associated with Holt's tenure that might have been indicative of the alleged conduct. Mr. Fong stated that he could not. He explained that the Division's financial results during Holt's tenure did not, on their face, suggest anything other than successful commercial management. The revenue growth was steady, the margins were within normal parameters, the Division's results tracked the AOP, and there were no unusual transactions or accounting entries that, even in retrospect, would have alerted the finance function to the possibility of anticompetitive conduct.

VI. Knowledge of Competitor Interactions and Trade Associations

Mr. Fong was questioned at length regarding his knowledge of any interactions between TMC personnel and competitors, as well as TMC's involvement in industry trade associations.

Mr. Fong stated that he had no personal involvement with the North American Specialty Minerals Council ("NASMC") or with any other trade association or industry group in the specialty-minerals sector. He did not attend NASMC conferences, meetings, working groups, or social events. He stated that his role as CFO did not require or involve participation in industry trade associations, which he understood to be more relevant to the commercial and technical personnel within TMC's operating divisions.

Mr. Fong was asked whether he was aware of any communications or interactions between Gavin Holt and personnel at Ridgecrest Minerals Inc. — including Carl Edgerton, Ridgecrest's VP of Commercial Operations, who has been identified as a co-conspirator in the investigation — or at Pinnacle Earth Resources Ltd. — including Kevin Tsang, Pinnacle's Director of Strategic Accounts, who has also been identified in the investigation. Mr. Fong stated that he was not aware of any specific communications or interactions between Holt and any of these individuals. He acknowledged that he would assume that divisional commercial leaders such as Holt would have had some level of contact with counterparts at competitor companies in the ordinary course of business — for example, at trade association events, industry conferences, or customer-facing situations — but he had no specific knowledge of any such interactions and had never been briefed on or informed of any contacts between Holt and the named individuals.

Mr. Fong stated that he had never heard of the "VaultChat" messaging application prior to learning about it in the context of the current investigation. VaultChat, as the investigation has revealed, was an encrypted and ephemeral messaging platform reportedly used by certain individuals, including Holt, to communicate with counterparts at competitor companies regarding pricing and customer allocation. Mr. Fong stated that this was entirely unknown to him before the investigation commenced.

Finally, and critically, Mr. Fong stated that he was never informed by anyone at TMC — including Gavin Holt, Sandra Chu, Thomas Eriksen (Division Controller), Priya Anand (General Counsel), Søren Dalmqvist (CEO), or any other person — of any agreement, understanding, arrangement, or coordination with competitors regarding:

• The pricing of feldspar, industrial talc, rare-earth concentrates, or any other product;

• The allocation of customers or geographic markets among competitors; or

• The coordination of bids in response to customer requests for proposals or other competitive solicitations.

Mr. Fong was unequivocal on this point and stated that he would have immediately reported any such information to TMC's General Counsel had it come to his attention.

VII. Absence of Financial Irregularities Suggesting Awareness

A. No Unusual Payment Flows

Mr. Fong was asked whether TMC's finance function had, at any point during the 2017–2021 period, identified any unusual payment flows, off-books transactions, side agreements, consulting payments, rebates, or other financial irregularities in connection with the U.S. Specialty Minerals Division.

Mr. Fong stated that no such irregularities had been identified. He confirmed that all of the Division's revenue was processed through TMC's standard enterprise resource planning systems and that the Division's revenue, accounts receivable, and related financial data were subject to TMC's normal suite of internal controls, including segregation of duties, approval workflows for significant transactions, and management review of journal entries and adjustments. In addition, the Division's financial results were subject to Calvert & Associates LLP's annual external audit procedures, which included substantive testing of revenue, receivables, and related accounts. Mr. Fong stated that neither the internal controls nor the external audit procedures identified any unusual or unexplained payment flows or off-books arrangements.

B. No Whistleblower Reports

Mr. Fong was asked about TMC's ethics and whistleblower reporting mechanisms and whether any reports had been received alleging anticompetitive conduct.

Mr. Fong stated that TMC maintains an anonymous ethics hotline, which is available to all TMC employees worldwide and is administered by a third-party provider. Reports submitted through the hotline are reviewed by TMC's compliance function and, depending on the nature of the report, may be escalated to the General Counsel's office, the Audit Committee, or outside counsel.

Mr. Fong stated that, to his knowledge, no complaints or reports were received through the ethics hotline or through any other reporting channel — including direct reports to management, reports to the General Counsel's office, or reports to the Audit Committee — alleging anticompetitive conduct, price-fixing, customer allocation, bid-rigging, or any other antitrust violation in the U.S. Specialty Minerals Division during Mr. Fong's tenure as CFO.

C. No External Audit Findings

Mr. Fong confirmed that Calvert & Associates LLP, TMC's external auditor (engagement partner Daniel Moreau), had not raised any audit findings, management letter comments, or internal control deficiencies related to the U.S. Specialty Minerals Division's pricing practices, competitor interactions, or antitrust compliance during the period in question. The external auditor's work focused on financial-statement-level assertions — accuracy, completeness, existence, valuation, and disclosure — and did not encompass antitrust-specific testing.

Mr. Fong further confirmed that TMC received unqualified (clean) audit opinions from Calvert & Associates for all fiscal years during the alleged conspiracy period, spanning from fiscal year 2017 through fiscal year 2021. There were no qualified opinions, going-concern qualifications, or adverse opinions during this period. The management letters issued by Calvert & Associates did not contain any observations or recommendations pertaining to the Division's pricing practices or competitive conduct.

D. No Unusual Margin or Revenue Patterns

Mr. Fong reiterated that, from a financial-reporting perspective, the Division's revenue growth and margin stability during the 2017–2021 period were unremarkable. There were no sudden spikes in revenue, no unexplained shifts in profitability, and no quarter-over-quarter or year-over-year changes that, in Mr. Fong's assessment, would have prompted further inquiry from the finance function, the internal audit team, or the external auditors.

However, Mr. Fong made an unprompted and notable acknowledgment during this portion of the interview. He stated that he recognized, in light of the current investigation, that price-fixing conspiracies can be difficult — and in some cases impossible — to detect from financial data alone. He observed that the financial effect of a successful price-fixing conspiracy may not be a dramatic increase in margins but rather a stabilization of margins, a reduction in price competition, and a smoothing of revenue that appears, from the outside, as simply solid commercial performance. Mr. Fong acknowledged that this dynamic could explain why the Division's financial results did not raise red flags, even if the alleged conduct was occurring during the relevant period.

VIII. Involvement in Investigation-Related Financial Matters

A. Litigation Reserve

Mr. Fong was questioned about his involvement in the financial and accounting aspects of TMC's response to the DOJ investigation.

Mr. Fong stated that he was directly involved in the establishment of TMC's initial litigation reserve in connection with the investigation. TMC established an initial litigation reserve of USD 30 million in March 2022, which was disclosed in TMC's fiscal year 2021 annual report filed on March 28, 2022, on the SEDAR+ system and with the U.S. Securities and Exchange Commission on Form 40-F.

Mr. Fong stated that he worked closely with General Counsel Priya Anand, the Calderwood & Harkness team (including Elaine Forsythe and Aaron Liu), and TMC's external auditor, Calvert & Associates LLP, to assess the appropriate reserve amount under applicable accounting standards. The reserve was assessed under the framework of ASC 450 (Accounting Standards Codification 450, Contingencies) for U.S. GAAP purposes and IAS 37 (Provisions, Contingent Liabilities and Contingent Assets) for IFRS purposes. The analysis considered the probability that a loss had been incurred and whether the amount of the loss could be reasonably estimated, taking into account the early stage of the investigation and the inherent uncertainty regarding potential outcomes, including criminal fines, civil liability, and related costs.

Mr. Fong noted that the USD 30 million initial reserve was established based on an early-stage assessment when the range of potential outcomes was still extremely broad and when the full scope of the alleged conduct had not yet been determined. He stated that the reserve amount would be, and indeed has been, subject to reassessment as the investigation progresses and as additional information becomes available. Mr. Fong noted that the reserve was subsequently increased to USD 50 million in the third quarter of fiscal year 2023, reflecting updated assessments of the potential exposure.

B. D&O Insurance

Mr. Fong confirmed that he was aware that TMC had tendered notice of the DOJ investigation to Northland Mutual Insurance Co. under TMC's directors' and officers' liability insurance policy, Policy No. NMI-DO-2021-5547. The notice was tendered on March 4, 2022.

Mr. Fong stated that the D&O insurance notification and the analysis of coverage issues — including questions regarding the scope of coverage, applicable retention amounts, and the interplay between the corporate-entity coverage and individual-insured coverage under the policy — were primarily managed by General Counsel Priya Anand in coordination with Calderwood & Harkness LLP. Mr. Fong's involvement in D&O insurance matters was limited to understanding the potential financial impact of coverage determinations on TMC's consolidated financial statements, including the extent to which insurance proceeds might offset litigation expenses and any eventual fines, penalties, or settlement amounts.

C. Disclosure Coordination

Mr. Fong described his role in coordinating the public disclosure of the DOJ investigation in TMC's financial filings and investor communications.

Mr. Fong stated that he worked closely with Priya Anand, the Calderwood & Harkness team, and Calvert & Associates to draft the disclosure language for TMC's fiscal year 2021 annual report, ensuring that the disclosures complied with the requirements of the U.S. Securities and Exchange Commission (including the disclosure obligations applicable to foreign private issuers filing on Form 40-F) and the applicable Canadian securities laws and regulations. The disclosure was included in the contingencies note to the financial statements and in the management's discussion and analysis section of the annual report.

Mr. Fong stated that significant attention was paid to ensuring that the disclosure was sufficiently informative to satisfy securities-law requirements without inadvertently making admissions or characterizations that could prejudice TMC's position in the DOJ investigation or in potential civil follow-on litigation. The language was reviewed and approved by Calderwood & Harkness before filing.

In addition, Mr. Fong stated that Ironbridge Capital Markets Inc. (TMC's relationship investment bank, under the coverage of relationship partner Alan Kirkwood) was consulted regarding the potential market and investor-relations impact of the disclosure. Ironbridge provided input on investor expectations, likely market reaction, and strategies for managing the narrative with TMC's institutional investor base and the analyst community.

IX. Knowledge of TMC's Antitrust Compliance Program

Mr. Fong was questioned regarding his knowledge of TMC's antitrust compliance program.

Mr. Fong stated that he was generally aware that TMC had adopted a formal antitrust compliance policy in approximately 2014. He understood the policy to contain standard provisions prohibiting agreements with competitors on pricing, customer allocation, market division, and bid-rigging, among other topics. However, Mr. Fong acknowledged that he was not closely involved in the development, implementation, or ongoing administration of the compliance program. He had not reviewed the compliance policy in detail in recent years and could not recall the specific provisions or the last time the policy had been updated.

Mr. Fong was asked specifically whether, from his position as CFO, he tracked whether annual antitrust compliance training was being conducted across TMC's operating divisions, including the U.S. Specialty Minerals Division. Mr. Fong acknowledged that he did not. He stated that he understood that antitrust compliance training had been conducted in earlier years — he recalled that there was an initial training program around the time of the policy's adoption in 2014 and that additional sessions may have been held in subsequent years — but he was not aware of the frequency with which training was conducted, the personnel who participated, or whether the training program had lapsed in recent years.

It should be noted, for context, that the internal investigation conducted by Calderwood & Harkness has found that no formal annual antitrust compliance training was conducted at TMC since approximately 2018 — a gap of approximately three to four years during which the alleged conspiracy was ongoing.

Mr. Fong stated that the antitrust compliance program was primarily within the purview of the General Counsel's office and that the CFO's office did not have a direct role in antitrust-compliance monitoring or enforcement. He distinguished between financial controls, which fall squarely within the CFO's domain, and legal-compliance programs, which he viewed as the responsibility of the legal and compliance functions.

Mr. Fong expressed the view, voluntarily and without prompting, that going forward, closer integration between the finance function and compliance monitoring would be beneficial. He stated that the current investigation had highlighted the importance of building compliance considerations — including antitrust compliance — into the financial planning and review processes, so that the finance function can serve as an additional line of defense against misconduct rather than operating in isolation from compliance activities.

X. Assessment and Observations

The following assessment reflects the observations and preliminary conclusions of the interviewing attorney based on the totality of the interview.

Credibility: Mr. Fong was cooperative, responsive, and appeared forthcoming throughout the interview. He answered questions directly and did not appear to evade or deflect. His answers were consistent and measured, and he did not contradict himself at any point. Where he lacked specific knowledge — for example, regarding the details of divisional pricing decisions or the antitrust compliance training schedule — he acknowledged the gaps in his knowledge candidly rather than speculating or offering unsupported assertions. There were no indications of evasiveness, inconsistency, or dishonesty during the interview.

Knowledge of Alleged Conduct: Based on the interview, it appears that Mr. Fong had no knowledge of the alleged price-fixing, customer allocation, or bid-rigging conduct that is the subject of the DOJ investigation. His role as CFO did not involve direct oversight of divisional pricing decisions, and the U.S. Specialty Minerals Division's financial performance during the relevant period did not present anomalies that would have triggered further inquiry from the finance function. The alleged conduct appears to have been carried out at the divisional level — specifically, by Gavin Holt — without the knowledge or involvement of TMC's C-suite executives, including the CFO.

Corroboration of Other Witness Accounts: Mr. Fong's description of the pricing authority delegation structure, and in particular the breadth of Gavin Holt's authority over pricing decisions for the U.S. Specialty Minerals Division, is consistent with the account provided by Sandra Chu during her interview on July 18, 2022. It is also consistent with the organizational charts and delegation-of-authority matrices reviewed during the internal investigation. Mr. Fong's statement that no C-suite executive was aware of the alleged conduct is consistent with the accounts of other interviewees to date, including CEO Søren Dalmqvist and General Counsel Priya Anand.

Significance for Defense Strategy: Mr. Fong's testimony supports the position that the alleged anticompetitive conduct was confined to the divisional level — specifically, to Gavin Holt and potentially a limited number of other Division-level personnel — and was not known to, authorized by, or ratified by TMC's senior management or Board of Directors. This characterization, if supported by the totality of the evidence developed during the internal investigation, is a relevant factor in the assessment of TMC's eligibility for cooperation credit under the Antitrust Division's policies, as well as in any potential non-prosecution agreement ("NPA") or deferred prosecution agreement ("DPA") negotiation with the DOJ.

Potential Exposure: No evidence was identified during this interview suggesting that Mr. Fong has any personal criminal or civil exposure in connection with the DOJ investigation. Mr. Fong does not appear to have participated in, known about, or facilitated the alleged conduct. His role as CFO was organizationally and functionally removed from the Division's commercial pricing operations.

Follow-Up: No immediate follow-up interview of Mr. Fong is anticipated at this time. However, Mr. Fong should be advised that he may be contacted again if additional questions arise as the internal investigation progresses, including if the document review or other witness interviews reveal information that requires further clarification from the CFO. Mr. Fong should also be reminded of the continuing litigation hold that is in effect across TMC and of his personal obligation to preserve all potentially relevant documents, including electronic communications, financial reports, and any other materials that may be relevant to the investigation. These reminders should be communicated to Mr. Fong by the Calderwood & Harkness team or by TMC's General Counsel.

XI. Distribution and Retention

This memorandum is to be maintained in the privileged attorney work-product file for Calderwood & Harkness LLP Matter No. 1039-00001. The memorandum shall be stored in accordance with the firm's document retention and information security policies applicable to privileged and confidential materials.

Distribution of this memorandum is strictly limited to the following individuals:

• Elaine Forsythe, Responsible Partner, Antitrust & Competition Practice Group, Calderwood & Harkness LLP;

• Aaron Liu, Lead Associate, Antitrust & Competition Practice Group, Calderwood & Harkness LLP;

• Howard Bellamy, Billing Partner, Calderwood & Harkness LLP (for billing and administrative awareness purposes only); and

• Such other Calderwood & Harkness personnel as may be expressly designated by Elaine Forsythe from time to time.

This memorandum is not to be shared with the client (Torchlight Mining Corp.), any TMC employee, officer, or director, or any third party without the express prior authorization of Elaine Forsythe, in consultation with the client regarding the potential implications of any disclosure for TMC's attorney-client privilege and work-product protections.

Prepared by:

CALDERWOOD & HARKNESS LLP

By: ________

Name: Monica Reyes

Title: Associate, Antitrust & Competition Practice Group

Date: August 19, 2022

PRIVILEGED AND CONFIDENTIAL — ATTORNEY-CLIENT PRIVILEGE / ATTORNEY WORK PRODUCT This document is not to be reproduced or distributed without the express authorization of Calderwood & Harkness LLP. Calderwood & Harkness LLP	Matter No. 1039-00001
Matter:	Torchlight Mining Corp. — DOJ Antitrust Division Grand Jury Investigation
Matter Number:	1039-00001
Grand Jury No.:	GJ-22-0194, U.S. District Court, Northern District of California, San Francisco Division
Date:	August 19, 2022
From:	Monica Reyes, Associate, Antitrust & Competition Practice Group
To:	Elaine Forsythe, Responsible Partner; Aaron Liu, Lead Associate
Re:	Witness Interview Memorandum — Richard Fong, Chief Financial Officer, Torchlight Mining Corp.

PRIVILEGED AND CONFIDENTIAL — ATTORNEY-CLIENT PRIVILEGE / ATTORNEY WORK PRODUCT
MEMORANDUM
CALDERWOOD & HARKNESS LLP 555 California Street, 40th Floor San Francisco, California 94104
PRIVILEGE LEGEND
This memorandum was prepared by counsel at Calderwood & Harkness LLP at the direction of and in anticipation of litigation, and in connection with the provision of legal advice to Torchlight Mining Corp. ("TMC") regarding the above-referenced investigation by the Antitrust Division of the United States Department of Justice. This memorandum reflects attorney mental impressions, conclusions, opinions, and legal theories and is protected in its entirety by the attorney-client privilege and the work-product doctrine. The protections afforded by these doctrines are not waived by the limited internal distribution of this memorandum within Calderwood & Harkness LLP. This memorandum shall not be disclosed, disseminated, distributed, copied, or otherwise communicated to any person or entity — including any employee, officer, or director of TMC — without the express prior authorization of Calderwood & Harkness LLP. Any unauthorized disclosure may constitute a waiver of privilege. All recipients are directed to maintain this memorandum in strict confidence and to take all reasonable steps to preserve its privileged status.
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I. Interview Logistics
Date of Interview: August 19, 2022.
Location: The interview was conducted in person at the offices of Calderwood & Harkness LLP, 555 California Street, 40th Floor, San Francisco, California 94104, in Conference Room 40-B. The conference room was secured for the duration of the interview, and no other persons were present other than those identified below.
Duration: The interview commenced at approximately 10:00 a.m. Pacific Time and concluded at approximately 12:45 p.m. Pacific Time, for a total duration of approximately two hours and forty-five minutes. A brief break of approximately ten minutes was taken at approximately 11:15 a.m. at the witness's request.
Interviewers: The interview was conducted by Monica Reyes, Associate, Antitrust & Competition Practice Group, Calderwood & Harkness LLP. Aaron Liu, Lead Associate, was also present and participated in the questioning for approximately the first ninety minutes of the interview before departing at approximately 11:30 a.m. for another previously scheduled commitment. The remainder of the interview was conducted by Monica Reyes alone.
Interviewee: Richard Fong, Chief Financial Officer, Torchlight Mining Corp. ("TMC"). Mr. Fong traveled from TMC's Toronto headquarters to San Francisco for purposes of this interview and related meetings with Calderwood & Harkness.
Counsel for Witness: Mr. Fong was not accompanied by personal counsel at the interview. At the outset of the interview, prior to the administration of the Upjohn warning described below, Mr. Fong was expressly advised that Calderwood & Harkness LLP represents Torchlight Mining Corp. as an entity and does not represent Mr. Fong in his individual capacity. Mr. Fong was further informed that he has the right to retain personal counsel, at his own expense, to represent his individual interests in connection with the DOJ investigation and this internal investigation. Mr. Fong acknowledged his understanding of these advisements and affirmatively elected to proceed with the interview without retaining or consulting separate counsel.
Upjohn Warning: An Upjohn warning was administered orally by Monica Reyes at the outset of the interview, prior to the commencement of any substantive questioning. Specifically, Mr. Fong was informed of the following:
(a) Calderwood & Harkness LLP represents Torchlight Mining Corp., the corporate entity, and does not represent Mr. Fong personally or in his individual capacity;
(b) The purpose of the interview is to gather facts in connection with Calderwood & Harkness's internal investigation relating to the investigation being conducted by the Antitrust Division of the United States Department of Justice, including the grand jury proceedings in the Northern District of California (Grand Jury No. GJ-22-0194);
(c) The conversation between Mr. Fong and Calderwood & Harkness attorneys during this interview is protected by the attorney-client privilege; however, the privilege belongs to TMC as the corporate entity and not to Mr. Fong individually;
(d) TMC, as the holder of the privilege, may in its sole discretion choose to waive the privilege and disclose the substance of this interview, including any statements made by Mr. Fong, to third parties, including the Department of Justice or other governmental authorities; and
(e) Mr. Fong should not discuss the substance of this interview, including the questions asked and the answers provided, with other TMC employees, officers, directors, or any other person outside of this privileged setting.
Mr. Fong confirmed that he understood each of the foregoing advisements. He did not raise any questions or express any reservations, and he affirmatively consented to proceed with the interview.
Recording: No audio or video recording of the interview was made. Handwritten notes were taken by Monica Reyes during the course of the interview. These notes will be maintained in the Calderwood & Harkness privilege file for Matter No. 1039-00001 and are subject to the same privilege protections as this memorandum.
Documents Reviewed During Interview: No documents were provided to Mr. Fong in advance of the interview. During the course of the interview, certain TMC financial reports and internal budget documents were referenced and shown to Mr. Fong for purposes of refreshing his recollection and eliciting testimony. These documents are identified in context in the relevant sections of this memorandum below.
II. Background on Richard Fong
Mr. Fong provided the following background information at the outset of the interview.
Full Name: Richard Fong.
Title: Chief Financial Officer, Torchlight Mining Corp.
Reporting Line: Mr. Fong reports directly to Søren Dalmqvist, the Chief Executive Officer of TMC. In addition, Mr. Fong reports functionally to the Audit Committee of the TMC Board of Directors. The Audit Committee is currently chaired by Janet Moreau-Shaw, an independent director. Mr. Fong stated that he attends all regular and special meetings of the Audit Committee and provides financial updates, audit reports, and risk assessments to the Committee on a quarterly basis, and more frequently as circumstances require.
Tenure: Mr. Fong stated that he has served as Chief Financial Officer of TMC since approximately 2015, representing approximately seven years of service in the CFO role at the time of this interview. Prior to his appointment as CFO, Mr. Fong held the position of Vice President, Finance at TMC for approximately three years (from approximately 2012 to 2015). In total, Mr. Fong has been employed by TMC in various senior finance capacities for approximately ten years.
Office Location: Mr. Fong is based at TMC's registered corporate office in Toronto, Ontario, Canada, located at 200 Bay Street, Suite 3400, Toronto, ON M5J 2J2. He noted that he travels periodically to TMC's operational sites and to the offices of advisors and auditors, but his primary base of operations is the Toronto headquarters.
Responsibilities: Mr. Fong described his responsibilities as encompassing all financial operations of TMC on a global basis. Specifically, his areas of responsibility include:
•  Financial reporting and controls;
•  Treasury and cash management;
•  Tax planning and compliance (including cross-border tax matters in Canada, the United States, Australia, Chile, and other jurisdictions in which TMC operates);
•  Internal audit oversight;
•  Investor relations (in coordination with TMC's external investor relations advisors);
•  Financial planning and analysis ("FP&A") for all operating divisions, including the U.S. Specialty Minerals Division;
•  Certification of TMC's consolidated financial statements as filed on SEDAR+ (the Canadian securities regulatory filing system) and with the United States Securities and Exchange Commission on Form 40-F (as a foreign private issuer); and
•  Co-signing (with CEO Dalmqvist) all quarterly and annual financial filings and the associated management certifications required under applicable Canadian and U.S. securities laws.
Mr. Fong stated that TMC's consolidated revenue for fiscal year 2021 was approximately CAD 4.27 billion (approximately USD 3.38 billion at prevailing exchange rates), and that TMC's consolidated EBITDA for the same period was approximately CAD 812 million.
Relationship to the U.S. Specialty Minerals Division: Mr. Fong provided the following information regarding his relationship to the U.S. Specialty Minerals Division, which is the TMC business unit at the center of the DOJ investigation:
Mr. Fong stated that the U.S. Specialty Minerals Division is one of several operating divisions within TMC's corporate structure. TMC is organized into multiple operating divisions, each with its own management team, operational infrastructure, and financial reporting unit. The U.S. Specialty Minerals Division generated approximately USD 687 million in revenue in fiscal year 2021, representing approximately 20% of TMC's consolidated revenue for that year.
As CFO, Mr. Fong receives monthly and quarterly financial reports from the Division's finance team, including revenue summaries, margin analyses, variance reports against the annual operating plan, and capital expenditure updates. However, Mr. Fong emphasized that he does not have day-to-day involvement in the Division's commercial or pricing operations. Those operational decisions are handled by the Division's management team. The Division's financial performance is reported through a divisional controller, who ultimately reports up through the corporate finance structure to Mr. Fong's office in Toronto. Mr. Fong characterized his role vis-à-vis the Division as one of "oversight and review" rather than "hands-on management."
III. Knowledge of the U.S. Specialty Minerals Division's Financial Performance
A. Revenue and Profitability Trends
Mr. Fong was questioned at length regarding the financial performance of the U.S. Specialty Minerals Division during the period relevant to the DOJ investigation (approximately January 2017 through August 2021).
Mr. Fong described the U.S. Specialty Minerals Division as a "steady performer" within the TMC portfolio. He stated that the Division's revenue had grown from approximately USD 520 million in fiscal year 2016 to approximately USD 687 million in fiscal year 2021, representing a compound annual growth rate ("CAGR") of roughly 5.7% over the five-year period. He characterized this growth trajectory as consistent with what one would expect given the overall growth in demand for specialty mineral products in the North American market during this period, as well as the Division's ongoing efforts to expand its customer base and product offerings.
Mr. Fong stated that the Division's margins were "in line with industry norms" for specialty-minerals producers. He did not observe any anomalous margin expansion or compression during the period under investigation. When asked to elaborate on what he considered to be "industry norms," Mr. Fong referred generally to EBITDA margins in the range of approximately 18% to 24% for North American specialty-minerals producers of comparable scale, noting that the Division's margins fluctuated within a similar range depending on market conditions, input costs, and product mix in any given quarter.
Mr. Fong was asked directly whether he had ever been alerted to, or had independently identified, any unusual or unexplained revenue or margin trends in the U.S. Specialty Minerals Division. Mr. Fong stated that he had not. He explained that the Division's performance was "consistent with management's projections and the overall market environment." He noted that while there were minor quarter-to-quarter fluctuations — which he attributed to normal seasonality, variations in order timing, and raw material cost movements — there was nothing in the Division's financial results that, from his vantage point as CFO, appeared anomalous or warranted further investigation.
B. Product Categories at Issue
Mr. Fong was asked about the three product categories that are the focus of the DOJ investigation: high-purity feldspar, industrial talc, and rare-earth concentrates. These three product categories are the principal products of the U.S. Specialty Minerals Division and constitute the core of the Division's revenue base.
Mr. Fong confirmed that he was generally aware of these product categories and their significance to the Division's operations. He stated that he was generally aware of industry pricing trends for these products through TMC's quarterly business reviews ("QBRs"), which include presentations by divisional management on market conditions, competitive dynamics, and pricing trends. However, Mr. Fong emphasized that he did not personally track product-level pricing. Rather, product-level pricing detail was managed at the divisional level by the Division's commercial and pricing teams. Mr. Fong's focus, as CFO, was on the Division's aggregate financial performance — total revenue, margins, cash flow — rather than the pricing of individual product lines or specific customer contracts.
When asked whether any specific price increases or pricing actions taken by the Division had ever seemed incongruent with market conditions or had raised concerns from a financial-reporting perspective, Mr. Fong stated that they had not. He explained that the Division's pricing actions, to the extent he was aware of them at a high level, appeared to track general market trends. He did not recall any instance in which a pricing action resulted in a revenue outcome that diverged materially from expectations or that prompted questions from his office, from the Audit Committee, or from TMC's external auditors.
C. Budget and Forecasting Process
Mr. Fong was asked to describe TMC's annual budgeting and forecasting process as it relates to the U.S. Specialty Minerals Division. Mr. Fong provided the following description.
Each fiscal year, TMC's operating divisions are required to prepare and submit an annual operating plan ("AOP") during the fourth quarter of the preceding fiscal year. The AOP is the primary planning and budgeting document for each division and serves as the benchmark against which actual performance is measured throughout the year. The U.S. Specialty Minerals Division's AOP includes, among other things:
•  Revenue forecasts broken down by product line (including high-purity feldspar, industrial talc, and rare-earth concentrates);
•  Pricing assumptions for each product line, typically expressed as a range or an average expected realized price per unit;
•  Volume estimates, including projected production volumes and sales volumes by product;
•  Margin targets at the gross profit and EBITDA levels;
•  Capital expenditure plans; and
•  Headcount and operating expense budgets.
Mr. Fong stated that the Division's AOP is reviewed by TMC's corporate finance team and is discussed during annual budget review meetings attended by the CEO, CFO, and senior management of each division. Once the AOP is approved, the Division's management is expected to execute against the plan, and the corporate finance team monitors actual results against the AOP on a monthly and quarterly basis through variance reporting.
Mr. Fong stated that the Division's actual results consistently tracked within a reasonable range of the AOP during the 2017–2021 period. He defined "reasonable range" as within approximately plus or minus 5% of the revenue forecast and within a comparable range for margin targets, allowing for normal market fluctuations. He did not recall any fiscal year during the relevant period in which the Division's results were so far above or below the forecast as to trigger a special review or an escalation to the CEO or the Audit Committee for further inquiry.
Mr. Fong was asked whether the pricing assumptions embedded in the Division's AOP were ever questioned or flagged — either by TMC's internal audit function, by the corporate finance team during the budget review process, or by TMC's external auditor, Calvert & Associates LLP (engagement partner Daniel Moreau). Mr. Fong stated that they were not. He explained that the pricing assumptions in the AOP were prepared by the Division's management, were reviewed by the corporate finance team for general reasonableness, and were subjected to Calvert & Associates' standard audit procedures in connection with the annual financial statement audit, but that no concerns were raised.
IV. Pricing Authority and Delegation Structure
A. Authority for Pricing Decisions
A significant portion of the interview was devoted to understanding the delegation of pricing authority within TMC, particularly as it relates to the U.S. Specialty Minerals Division.
Mr. Fong explained that pricing authority within TMC is delegated to divisional management. This is consistent with TMC's decentralized organizational structure, in which operating divisions have substantial autonomy over commercial and operational decisions, subject to corporate-level financial oversight. The CEO sets the overall strategic direction for the company, and the CFO's office monitors financial performance and ensures the accuracy and integrity of financial reporting, but specific pricing decisions for individual products and customer contracts are made at the divisional Vice President level and below.
For the U.S. Specialty Minerals Division, Mr. Fong stated that the relevant pricing authority during the period in question resided with Gavin Holt, who held the title of Vice President, U.S. Specialty Minerals Sales. Mr. Holt had the authority to set and adjust published price lists for the Division's products and to approve customer-specific contract pricing, including pricing for multi-year supply agreements and spot transactions.
Mr. Fong stated that Holt had "broad latitude" on pricing, subject to one key constraint: the Division's actual financial results needed to stay within the margin targets as approved in the annual operating plan. As long as the Division was delivering results within the parameters of the AOP — and, in particular, was not falling below the margin floors approved by corporate management — there was no requirement for Holt to seek additional approval from the corporate level for individual pricing decisions.
Mr. Fong was asked specifically whether there was any requirement for Holt or other divisional managers to seek approval from the CFO's office or the CEO before implementing pricing changes. Mr. Fong stated that there was no such formal requirement. He explained that TMC's governance framework contemplated that divisional management would exercise judgment on pricing within the guardrails established by the AOP, and that the corporate finance function would monitor outcomes through after-the-fact variance reporting rather than through pre-approval of individual pricing actions.
Mr. Fong further stated that there was no formal sign-off or approval workflow at the corporate level for individual pricing decisions. He described this arrangement as "typical for a decentralized mining and chemicals company" and noted that TMC's organizational structure was designed to empower divisional management to respond to market conditions quickly and effectively without the delays that would be associated with a more centralized approval process.
B. Sandra Chu's Role
Mr. Fong was asked about his knowledge of Sandra Chu, who served as Director of Pricing Analytics within the U.S. Specialty Minerals Division during the relevant period. Ms. Chu has been identified as a person of interest in the investigation and was previously interviewed by Calderwood & Harkness on July 18, 2022.
Mr. Fong stated that he was aware of Ms. Chu's role within the Division, though he did not interact with her regularly and had no direct reporting relationship with her. Ms. Chu reported to Gavin Holt, not to Mr. Fong or to anyone in the corporate finance organization. Mr. Fong described Ms. Chu's function as "the analytical backbone" of the Division's pricing process. He understood that she was responsible for compiling market data, analyzing competitive pricing trends, preparing pricing recommendations for Holt's consideration, and implementing approved price adjustments in TMC's enterprise resource planning ("ERP") systems.
Mr. Fong stated that he had no knowledge of any specific pricing instructions that Holt may have given to Chu beyond what would be normal in the course of their reporting relationship. He had not reviewed any communications between Holt and Chu and had not been made aware of any such communications prior to the commencement of the internal investigation.
C. Controls Over Pricing
Mr. Fong was asked whether TMC had any internal controls specifically designed to monitor or audit pricing decisions at the divisional level for antitrust compliance purposes.
Mr. Fong stated that TMC had a general antitrust compliance policy, which had been adopted in approximately 2014. He was aware of the existence of the policy in general terms but acknowledged that the CFO's office did not have specific financial controls designed to detect anticompetitive pricing coordination. He stated that the finance function's controls were oriented toward ensuring the accuracy of financial reporting, the proper recognition of revenue, the integrity of intercompany transactions, and the prevention and detection of fraud — not toward monitoring the competitive dynamics of pricing decisions or detecting collusion with competitors.
Mr. Fong further stated that TMC's internal audit team, which reports to the Audit Committee through the CFO's office, conducts periodic operational audits of the divisions. These audits encompass a range of topics, including financial accuracy, revenue recognition, expense management, compliance with internal policies, and controls testing. However, Mr. Fong acknowledged that these audits did not include any specific procedures designed to test for anticompetitive behavior, such as reviews of communications with competitors, analysis of pricing patterns for evidence of coordination, or testing of adherence to the antitrust compliance policy. The audits were financial in nature, not competitive-compliance-oriented.
V. Knowledge of Gavin Holt and Holt's Departure
Mr. Fong was questioned regarding his personal knowledge of Gavin Holt and the circumstances of Holt's departure from TMC.
Mr. Fong stated that he knew Holt professionally. Holt was a "senior commercial leader" within TMC's U.S. operations and held the title of Vice President, U.S. Specialty Minerals Sales. Mr. Fong and Holt interacted at TMC's annual leadership meetings, which bring together senior executives from all divisions and geographies, as well as at the quarterly business reviews at which divisional management presents financial and operational results to the CEO, CFO, and other members of the executive leadership team. Mr. Fong described these interactions as professional and business-focused; he did not characterize his relationship with Holt as a personal one outside of the work environment.
Mr. Fong described Holt as "commercially aggressive" in the sense that Holt was a results-oriented manager who was focused on revenue growth, market share, and financial performance. Mr. Fong noted that the U.S. Specialty Minerals Division under Holt's leadership generally met or exceeded its financial targets during the years that Holt led the commercial function. Mr. Fong stated that Holt's performance was viewed positively within the company and that Holt was regarded as a capable and effective commercial leader.
Regarding Holt's departure from TMC, Mr. Fong provided the following account. Mr. Fong stated that Holt resigned from TMC effective September 30, 2021. Mr. Fong understood that the resignation was presented as voluntary and that Holt represented to TMC management that he was leaving to pursue "other opportunities." Mr. Fong was not involved in the details of Holt's separation and did not participate in any discussions regarding the circumstances of Holt's departure beyond being informed that Holt was leaving the company. Mr. Fong stated that he was not aware at the time of any connection between Holt's departure and any potential DOJ investigation, grand jury proceedings, or antitrust concerns of any kind.
Mr. Fong stated that he did not learn of the DOJ investigation until TMC received the grand jury subpoena duces tecum — Subpoena No. GJ-22-0194-SD-003 — on February 14, 2022. He was informed of the receipt of the subpoena by Priya Anand, TMC's General Counsel, on the same day. Prior to receiving that notification from Ms. Anand, Mr. Fong stated that he had no knowledge or awareness of any investigation or inquiry by the DOJ or any other governmental agency relating to anticompetitive conduct in the specialty-minerals industry.
Mr. Fong was asked whether, with the benefit of hindsight and knowledge of the investigation, he could now identify any financial "red flags" associated with Holt's tenure that might have been indicative of the alleged conduct. Mr. Fong stated that he could not. He explained that the Division's financial results during Holt's tenure did not, on their face, suggest anything other than successful commercial management. The revenue growth was steady, the margins were within normal parameters, the Division's results tracked the AOP, and there were no unusual transactions or accounting entries that, even in retrospect, would have alerted the finance function to the possibility of anticompetitive conduct.
VI. Knowledge of Competitor Interactions and Trade Associations
Mr. Fong was questioned at length regarding his knowledge of any interactions between TMC personnel and competitors, as well as TMC's involvement in industry trade associations.
Mr. Fong stated that he had no personal involvement with the North American Specialty Minerals Council ("NASMC") or with any other trade association or industry group in the specialty-minerals sector. He did not attend NASMC conferences, meetings, working groups, or social events. He stated that his role as CFO did not require or involve participation in industry trade associations, which he understood to be more relevant to the commercial and technical personnel within TMC's operating divisions.
Mr. Fong was asked whether he was aware of any communications or interactions between Gavin Holt and personnel at Ridgecrest Minerals Inc. — including Carl Edgerton, Ridgecrest's VP of Commercial Operations, who has been identified as a co-conspirator in the investigation — or at Pinnacle Earth Resources Ltd. — including Kevin Tsang, Pinnacle's Director of Strategic Accounts, who has also been identified in the investigation. Mr. Fong stated that he was not aware of any specific communications or interactions between Holt and any of these individuals. He acknowledged that he would assume that divisional commercial leaders such as Holt would have had some level of contact with counterparts at competitor companies in the ordinary course of business — for example, at trade association events, industry conferences, or customer-facing situations — but he had no specific knowledge of any such interactions and had never been briefed on or informed of any contacts between Holt and the named individuals.
Mr. Fong stated that he had never heard of the "VaultChat" messaging application prior to learning about it in the context of the current investigation. VaultChat, as the investigation has revealed, was an encrypted and ephemeral messaging platform reportedly used by certain individuals, including Holt, to communicate with counterparts at competitor companies regarding pricing and customer allocation. Mr. Fong stated that this was entirely unknown to him before the investigation commenced.
Finally, and critically, Mr. Fong stated that he was never informed by anyone at TMC — including Gavin Holt, Sandra Chu, Thomas Eriksen (Division Controller), Priya Anand (General Counsel), Søren Dalmqvist (CEO), or any other person — of any agreement, understanding, arrangement, or coordination with competitors regarding:
•  The pricing of feldspar, industrial talc, rare-earth concentrates, or any other product;
•  The allocation of customers or geographic markets among competitors; or
•  The coordination of bids in response to customer requests for proposals or other competitive solicitations.
Mr. Fong was unequivocal on this point and stated that he would have immediately reported any such information to TMC's General Counsel had it come to his attention.
VII. Absence of Financial Irregularities Suggesting Awareness
A. No Unusual Payment Flows
Mr. Fong was asked whether TMC's finance function had, at any point during the 2017–2021 period, identified any unusual payment flows, off-books transactions, side agreements, consulting payments, rebates, or other financial irregularities in connection with the U.S. Specialty Minerals Division.
Mr. Fong stated that no such irregularities had been identified. He confirmed that all of the Division's revenue was processed through TMC's standard enterprise resource planning systems and that the Division's revenue, accounts receivable, and related financial data were subject to TMC's normal suite of internal controls, including segregation of duties, approval workflows for significant transactions, and management review of journal entries and adjustments. In addition, the Division's financial results were subject to Calvert & Associates LLP's annual external audit procedures, which included substantive testing of revenue, receivables, and related accounts. Mr. Fong stated that neither the internal controls nor the external audit procedures identified any unusual or unexplained payment flows or off-books arrangements.
B. No Whistleblower Reports
Mr. Fong was asked about TMC's ethics and whistleblower reporting mechanisms and whether any reports had been received alleging anticompetitive conduct.
Mr. Fong stated that TMC maintains an anonymous ethics hotline, which is available to all TMC employees worldwide and is administered by a third-party provider. Reports submitted through the hotline are reviewed by TMC's compliance function and, depending on the nature of the report, may be escalated to the General Counsel's office, the Audit Committee, or outside counsel.
Mr. Fong stated that, to his knowledge, no complaints or reports were received through the ethics hotline or through any other reporting channel — including direct reports to management, reports to the General Counsel's office, or reports to the Audit Committee — alleging anticompetitive conduct, price-fixing, customer allocation, bid-rigging, or any other antitrust violation in the U.S. Specialty Minerals Division during Mr. Fong's tenure as CFO.
C. No External Audit Findings
Mr. Fong confirmed that Calvert & Associates LLP, TMC's external auditor (engagement partner Daniel Moreau), had not raised any audit findings, management letter comments, or internal control deficiencies related to the U.S. Specialty Minerals Division's pricing practices, competitor interactions, or antitrust compliance during the period in question. The external auditor's work focused on financial-statement-level assertions — accuracy, completeness, existence, valuation, and disclosure — and did not encompass antitrust-specific testing.
Mr. Fong further confirmed that TMC received unqualified (clean) audit opinions from Calvert & Associates for all fiscal years during the alleged conspiracy period, spanning from fiscal year 2017 through fiscal year 2021. There were no qualified opinions, going-concern qualifications, or adverse opinions during this period. The management letters issued by Calvert & Associates did not contain any observations or recommendations pertaining to the Division's pricing practices or competitive conduct.
D. No Unusual Margin or Revenue Patterns
Mr. Fong reiterated that, from a financial-reporting perspective, the Division's revenue growth and margin stability during the 2017–2021 period were unremarkable. There were no sudden spikes in revenue, no unexplained shifts in profitability, and no quarter-over-quarter or year-over-year changes that, in Mr. Fong's assessment, would have prompted further inquiry from the finance function, the internal audit team, or the external auditors.
However, Mr. Fong made an unprompted and notable acknowledgment during this portion of the interview. He stated that he recognized, in light of the current investigation, that price-fixing conspiracies can be difficult — and in some cases impossible — to detect from financial data alone. He observed that the financial effect of a successful price-fixing conspiracy may not be a dramatic increase in margins but rather a stabilization of margins, a reduction in price competition, and a smoothing of revenue that appears, from the outside, as simply solid commercial performance. Mr. Fong acknowledged that this dynamic could explain why the Division's financial results did not raise red flags, even if the alleged conduct was occurring during the relevant period.
VIII. Involvement in Investigation-Related Financial Matters
A. Litigation Reserve
Mr. Fong was questioned about his involvement in the financial and accounting aspects of TMC's response to the DOJ investigation.
Mr. Fong stated that he was directly involved in the establishment of TMC's initial litigation reserve in connection with the investigation. TMC established an initial litigation reserve of USD 30 million in March 2022, which was disclosed in TMC's fiscal year 2021 annual report filed on March 28, 2022, on the SEDAR+ system and with the U.S. Securities and Exchange Commission on Form 40-F.
Mr. Fong stated that he worked closely with General Counsel Priya Anand, the Calderwood & Harkness team (including Elaine Forsythe and Aaron Liu), and TMC's external auditor, Calvert & Associates LLP, to assess the appropriate reserve amount under applicable accounting standards. The reserve was assessed under the framework of ASC 450 (Accounting Standards Codification 450, Contingencies) for U.S. GAAP purposes and IAS 37 (Provisions, Contingent Liabilities and Contingent Assets) for IFRS purposes. The analysis considered the probability that a loss had been incurred and whether the amount of the loss could be reasonably estimated, taking into account the early stage of the investigation and the inherent uncertainty regarding potential outcomes, including criminal fines, civil liability, and related costs.
Mr. Fong noted that the USD 30 million initial reserve was established based on an early-stage assessment when the range of potential outcomes was still extremely broad and when the full scope of the alleged conduct had not yet been determined. He stated that the reserve amount would be, and indeed has been, subject to reassessment as the investigation progresses and as additional information becomes available. Mr. Fong noted that the reserve was subsequently increased to USD 50 million in the third quarter of fiscal year 2023, reflecting updated assessments of the potential exposure.
B. D&O Insurance
Mr. Fong confirmed that he was aware that TMC had tendered notice of the DOJ investigation to Northland Mutual Insurance Co. under TMC's directors' and officers' liability insurance policy, Policy No. NMI-DO-2021-5547. The notice was tendered on March 4, 2022.
Mr. Fong stated that the D&O insurance notification and the analysis of coverage issues — including questions regarding the scope of coverage, applicable retention amounts, and the interplay between the corporate-entity coverage and individual-insured coverage under the policy — were primarily managed by General Counsel Priya Anand in coordination with Calderwood & Harkness LLP. Mr. Fong's involvement in D&O insurance matters was limited to understanding the potential financial impact of coverage determinations on TMC's consolidated financial statements, including the extent to which insurance proceeds might offset litigation expenses and any eventual fines, penalties, or settlement amounts.
C. Disclosure Coordination
Mr. Fong described his role in coordinating the public disclosure of the DOJ investigation in TMC's financial filings and investor communications.
Mr. Fong stated that he worked closely with Priya Anand, the Calderwood & Harkness team, and Calvert & Associates to draft the disclosure language for TMC's fiscal year 2021 annual report, ensuring that the disclosures complied with the requirements of the U.S. Securities and Exchange Commission (including the disclosure obligations applicable to foreign private issuers filing on Form 40-F) and the applicable Canadian securities laws and regulations. The disclosure was included in the contingencies note to the financial statements and in the management's discussion and analysis section of the annual report.
Mr. Fong stated that significant attention was paid to ensuring that the disclosure was sufficiently informative to satisfy securities-law requirements without inadvertently making admissions or characterizations that could prejudice TMC's position in the DOJ investigation or in potential civil follow-on litigation. The language was reviewed and approved by Calderwood & Harkness before filing.
In addition, Mr. Fong stated that Ironbridge Capital Markets Inc. (TMC's relationship investment bank, under the coverage of relationship partner Alan Kirkwood) was consulted regarding the potential market and investor-relations impact of the disclosure. Ironbridge provided input on investor expectations, likely market reaction, and strategies for managing the narrative with TMC's institutional investor base and the analyst community.
IX. Knowledge of TMC's Antitrust Compliance Program
Mr. Fong was questioned regarding his knowledge of TMC's antitrust compliance program.
Mr. Fong stated that he was generally aware that TMC had adopted a formal antitrust compliance policy in approximately 2014. He understood the policy to contain standard provisions prohibiting agreements with competitors on pricing, customer allocation, market division, and bid-rigging, among other topics. However, Mr. Fong acknowledged that he was not closely involved in the development, implementation, or ongoing administration of the compliance program. He had not reviewed the compliance policy in detail in recent years and could not recall the specific provisions or the last time the policy had been updated.
Mr. Fong was asked specifically whether, from his position as CFO, he tracked whether annual antitrust compliance training was being conducted across TMC's operating divisions, including the U.S. Specialty Minerals Division. Mr. Fong acknowledged that he did not. He stated that he understood that antitrust compliance training had been conducted in earlier years — he recalled that there was an initial training program around the time of the policy's adoption in 2014 and that additional sessions may have been held in subsequent years — but he was not aware of the frequency with which training was conducted, the personnel who participated, or whether the training program had lapsed in recent years.
It should be noted, for context, that the internal investigation conducted by Calderwood & Harkness has found that no formal annual antitrust compliance training was conducted at TMC since approximately 2018 — a gap of approximately three to four years during which the alleged conspiracy was ongoing.
Mr. Fong stated that the antitrust compliance program was primarily within the purview of the General Counsel's office and that the CFO's office did not have a direct role in antitrust-compliance monitoring or enforcement. He distinguished between financial controls, which fall squarely within the CFO's domain, and legal-compliance programs, which he viewed as the responsibility of the legal and compliance functions.
Mr. Fong expressed the view, voluntarily and without prompting, that going forward, closer integration between the finance function and compliance monitoring would be beneficial. He stated that the current investigation had highlighted the importance of building compliance considerations — including antitrust compliance — into the financial planning and review processes, so that the finance function can serve as an additional line of defense against misconduct rather than operating in isolation from compliance activities.
X. Assessment and Observations
The following assessment reflects the observations and preliminary conclusions of the interviewing attorney based on the totality of the interview.
Credibility: Mr. Fong was cooperative, responsive, and appeared forthcoming throughout the interview. He answered questions directly and did not appear to evade or deflect. His answers were consistent and measured, and he did not contradict himself at any point. Where he lacked specific knowledge — for example, regarding the details of divisional pricing decisions or the antitrust compliance training schedule — he acknowledged the gaps in his knowledge candidly rather than speculating or offering unsupported assertions. There were no indications of evasiveness, inconsistency, or dishonesty during the interview.
Knowledge of Alleged Conduct: Based on the interview, it appears that Mr. Fong had no knowledge of the alleged price-fixing, customer allocation, or bid-rigging conduct that is the subject of the DOJ investigation. His role as CFO did not involve direct oversight of divisional pricing decisions, and the U.S. Specialty Minerals Division's financial performance during the relevant period did not present anomalies that would have triggered further inquiry from the finance function. The alleged conduct appears to have been carried out at the divisional level — specifically, by Gavin Holt — without the knowledge or involvement of TMC's C-suite executives, including the CFO.
Corroboration of Other Witness Accounts: Mr. Fong's description of the pricing authority delegation structure, and in particular the breadth of Gavin Holt's authority over pricing decisions for the U.S. Specialty Minerals Division, is consistent with the account provided by Sandra Chu during her interview on July 18, 2022. It is also consistent with the organizational charts and delegation-of-authority matrices reviewed during the internal investigation. Mr. Fong's statement that no C-suite executive was aware of the alleged conduct is consistent with the accounts of other interviewees to date, including CEO Søren Dalmqvist and General Counsel Priya Anand.
Significance for Defense Strategy: Mr. Fong's testimony supports the position that the alleged anticompetitive conduct was confined to the divisional level — specifically, to Gavin Holt and potentially a limited number of other Division-level personnel — and was not known to, authorized by, or ratified by TMC's senior management or Board of Directors. This characterization, if supported by the totality of the evidence developed during the internal investigation, is a relevant factor in the assessment of TMC's eligibility for cooperation credit under the Antitrust Division's policies, as well as in any potential non-prosecution agreement ("NPA") or deferred prosecution agreement ("DPA") negotiation with the DOJ.
Potential Exposure: No evidence was identified during this interview suggesting that Mr. Fong has any personal criminal or civil exposure in connection with the DOJ investigation. Mr. Fong does not appear to have participated in, known about, or facilitated the alleged conduct. His role as CFO was organizationally and functionally removed from the Division's commercial pricing operations.
Follow-Up: No immediate follow-up interview of Mr. Fong is anticipated at this time. However, Mr. Fong should be advised that he may be contacted again if additional questions arise as the internal investigation progresses, including if the document review or other witness interviews reveal information that requires further clarification from the CFO. Mr. Fong should also be reminded of the continuing litigation hold that is in effect across TMC and of his personal obligation to preserve all potentially relevant documents, including electronic communications, financial reports, and any other materials that may be relevant to the investigation. These reminders should be communicated to Mr. Fong by the Calderwood & Harkness team or by TMC's General Counsel.
XI. Distribution and Retention
This memorandum is to be maintained in the privileged attorney work-product file for Calderwood & Harkness LLP Matter No. 1039-00001. The memorandum shall be stored in accordance with the firm's document retention and information security policies applicable to privileged and confidential materials.
Distribution of this memorandum is strictly limited to the following individuals:
•  Elaine Forsythe, Responsible Partner, Antitrust & Competition Practice Group, Calderwood & Harkness LLP;
•  Aaron Liu, Lead Associate, Antitrust & Competition Practice Group, Calderwood & Harkness LLP;
•  Howard Bellamy, Billing Partner, Calderwood & Harkness LLP (for billing and administrative awareness purposes only); and
•  Such other Calderwood & Harkness personnel as may be expressly designated by Elaine Forsythe from time to time.
This memorandum is not to be shared with the client (Torchlight Mining Corp.), any TMC employee, officer, or director, or any third party without the express prior authorization of Elaine Forsythe, in consultation with the client regarding the potential implications of any disclosure for TMC's attorney-client privilege and work-product protections.
Prepared by:
CALDERWOOD & HARKNESS LLP
By: ________
Name: Monica Reyes
Title: Associate, Antitrust & Competition Practice Group
Date: August 19, 2022
PRIVILEGED AND CONFIDENTIAL — ATTORNEY-CLIENT PRIVILEGE / ATTORNEY WORK PRODUCT This document is not to be reproduced or distributed without the express authorization of Calderwood & Harkness LLP. Calderwood & Harkness LLP | Matter No. 1039-00001
Matter: | Torchlight Mining Corp. — DOJ Antitrust Division Grand Jury Investigation
Matter Number: | 1039-00001
Grand Jury No.: | GJ-22-0194, U.S. District Court, Northern District of California, San Francisco Division
Date: | August 19, 2022
From: | Monica Reyes, Associate, Antitrust & Competition Practice Group
To: | Elaine Forsythe, Responsible Partner; Aaron Liu, Lead Associate
Re: | Witness Interview Memorandum — Richard Fong, Chief Financial Officer, Torchlight Mining Corp.

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