1039-00002 · Torchlight Mining Corp · Closing

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CALDERWOOD & HARKNESS LLP Attorneys at Law

450 Park Avenue New York, New York 10022 Telephone: (212) 558-4000 Facsimile: (212) 558-3588 www.calderwoodharkness.com

New York · Toronto · London · Hong Kong

Toronto Office: 199 Bay Street, Suite 4400 Toronto, Ontario M5L 1A9, Canada Telephone: (416) 863-1200

April 22, 2022

Matter No.: 1039-00002

Deepak Rathore, Esq. General Counsel & Corporate Secretary Torchlight Mining Corp. 2200 – 400 Burrard Street Vancouver, British Columbia V6C 3A6 Canada

Re: Closing of the Offering of $300,000,000 Aggregate Principal Amount of 8.750% Senior Secured Notes due 2029 by Torchlight Mining Corp.

Dear Deepak:

1. Confirmation of Closing

We are pleased to confirm that the closing of the offering described above (the "Offering") occurred on April 19, 2022 (the "Closing Date"). On that date, Torchlight Mining Corp. (the "Issuer" or the "Company") completed the issuance and sale of $300,000,000 aggregate principal amount of its 8.750% Senior Secured Notes due 2029 (the "Notes"). The Notes were offered and sold in a private placement pursuant to Rule 144A under the Securities Act of 1933, as amended (the "Securities Act"), to qualified institutional buyers, and in offshore transactions in reliance upon Regulation S under the Securities Act. No registration statement has been filed with the U.S. Securities and Exchange Commission (the "SEC") in connection with the issuance of the Notes.

The Notes are governed by, and construed in accordance with, the laws of the State of New York. The Notes were issued pursuant to that certain Indenture, dated as of April 19, 2022 (the "Indenture"), among Torchlight Mining Corp., as Issuer, Wolverine Lake Mining Ltd., Torchlight Milling & Processing Inc., and Torchlight U.S. Holdings, Inc. (collectively, the "Guarantors"), and Northern Dominion Trust Company, as Trustee and Collateral Agent (the "Trustee" or the "Collateral Agent," as applicable).

The Notes were purchased by the following initial purchasers (collectively, the "Initial Purchasers"): Kelvantis Capital Markets LLC, as lead book-running manager; Prestige Barrington & Co., Inc., as co-manager; and Halcyon Securities Inc., as co-manager. The purchase was effected pursuant to the Purchase Agreement described in Section 4.1 below.

Calderwood & Harkness LLP ("C&H") served as U.S. counsel to the Issuer and the Guarantors in connection with the Offering. Pendleton Ross LLP served as Canadian counsel to the Issuer and the Guarantors. Clairmont & Voss LLP served as U.S. counsel to the Initial Purchasers, and Greystone & Whitfield LLP served as Canadian counsel to the Initial Purchasers.

We note for the record that the originally anticipated closing date for the Offering was April 5, 2022. The closing was extended to April 19, 2022 to accommodate the timing of Canadian regulatory clearances, as discussed among the parties and reflected in the amendment to the Purchase Agreement. All conditions precedent to closing were satisfied or duly waived as of the Closing Date.

The applicable securities identification numbers for the Notes are as follows:

This memorandum is intended to serve as a comprehensive record of the Offering, the closing deliverables, and the key post-closing obligations of the Company, and to facilitate the Company's ongoing compliance with the terms of the Indenture, the Registration Rights Agreement, and the related transaction documents.

2. Summary of Key Terms

The following is a summary of the principal terms of the Notes as issued on the Closing Date. This summary is qualified in its entirety by reference to the Indenture and the Notes themselves.

The Notes constitute senior secured obligations of the Issuer and rank pari passu in right of payment with all existing and future senior indebtedness of the Issuer. The guarantees of the Guarantors constitute senior secured obligations of each respective Guarantor, ranking pari passu in right of payment with all existing and future senior indebtedness of such Guarantor. The Notes and the guarantees are secured on a first-priority basis by the Collateral, subject to Permitted Liens as defined in the Indenture.

3. Use of Proceeds — Confirmation

We confirm that, based on the Funds Flow Memorandum and information provided by the Company, the proceeds of the Offering were applied on or promptly after the Closing Date as described in the Final Offering Memorandum dated March 14, 2022 (the "Final Offering Memorandum"), as follows:

With respect to the Ridgeline Bank of Canada revolving credit facility, we confirm that the outstanding balance of CAD $140,000,000 (together with all accrued interest, breakage costs, and administrative fees) was repaid in full on the Closing Date, and the CAD $225,000,000 committed revolving credit facility was terminated in accordance with its terms. The applicable payoff amount was wired in accordance with the wire instructions set forth in the Funds Flow Memorandum dated April 18, 2022, and the Payoff Letter & Lien Release was received from Ridgeline Bank of Canada (Gavin Forde, Relationship Manager) confirming satisfaction and discharge of all obligations thereunder. Arrangements for the filing of PPSA discharges with respect to the liens of Ridgeline Bank of Canada are being coordinated by Pendleton Ross LLP and are described in greater detail in Section 5.1 of this memorandum.

4. Closing Deliverables — Summary of Completed Items

Set forth below is a summary of the principal documents executed, delivered, or received in connection with the closing of the Offering. All documents have been reviewed by this firm and, except as otherwise noted below, are in form and substance satisfactory to counsel. Originals and/or executed counterparts of all documents are being assembled in the closing binder described in Section 6 below.

4.1 Transaction Agreements Executed and Delivered

The following principal transaction agreements were duly executed and delivered by the parties thereto on or prior to the Closing Date:

(a) Purchase Agreement, dated March 29, 2022, among Torchlight Mining Corp., as Issuer, Wolverine Lake Mining Ltd., Torchlight Milling & Processing Inc., and Torchlight U.S. Holdings, Inc., as Guarantors, and Kelvantis Capital Markets LLC, Prestige Barrington & Co., Inc., and Halcyon Securities Inc., as Initial Purchasers (the "Purchase Agreement");

(b) Indenture, dated April 19, 2022, among Torchlight Mining Corp., as Issuer, Wolverine Lake Mining Ltd., Torchlight Milling & Processing Inc., and Torchlight U.S. Holdings, Inc., as Guarantors, and Northern Dominion Trust Company, as Trustee and Collateral Agent (the "Indenture");

(c) Registration Rights Agreement, dated April 19, 2022, among Torchlight Mining Corp., as Issuer, Wolverine Lake Mining Ltd., Torchlight Milling & Processing Inc., and Torchlight U.S. Holdings, Inc., as Guarantors, and Kelvantis Capital Markets LLC, Prestige Barrington & Co., Inc., and Halcyon Securities Inc., as Initial Purchasers (the "Registration Rights Agreement");

(d) Security Agreement (U.S.), dated April 19, 2022, between Torchlight U.S. Holdings, Inc. (EIN: 84-3921057) and Northern Dominion Trust Company, as Collateral Agent (the "U.S. Security Agreement");

(e) General Security Agreement (Canada), dated April 19, 2022, among Torchlight Mining Corp., Wolverine Lake Mining Ltd., Torchlight Milling & Processing Inc., and Northern Dominion Trust Company, as Collateral Agent (the "Canadian General Security Agreement"); and

(f) Collateral Agency Agreement, dated April 19, 2022, among Torchlight Mining Corp., as Issuer, Wolverine Lake Mining Ltd., Torchlight Milling & Processing Inc., and Torchlight U.S. Holdings, Inc., as Guarantors, and Northern Dominion Trust Company, as Collateral Agent (the "Collateral Agency Agreement").

Each of the foregoing agreements was executed in multiple counterparts and delivered to the applicable parties at or prior to closing. Fully executed copies of each agreement will be included in the closing binder.

4.2 Notes Issued

The following Global Notes were authenticated and delivered by the Trustee and credited to the accounts of the applicable participants through DTC, Thackeray Partners LLC, and Ashgrove Enterprises, as applicable, on the Closing Date:

(a) Global Note (Rule 144A) — substantially in the form of Exhibit A-1 to the Indenture; CUSIP No. 891207 AA 3; ISIN No. US891207AA38; and

(b) Global Note (Regulation S) — substantially in the form of Exhibit A-2 to the Indenture; CUSIP No. C89120 AA 5; ISIN No. USC89120AA58.

Both Global Notes were delivered to Northern Dominion Trust Company, as Trustee, and the beneficial interests therein were credited through DTC (with respect to the Rule 144A Global Note) and through Stonefield Industries and Harborview Industries (with respect to the Regulation S Global Note) on the Closing Date in accordance with the DTC Letter of Representations and customary book-entry settlement procedures.

4.3 Legal Opinions Delivered

The following legal opinions were delivered to the Initial Purchasers (and, where applicable, to the Trustee) at or prior to the closing:

(a) Calderwood & Harkness LLP Opinion (New York law), dated April 19, 2022, addressed to the Initial Purchasers, opining on, inter alia, the valid issuance and due authorization of the Notes, the enforceability of the Notes and the Indenture under the laws of the State of New York, the perfection and priority of the security interests created under the U.S. Security Agreement, and the availability of the exemptions from registration under Rule 144A and Regulation S under the Securities Act;

(b) Calderwood & Harkness LLP Opinion (Delaware law — Torchlight U.S. Holdings, Inc.), dated April 19, 2022, addressed to the Initial Purchasers, opining on the due organization, valid existence, and good standing of Torchlight U.S. Holdings, Inc. ("TUSHI") under the laws of the State of Delaware, and the enforceability of the Guarantee and the U.S. Security Agreement as against TUSHI;

(c) Pendleton Ross LLP Opinion (Canadian law), dated April 19, 2022, addressed to the Initial Purchasers, opining on the due organization of Torchlight Mining Corp. under the Canada Business Corporations Act, the due organization of Wolverine Lake Mining Ltd. and Torchlight Milling & Processing Inc. under the Business Corporations Act (Ontario), the corporate power and authority of each Canadian entity, and the enforceability of the Guarantees and the Canadian General Security Agreement; and

(d) Clairmont & Voss LLP Opinion (as U.S. counsel to the Initial Purchasers), dated April 19, 2022, delivered to the Initial Purchasers at closing, addressing customary matters relating to the Offering.

Copies of the C&H and Pendleton Ross opinions are included in the closing binder. A copy of the Clairmont & Voss opinion was delivered directly to the Initial Purchasers and is included in the closing binder as received.

4.4 Officers' and Secretary's Certificates

The following officers' and secretary's certificates were duly executed and delivered on the Closing Date:

(a) Officer's Certificate of Torchlight Mining Corp., dated April 19, 2022, executed by Lianne Prokopchuk, Chief Financial Officer, and Deepak Rathore, General Counsel, certifying compliance with Section 4.02 of the Indenture and the satisfaction of the conditions precedent to closing set forth in the Purchase Agreement, including, without limitation, the accuracy of representations and warranties, the absence of any material adverse change, and the performance of covenants and agreements required to be performed on or prior to the Closing Date;

(b) Secretary's Certificate of Torchlight Mining Corp., dated April 19, 2022, executed by Deepak Rathore, Corporate Secretary, certifying the authenticity and completeness of the attachments thereto, including: (i) certified copies of resolutions of the Board of Directors authorizing the Offering, the issuance of the Notes, the execution and delivery of the transaction documents, and the granting of the security interests; (ii) certified copies of the Company's articles of incorporation, as amended; (iii) certified copies of the Company's by-laws, as amended; and (iv) an incumbency certificate identifying the following authorized officers of the Company: Magnus Thornberg, Chief Executive Officer; Lianne Prokopchuk, Chief Financial Officer; Deepak Rathore, General Counsel and Corporate Secretary; and Colleen Hébert, Treasurer;

(c) Secretary's Certificate of Wolverine Lake Mining Ltd., dated April 19, 2022, certifying organizational documents, board resolutions, and officer incumbency;

(d) Secretary's Certificate of Torchlight Milling & Processing Inc., dated April 19, 2022, certifying organizational documents, board resolutions, and officer incumbency;

(e) Secretary's Certificate of Torchlight U.S. Holdings, Inc., dated April 19, 2022, certifying organizational documents, board resolutions, and officer incumbency; and

(f) Bring-Down Certificate (Representations and Warranties), dated April 19, 2022, from the Issuer to the Initial Purchasers, certifying that all representations and warranties of the Issuer and the Guarantors contained in the Purchase Agreement were true and correct in all material respects as of the Closing Date, with the same force and effect as though originally made on the Closing Date (except for representations and warranties that speak as of a specific date, which were true and correct in all material respects as of such date).

4.5 Other Closing Deliverables

The following additional closing deliverables were executed, delivered, or received on or prior to the Closing Date:

(a) DTC Letter of Representations, from Torchlight Mining Corp. to Northern Dominion Trust Company and The Depository Trust Company, confirming the Company's agreement to comply with DTC's operational procedures for book-entry securities;

(b) Payoff Letter & Lien Release from Ridgeline Bank of Canada (executed by Gavin Forde, Relationship Manager, Corporate Lending Division), confirming the full payoff amount of CAD $140,000,000 (together with all accrued interest, breakage costs, and administrative fees), the termination of the CAD $225,000,000 committed revolving credit facility, and the release of all liens and security interests held by Ridgeline Bank of Canada in the assets of the Issuer and the Guarantors;

(c) Funds Flow Memorandum, dated April 18, 2022, prepared by the Company and reviewed by C&H, detailing the disbursement of gross proceeds ($295,500,000, reflecting the OID of $4,500,000 on the $300,000,000 principal amount), the deduction of the initial purchaser discount ($6,750,000), and the allocation and application of the resulting net proceeds ($288,750,000), together with wire transfer instructions for each recipient;

(d) Good Standing Certificates / Certificates of Status for each of the Issuer and the Guarantors, obtained from their respective jurisdictions of incorporation, as follows: (i) Certificate of Status for Torchlight Mining Corp. from Corporations Canada (Industry Canada); (ii) Certificate of Status for Wolverine Lake Mining Ltd. from the Ontario Ministry of Public and Business Service Delivery; (iii) Certificate of Status for Torchlight Milling & Processing Inc. from the Ontario Ministry of Public and Business Service Delivery; and (iv) Certificate of Good Standing for Torchlight U.S. Holdings, Inc. from the Delaware Secretary of State;

(e) Comfort Letter from Aldgate Thornton LLP (Francesca Hui, Engagement Partner), addressed to the Initial Purchasers, containing customary "comfort" regarding the financial information included in the Final Offering Memorandum, including confirmation that no material changes in the financial condition of the Company had occurred since the date of the latest audited financial statements; and

(f) Independent Engineer's Report prepared by Cascade Technical Advisors Inc. (Dr. Elaine Whitaker, P.Eng., Principal Consultant), dated February 28, 2022, providing an independent technical assessment of the Wolverine Lake mine, including mineral resource and mineral reserve estimates, mine plan, processing infrastructure, and the Phase II expansion program. This report was delivered to the Initial Purchasers and included in the data room; a copy is included in the closing binder.

5. Post-Closing Obligations

The following matters require attention by the Company, in coordination with C&H and Pendleton Ross LLP, following the Closing Date. We have organized these items by category for ease of reference and recommend that the Company maintain an internal tracking system to monitor compliance with each obligation and the applicable deadlines.

5.1 UCC and PPSA Filing Confirmations

The following security interest filings are in the process of being completed or confirmed following the Closing Date:

(a) UCC-1 Financing Statements — to be filed with the Office of the Secretary of State of the State of Delaware with respect to Torchlight U.S. Holdings, Inc. as debtor, naming Northern Dominion Trust Company as secured party in its capacity as Collateral Agent, covering all assets constituting Collateral under the U.S. Security Agreement;

(b) PPSA Registrations (Ontario) — to be filed in the Province of Ontario under the Personal Property Security Act (Ontario) with respect to Wolverine Lake Mining Ltd. and Torchlight Milling & Processing Inc. as debtors, naming Northern Dominion Trust Company as secured party in its capacity as Collateral Agent;

(c) PPSA Registration (British Columbia) — to be filed in the Province of British Columbia under the Personal Property Security Act (British Columbia) with respect to Torchlight Mining Corp. as debtor, naming Northern Dominion Trust Company as secured party in its capacity as Collateral Agent;

(d) PPSA Discharge Filings — confirmations of the filing of discharges with respect to all liens and security interests of Ridgeline Bank of Canada in the assets of the Issuer and the Guarantors are being coordinated by Pendleton Ross LLP (Marie-Claire Bouchard, lead partner). These discharge filings are expected to be completed within ten (10) business days following the Closing Date; and

(e) Mining Lien Registrations — appropriate registrations with respect to Ontario Mining Claim Nos. WL-4492-01 through WL-4492-47 (comprising approximately 12,400 hectares in the Wolverine Lake property), in favor of Northern Dominion Trust Company as Collateral Agent, are being processed in coordination with Pendleton Ross LLP and the Ontario Ministry of Mines.

C&H and Pendleton Ross LLP will provide copies of all filed and confirmed filings to Torchlight Mining Corp. and to Northern Dominion Trust Company (Collateral Agent, attention: Sandra Leung) promptly following receipt. We expect to have confirmation of all filings within approximately three to four weeks following the Closing Date.

5.2 Registration Rights Obligations

Pursuant to the Registration Rights Agreement, dated April 19, 2022, the Company has undertaken certain obligations with respect to the registration of the Notes (or substantially identical exchange notes) under the Securities Act. Specifically:

(a) The Company is required to file with the SEC either (i) an exchange offer registration statement with respect to a registered offer to exchange the Notes for a new series of substantially identical notes registered under the Securities Act (an "Exchange Offer"), or (ii) a shelf registration statement for the resale of the Notes (a "Shelf Registration Statement"), within 365 days after the Closing Date;

(b) The applicable filing deadline is April 19, 2023; and

(c) Failure to meet this deadline will trigger additional interest provisions, requiring the Company to pay additional interest on the Notes at a rate increasing in increments as specified in the Registration Rights Agreement, until the applicable registration default is cured.

We strongly recommend that the Company commence preparations for the exchange offer or shelf registration process no later than the fourth quarter of 2022 (Q4 2022), in order to allow sufficient time for the preparation and review of the registration statement, SEC comment periods, and effectiveness. C&H is available to assist the Company with all aspects of this process, and we would welcome the opportunity to discuss the relative merits and practical considerations of an exchange offer versus a shelf registration statement at the Company's convenience.

5.3 Indenture Reporting Obligations

Notwithstanding that the Company is not presently an SEC reporting issuer, the Indenture imposes the following ongoing reporting obligations:

(a) Annual Financial Reporting — The Company is required to furnish to the Trustee (Northern Dominion Trust Company) and, upon request, to the holders of the Notes, annual financial reports containing substantially the same information as would be required in an Annual Report on Form 10-K filed with the SEC, including audited consolidated financial statements prepared in accordance with U.S. GAAP or IFRS (as elected by the Company), within 90 days after the end of each fiscal year;

(b) Quarterly Financial Reporting — The Company is required to furnish to the Trustee and, upon request, to the holders of the Notes, quarterly financial reports containing substantially the same information as would be required in a Quarterly Report on Form 10-Q filed with the SEC, including unaudited condensed consolidated financial statements, within 45 days after the end of each of the first three fiscal quarters; and

(c) Annual Compliance Certificate — The Company is required to deliver to the Trustee, together with each annual report, an officer's certificate certifying compliance with the covenants contained in the Indenture, including a statement as to whether any Default or Event of Default has occurred during the preceding fiscal year.

We recommend that the Company work with its auditors, Aldgate Thornton LLP, to establish procedures to ensure timely compliance with these reporting obligations.

5.4 Future Guarantor Joinder

Section [4.15] of the Indenture requires that any Restricted Subsidiary of Torchlight Mining Corp. that, at any time after the Closing Date, has total assets in excess of $5,000,000 (determined on a consolidated basis in accordance with the applicable accounting standards) must execute and deliver to the Trustee a supplemental indenture in substantially the form of the First Supplemental Indenture attached as an exhibit to the Indenture, pursuant to which such subsidiary will become a Guarantor and will grant a first-priority security interest in its assets to the Collateral Agent for the benefit of the holders of the Notes.

The Company should implement internal procedures to monitor the formation of any new subsidiaries and to track the total assets of all existing Restricted Subsidiaries, so as to ensure timely compliance with this joinder obligation. Any failure to comply with this requirement within the time periods specified in the Indenture could constitute a Default thereunder. C&H is available to assist with the preparation and execution of any required supplemental indenture and related security documents.

5.5 Key Covenant Reminders

We summarize below certain of the key financial and restrictive covenants contained in the Indenture. This summary is intended for the Company's general reference only and does not purport to be a complete description of all covenants. We urge the Company to review the Indenture in its entirety and to consult with counsel before taking any action that may implicate these covenants.

(a) Incurrence-Based Leverage Test — The Company may not incur additional Indebtedness (other than Permitted Indebtedness, as defined in the Indenture) unless, at the time of such incurrence and after giving pro forma effect thereto, the Consolidated Leverage Ratio does not exceed 3.75 to 1.00.

(b) Restricted Payments — The Company is subject to limitations on Restricted Payments (including dividends, share repurchases, and certain investments), which are permitted only within a cumulative basket starting at $25,000,000, plus 50% of Consolidated Net Income (for positive quarters only, calculated on a cumulative basis from the Issue Date), and subject to the condition that the Consolidated Leverage Ratio does not exceed 3.00 to 1.00 on a pro forma basis after giving effect to such Restricted Payment.

(c) Asset Sales — Any Asset Sale must be for at least fair market value, with at least 75% of the consideration received in the form of cash or Cash Equivalents. Net Proceeds from any Asset Sale must be applied within 365 days to (i) repay Notes or other Pari Passu Indebtedness, (ii) invest in Replacement Assets (as defined in the Indenture), or (iii) if not so applied, the Company must make an Asset Sale Offer to repurchase Notes at 100% of the principal amount thereof, plus accrued and unpaid interest to the date of repurchase.

(d) Change of Control — Upon the occurrence of a Change of Control (as defined in the Indenture), the Company is required to make an offer to repurchase all outstanding Notes at a price equal to 101% of the principal amount thereof, plus accrued and unpaid interest to the date of repurchase.

(e) Limitation on Liens — The Indenture contains a negative pledge covenant restricting the ability of the Company and the Guarantors to incur or permit to exist additional liens on their assets, subject to Permitted Liens as defined in the Indenture.

We strongly recommend that the Company establish internal compliance monitoring procedures, including periodic reviews of the Consolidated Leverage Ratio and the status of the Restricted Payments basket, and that any proposed transactions that may implicate these covenants be reviewed by counsel prior to execution.

5.6 Optional Redemption Schedule

The Indenture provides the Company with the following optional redemption rights with respect to the Notes:

Any optional redemption must be effected in accordance with the procedures set forth in Article 3 of the Indenture, including the delivery of a notice of redemption to the Trustee and the holders of the Notes not less than 15 nor more than 60 days prior to the redemption date.

5.7 Interest Payment Schedule

Interest on the Notes accrues at the rate of 8.750% per annum and is payable semi-annually in arrears on April 15 and October 15 of each year, commencing on October 15, 2022. Interest on the Notes will be computed on the basis of a 360-day year comprised of twelve 30-day months. Payments will be made through the Paying Agent:

Northern Dominion Trust Company Corporate Trust Division 101 Barclay Street, 7th Floor New York, New York 10286

The Company should ensure that funds sufficient to cover each semi-annual interest payment are deposited with the Paying Agent no later than the close of business on the business day immediately preceding each interest payment date.

6. Closing Binder

A complete closing binder in both electronic format (USB drive and secure data room access) and hard copy (bound volumes) is currently being assembled by Calderwood & Harkness LLP and will be delivered to the Company within approximately thirty (30) days of the Closing Date, or on or about May 19, 2022. The closing binder will be organized in accordance with the Master Closing Checklist and will contain executed originals or conformed copies of all transaction documents and closing deliverables.

The closing binder will be organized pursuant to the following index:

Closing Binder Index

Tab 1 — Engagement and Internal

1.1 Engagement Letter — Calderwood & Harkness LLP to Torchlight Mining Corp. (January 17, 2022)

Tab 2 — Offering Documents

2.1 Preliminary Offering Memorandum (draft, February 4, 2022)

2.2 Final Offering Memorandum (dated March 14, 2022)

Tab 3 — Principal Transaction Agreements

3.1 Purchase Agreement (executed March 29, 2022)

3.2 Indenture (dated April 19, 2022)

3.3 Form of First Supplemental Indenture (future guarantor joinder)

3.4 Registration Rights Agreement (dated April 19, 2022)

Tab 4 — Security and Collateral Documents

4.1 Security Agreement (U.S.) — Torchlight U.S. Holdings, Inc. / Northern Dominion Trust Company (April 19, 2022)

4.2 General Security Agreement (Canada) — Torchlight Mining Corp., Wolverine Lake Mining Ltd., Torchlight Milling & Processing Inc. / Northern Dominion Trust Company (April 19, 2022)

4.3 Collateral Agency Agreement (April 19, 2022)

Tab 5 — Legal Opinions

5.1 Calderwood & Harkness LLP Opinion (New York law) (April 19, 2022)

5.2 Calderwood & Harkness LLP Opinion (Delaware law — TUSHI) (April 19, 2022)

5.3 Pendleton Ross LLP Opinion (Canadian law) (April 19, 2022)

5.4 Clairmont & Voss LLP Opinion (to Initial Purchasers) (April 19, 2022)

Tab 6 — Officers' and Secretary's Certificates

6.1 Officer's Certificate of Torchlight Mining Corp. (April 19, 2022)

6.2 Secretary's Certificate of Torchlight Mining Corp. (with attachments: board resolutions, articles of incorporation, by-laws, and incumbency certificate) (April 19, 2022)

6.3 Secretary's Certificate of Wolverine Lake Mining Ltd. (April 19, 2022)

6.4 Secretary's Certificate of Torchlight Milling & Processing Inc. (April 19, 2022)

6.5 Secretary's Certificate of Torchlight U.S. Holdings, Inc. (April 19, 2022)

6.6 Bring-Down Certificate — Representations and Warranties (April 19, 2022)

Tab 7 — Ancillary Closing Documents

7.1 DTC Letter of Representations

7.2 Payoff Letter & Lien Release — Ridgeline Bank of Canada

7.3 Funds Flow Memorandum (April 18, 2022)

7.4 Global Note (Rule 144A) — Exhibit A-1 to Indenture

7.5 Global Note (Regulation S) — Exhibit A-2 to Indenture

Tab 8 — Good Standing / Status Certificates

8.1 Certificate of Status — Torchlight Mining Corp. (Industry Canada / Corporations Canada)

8.2 Certificate of Status — Wolverine Lake Mining Ltd. (Ontario Ministry of Public and Business Service Delivery)

8.3 Certificate of Status — Torchlight Milling & Processing Inc. (Ontario Ministry of Public and Business Service Delivery)

8.4 Certificate of Good Standing — Torchlight U.S. Holdings, Inc. (Delaware Secretary of State)

Tab 9 — Comfort Letter and Technical Reports

9.1 Comfort Letter — Aldgate Thornton LLP (Francesca Hui, Engagement Partner)

9.2 Independent Engineer's Report — Cascade Technical Advisors Inc. (Dr. Elaine Whitaker, P.Eng.) (February 28, 2022)

Tab 10 — Ratings

10.1 Northmark Ratings Group, Inc. — Rating Letter (B1, stable outlook; March 7, 2022)

10.2 Creston Analytics, Inc. — Rating Letter (B+, stable outlook; March 7, 2022)

Tab 11 — UCC / PPSA Filings (to be supplemented post-closing)

11.1 UCC-1 Financing Statements (Delaware — Torchlight U.S. Holdings, Inc.)

11.2 PPSA Registrations (Ontario — Wolverine Lake Mining Ltd. and Torchlight Milling & Processing Inc.)

11.3 PPSA Registration (British Columbia — Torchlight Mining Corp.)

11.4 PPSA Discharges (Ridgeline Bank of Canada liens)

11.5 Mining Lien Registrations (Ontario Mining Claim Nos. WL-4492-01 through WL-4492-47)

Tab 12 — Closing Checklist

12.1 Master Closing Checklist (Calderwood & Harkness LLP)

Additional hard copies of the closing binder will be prepared for Northern Dominion Trust Company (Collateral Agent) and for each of the Initial Purchasers, as requested. Electronic copies will be made available through our secure document portal.

7. Fees and Billing

A final statement of legal fees and disbursements for Calderwood & Harkness LLP's services in connection with the Offering will be sent to the Company under separate cover. For reference, the fee arrangements for this engagement are as follows, as set forth in our engagement letter dated January 17, 2022:

(a) Hourly Rates — Blended hourly rates of $1,350 per hour for partners and $825 per hour for associates;

(b) Estimated Legal Fees — Estimated aggregate legal fees in the range of $1,200,000 to $1,450,000, based on the anticipated scope and complexity of the engagement;

(d) Expense Cap — Reimbursable expenses capped at $75,000, excluding travel expenses incurred in connection with mine site visits to Thunder Bay, Ontario, which are reimbursable at cost.

We note that the $150,000 completion fee has been earned and is now payable following the successful closing of the Offering on April 19, 2022. We will include this amount in our final invoice.

8. Acknowledgments and Closing Remarks

We would like to express our sincere appreciation to Magnus Thornberg, Chief Executive Officer, Lianne Prokopchuk, Chief Financial Officer, Deepak Rathore, General Counsel and Corporate Secretary, and Colleen Hébert, Treasurer, for their exceptional cooperation, responsiveness, and diligence throughout the course of this transaction. The successful completion of the Offering is a testament to the professionalism and commitment of the entire Torchlight team.

We also wish to acknowledge the excellent collaboration of Marie-Claire Bouchard and her colleagues at Pendleton Ross LLP, whose timely and thorough work on the Canadian law aspects of the transaction contributed materially to the successful closing.

With the net proceeds of the Offering now in hand, the Company is well positioned to proceed with the Phase II expansion of the Wolverine Lake mine, including the construction of the new decline ramp and ventilation raise to access the Wolverine Deep zone. We understand that the construction program is expected to commence in Q2 2022 and to be completed in Q4 2024, with estimated capital expenditures of approximately CAD $215 million. We are pleased that the Offering provides the financing foundation for this important next phase of the Company's growth.

Calderwood & Harkness LLP remains available to assist the Company with all post-closing matters, including the UCC and PPSA filing confirmations, the exchange offer or shelf registration process under the Registration Rights Agreement, ongoing compliance with the Indenture covenants and reporting requirements, and any future capital markets transactions that the Company may consider. Please do not hesitate to contact us at any time.

Any questions regarding this memorandum or the post-closing matters described herein should be directed to:

Vivienne St. Claire, Partner, Capital Markets Telephone: (212) 558-4127

Email: vstclaire@calderwoodharkness.com

Audrey Zhou, Lead Associate, Capital Markets Telephone: (212) 558-4389

Email: azhou@calderwoodharkness.com

Very truly yours,

CALDERWOOD & HARKNESS LLP

By: ________

Vivienne St. Claire Partner, Capital Markets

cc:

Magnus Thornberg, Chief Executive Officer, Torchlight Mining Corp. Lianne Prokopchuk, Chief Financial Officer, Torchlight Mining Corp. Colleen Hébert, Treasurer, Torchlight Mining Corp. Robert Adeyemi, Billing Partner, Calderwood & Harkness LLP Audrey Zhou, Lead Associate, Calderwood & Harkness LLP Brendan Walsh, Working Associate, Calderwood & Harkness LLP Marie-Claire Bouchard, Partner, Pendleton Ross LLP

CONFIDENTIALITY NOTICE: This memorandum is a confidential communication from Calderwood & Harkness LLP and is protected by the attorney-client privilege and/or the work product doctrine. It is intended solely for the use of the addressee(s) and the individuals identified in the copy list above. Any unauthorized review, use, disclosure, or distribution of this memorandum is strictly prohibited. If you have received this communication in error, please notify us immediately and destroy all copies. Matter No. 1039-00002.

Security	CUSIP	ISIN
Rule 144A Global Note	891207 AA 3	US891207AA38
Regulation S Global Note	C89120 AA 5	USC89120AA58
Term	Detail
Issuer	Torchlight Mining Corp.
Guarantors	Wolverine Lake Mining Ltd., Torchlight Milling & Processing Inc., and Torchlight U.S. Holdings, Inc. (jointly and severally)
Aggregate Principal Amount	$300,000,000
Coupon	8.750% per annum
Interest Payment Dates	April 15 and October 15 of each year, commencing October 15, 2022
Maturity Date	April 15, 2029
Issue Price	98.50% of par (reflecting original issue discount ("OID") of 1.50%, or $4,500,000)
Initial Purchaser discount	2.25% of the aggregate principal amount ($6,750,000), allocated as follows: Kelvantis Capital Markets LLC — 60% ($4,050,000); Prestige Barrington & Co., Inc. — 25% ($1,687,500); Halcyon Securities Inc. — 15% ($1,012,500)
Net Proceeds to Issuer	$285,750,000
Ratings	Northmark Ratings Group, Inc. — B1 (stable outlook); Creston Analytics, Inc. — B+ (stable outlook); each assigned March 7, 2022
Form	Global Notes in book-entry form through The Depository Trust Company ("DTC") (Rule 144A Notes) and Stonefield Industries and Harborview Industries (Regulation S Notes)
Minimum Denomination	$2,000 and integral multiples of $1,000 in excess thereof
Guarantee	Joint and several senior secured guarantees of the Guarantors
Security	First-priority lien on substantially all tangible and intangible assets of the Issuer and the Guarantors, as more fully described in the Security Agreement (U.S.), the General Security Agreement (Canada), and the Collateral Agency Agreement
Governing Law	State of New York
Application	Amount (USD)
Phase II Wolverine Lake mine expansion capital expenditure	$167,000,000
Repayment of Ridgeline Bank of Canada revolving credit facility (CAD $140,000,000 drawn under the CAD $225,000,000 committed facility, converted at USD/CAD exchange rate of 0.7875)	$110,250,000
Transaction fees and expenses (including OID, initial purchaser discount, legal fees, trustee fees, rating agency fees, and printing costs)	$14,250,000
General corporate purposes and working capital	$8,500,000
Total	$300,000,000

Redemption Period	Redemption Price
Prior to April 15, 2025 (make-whole)	Applicable Treasury Rate + 50 basis points (plus accrued and unpaid interest)
Prior to April 15, 2025 (equity clawback — up to 40% of original aggregate principal amount)	108.750% of principal (plus accrued and unpaid interest)
On or after April 15, 2025	104.375% of principal (plus accrued and unpaid interest)
On or after April 15, 2026	102.188% of principal (plus accrued and unpaid interest)
On or after April 15, 2027	100.000% of principal (plus accrued and unpaid interest)
Maturity	April 15, 2029

CALDERWOOD & HARKNESS LLP Attorneys at Law
450 Park Avenue New York, New York 10022 Telephone: (212) 558-4000 Facsimile: (212) 558-3588 www.calderwoodharkness.com
New York · Toronto · London · Hong Kong
Toronto Office: 199 Bay Street, Suite 4400 Toronto, Ontario M5L 1A9, Canada Telephone: (416) 863-1200
April 22, 2022
Matter No.: 1039-00002
Deepak Rathore, Esq. General Counsel & Corporate Secretary Torchlight Mining Corp. 2200 – 400 Burrard Street Vancouver, British Columbia V6C 3A6 Canada
Re: Closing of the Offering of $300,000,000 Aggregate Principal Amount of 8.750% Senior Secured Notes due 2029 by Torchlight Mining Corp.
Dear Deepak:
1. Confirmation of Closing
We are pleased to confirm that the closing of the offering described above (the "Offering") occurred on April 19, 2022 (the "Closing Date"). On that date, Torchlight Mining Corp. (the "Issuer" or the "Company") completed the issuance and sale of $300,000,000 aggregate principal amount of its 8.750% Senior Secured Notes due 2029 (the "Notes"). The Notes were offered and sold in a private placement pursuant to Rule 144A under the Securities Act of 1933, as amended (the "Securities Act"), to qualified institutional buyers, and in offshore transactions in reliance upon Regulation S under the Securities Act. No registration statement has been filed with the U.S. Securities and Exchange Commission (the "SEC") in connection with the issuance of the Notes.
The Notes are governed by, and construed in accordance with, the laws of the State of New York. The Notes were issued pursuant to that certain Indenture, dated as of April 19, 2022 (the "Indenture"), among Torchlight Mining Corp., as Issuer, Wolverine Lake Mining Ltd., Torchlight Milling & Processing Inc., and Torchlight U.S. Holdings, Inc. (collectively, the "Guarantors"), and Northern Dominion Trust Company, as Trustee and Collateral Agent (the "Trustee" or the "Collateral Agent," as applicable).
The Notes were purchased by the following initial purchasers (collectively, the "Initial Purchasers"): Kelvantis Capital Markets LLC, as lead book-running manager; Prestige Barrington & Co., Inc., as co-manager; and Halcyon Securities Inc., as co-manager. The purchase was effected pursuant to the Purchase Agreement described in Section 4.1 below.
Calderwood & Harkness LLP ("C&H") served as U.S. counsel to the Issuer and the Guarantors in connection with the Offering. Pendleton Ross LLP served as Canadian counsel to the Issuer and the Guarantors. Clairmont & Voss LLP served as U.S. counsel to the Initial Purchasers, and Greystone & Whitfield LLP served as Canadian counsel to the Initial Purchasers.
We note for the record that the originally anticipated closing date for the Offering was April 5, 2022. The closing was extended to April 19, 2022 to accommodate the timing of Canadian regulatory clearances, as discussed among the parties and reflected in the amendment to the Purchase Agreement. All conditions precedent to closing were satisfied or duly waived as of the Closing Date.
The applicable securities identification numbers for the Notes are as follows:
This memorandum is intended to serve as a comprehensive record of the Offering, the closing deliverables, and the key post-closing obligations of the Company, and to facilitate the Company's ongoing compliance with the terms of the Indenture, the Registration Rights Agreement, and the related transaction documents.
2. Summary of Key Terms
The following is a summary of the principal terms of the Notes as issued on the Closing Date. This summary is qualified in its entirety by reference to the Indenture and the Notes themselves.
The Notes constitute senior secured obligations of the Issuer and rank pari passu in right of payment with all existing and future senior indebtedness of the Issuer. The guarantees of the Guarantors constitute senior secured obligations of each respective Guarantor, ranking pari passu in right of payment with all existing and future senior indebtedness of such Guarantor. The Notes and the guarantees are secured on a first-priority basis by the Collateral, subject to Permitted Liens as defined in the Indenture.
3. Use of Proceeds — Confirmation
We confirm that, based on the Funds Flow Memorandum and information provided by the Company, the proceeds of the Offering were applied on or promptly after the Closing Date as described in the Final Offering Memorandum dated March 14, 2022 (the "Final Offering Memorandum"), as follows:
With respect to the Ridgeline Bank of Canada revolving credit facility, we confirm that the outstanding balance of CAD $140,000,000 (together with all accrued interest, breakage costs, and administrative fees) was repaid in full on the Closing Date, and the CAD $225,000,000 committed revolving credit facility was terminated in accordance with its terms. The applicable payoff amount was wired in accordance with the wire instructions set forth in the Funds Flow Memorandum dated April 18, 2022, and the Payoff Letter & Lien Release was received from Ridgeline Bank of Canada (Gavin Forde, Relationship Manager) confirming satisfaction and discharge of all obligations thereunder. Arrangements for the filing of PPSA discharges with respect to the liens of Ridgeline Bank of Canada are being coordinated by Pendleton Ross LLP and are described in greater detail in Section 5.1 of this memorandum.
4. Closing Deliverables — Summary of Completed Items
Set forth below is a summary of the principal documents executed, delivered, or received in connection with the closing of the Offering. All documents have been reviewed by this firm and, except as otherwise noted below, are in form and substance satisfactory to counsel. Originals and/or executed counterparts of all documents are being assembled in the closing binder described in Section 6 below.
4.1 Transaction Agreements Executed and Delivered
The following principal transaction agreements were duly executed and delivered by the parties thereto on or prior to the Closing Date:
(a) Purchase Agreement, dated March 29, 2022, among Torchlight Mining Corp., as Issuer, Wolverine Lake Mining Ltd., Torchlight Milling & Processing Inc., and Torchlight U.S. Holdings, Inc., as Guarantors, and Kelvantis Capital Markets LLC, Prestige Barrington & Co., Inc., and Halcyon Securities Inc., as Initial Purchasers (the "Purchase Agreement");
(b) Indenture, dated April 19, 2022, among Torchlight Mining Corp., as Issuer, Wolverine Lake Mining Ltd., Torchlight Milling & Processing Inc., and Torchlight U.S. Holdings, Inc., as Guarantors, and Northern Dominion Trust Company, as Trustee and Collateral Agent (the "Indenture");
(c) Registration Rights Agreement, dated April 19, 2022, among Torchlight Mining Corp., as Issuer, Wolverine Lake Mining Ltd., Torchlight Milling & Processing Inc., and Torchlight U.S. Holdings, Inc., as Guarantors, and Kelvantis Capital Markets LLC, Prestige Barrington & Co., Inc., and Halcyon Securities Inc., as Initial Purchasers (the "Registration Rights Agreement");
(d) Security Agreement (U.S.), dated April 19, 2022, between Torchlight U.S. Holdings, Inc. (EIN: 84-3921057) and Northern Dominion Trust Company, as Collateral Agent (the "U.S. Security Agreement");
(e) General Security Agreement (Canada), dated April 19, 2022, among Torchlight Mining Corp., Wolverine Lake Mining Ltd., Torchlight Milling & Processing Inc., and Northern Dominion Trust Company, as Collateral Agent (the "Canadian General Security Agreement"); and
(f) Collateral Agency Agreement, dated April 19, 2022, among Torchlight Mining Corp., as Issuer, Wolverine Lake Mining Ltd., Torchlight Milling & Processing Inc., and Torchlight U.S. Holdings, Inc., as Guarantors, and Northern Dominion Trust Company, as Collateral Agent (the "Collateral Agency Agreement").
Each of the foregoing agreements was executed in multiple counterparts and delivered to the applicable parties at or prior to closing. Fully executed copies of each agreement will be included in the closing binder.
4.2 Notes Issued
The following Global Notes were authenticated and delivered by the Trustee and credited to the accounts of the applicable participants through DTC, Thackeray Partners LLC, and Ashgrove Enterprises, as applicable, on the Closing Date:
(a) Global Note (Rule 144A) — substantially in the form of Exhibit A-1 to the Indenture; CUSIP No. 891207 AA 3; ISIN No. US891207AA38; and
(b) Global Note (Regulation S) — substantially in the form of Exhibit A-2 to the Indenture; CUSIP No. C89120 AA 5; ISIN No. USC89120AA58.
Both Global Notes were delivered to Northern Dominion Trust Company, as Trustee, and the beneficial interests therein were credited through DTC (with respect to the Rule 144A Global Note) and through Stonefield Industries and Harborview Industries (with respect to the Regulation S Global Note) on the Closing Date in accordance with the DTC Letter of Representations and customary book-entry settlement procedures.
4.3 Legal Opinions Delivered
The following legal opinions were delivered to the Initial Purchasers (and, where applicable, to the Trustee) at or prior to the closing:
(a) Calderwood & Harkness LLP Opinion (New York law), dated April 19, 2022, addressed to the Initial Purchasers, opining on, inter alia, the valid issuance and due authorization of the Notes, the enforceability of the Notes and the Indenture under the laws of the State of New York, the perfection and priority of the security interests created under the U.S. Security Agreement, and the availability of the exemptions from registration under Rule 144A and Regulation S under the Securities Act;
(b) Calderwood & Harkness LLP Opinion (Delaware law — Torchlight U.S. Holdings, Inc.), dated April 19, 2022, addressed to the Initial Purchasers, opining on the due organization, valid existence, and good standing of Torchlight U.S. Holdings, Inc. ("TUSHI") under the laws of the State of Delaware, and the enforceability of the Guarantee and the U.S. Security Agreement as against TUSHI;
(c) Pendleton Ross LLP Opinion (Canadian law), dated April 19, 2022, addressed to the Initial Purchasers, opining on the due organization of Torchlight Mining Corp. under the Canada Business Corporations Act, the due organization of Wolverine Lake Mining Ltd. and Torchlight Milling & Processing Inc. under the Business Corporations Act (Ontario), the corporate power and authority of each Canadian entity, and the enforceability of the Guarantees and the Canadian General Security Agreement; and
(d) Clairmont & Voss LLP Opinion (as U.S. counsel to the Initial Purchasers), dated April 19, 2022, delivered to the Initial Purchasers at closing, addressing customary matters relating to the Offering.
Copies of the C&H and Pendleton Ross opinions are included in the closing binder. A copy of the Clairmont & Voss opinion was delivered directly to the Initial Purchasers and is included in the closing binder as received.
4.4 Officers' and Secretary's Certificates
The following officers' and secretary's certificates were duly executed and delivered on the Closing Date:
(a) Officer's Certificate of Torchlight Mining Corp., dated April 19, 2022, executed by Lianne Prokopchuk, Chief Financial Officer, and Deepak Rathore, General Counsel, certifying compliance with Section 4.02 of the Indenture and the satisfaction of the conditions precedent to closing set forth in the Purchase Agreement, including, without limitation, the accuracy of representations and warranties, the absence of any material adverse change, and the performance of covenants and agreements required to be performed on or prior to the Closing Date;
(b) Secretary's Certificate of Torchlight Mining Corp., dated April 19, 2022, executed by Deepak Rathore, Corporate Secretary, certifying the authenticity and completeness of the attachments thereto, including: (i) certified copies of resolutions of the Board of Directors authorizing the Offering, the issuance of the Notes, the execution and delivery of the transaction documents, and the granting of the security interests; (ii) certified copies of the Company's articles of incorporation, as amended; (iii) certified copies of the Company's by-laws, as amended; and (iv) an incumbency certificate identifying the following authorized officers of the Company: Magnus Thornberg, Chief Executive Officer; Lianne Prokopchuk, Chief Financial Officer; Deepak Rathore, General Counsel and Corporate Secretary; and Colleen Hébert, Treasurer;
(c) Secretary's Certificate of Wolverine Lake Mining Ltd., dated April 19, 2022, certifying organizational documents, board resolutions, and officer incumbency;
(d) Secretary's Certificate of Torchlight Milling & Processing Inc., dated April 19, 2022, certifying organizational documents, board resolutions, and officer incumbency;
(e) Secretary's Certificate of Torchlight U.S. Holdings, Inc., dated April 19, 2022, certifying organizational documents, board resolutions, and officer incumbency; and
(f) Bring-Down Certificate (Representations and Warranties), dated April 19, 2022, from the Issuer to the Initial Purchasers, certifying that all representations and warranties of the Issuer and the Guarantors contained in the Purchase Agreement were true and correct in all material respects as of the Closing Date, with the same force and effect as though originally made on the Closing Date (except for representations and warranties that speak as of a specific date, which were true and correct in all material respects as of such date).
4.5 Other Closing Deliverables
The following additional closing deliverables were executed, delivered, or received on or prior to the Closing Date:
(a) DTC Letter of Representations, from Torchlight Mining Corp. to Northern Dominion Trust Company and The Depository Trust Company, confirming the Company's agreement to comply with DTC's operational procedures for book-entry securities;
(b) Payoff Letter & Lien Release from Ridgeline Bank of Canada (executed by Gavin Forde, Relationship Manager, Corporate Lending Division), confirming the full payoff amount of CAD $140,000,000 (together with all accrued interest, breakage costs, and administrative fees), the termination of the CAD $225,000,000 committed revolving credit facility, and the release of all liens and security interests held by Ridgeline Bank of Canada in the assets of the Issuer and the Guarantors;
(c) Funds Flow Memorandum, dated April 18, 2022, prepared by the Company and reviewed by C&H, detailing the disbursement of gross proceeds ($295,500,000, reflecting the OID of $4,500,000 on the $300,000,000 principal amount), the deduction of the initial purchaser discount ($6,750,000), and the allocation and application of the resulting net proceeds ($288,750,000), together with wire transfer instructions for each recipient;
(d) Good Standing Certificates / Certificates of Status for each of the Issuer and the Guarantors, obtained from their respective jurisdictions of incorporation, as follows: (i) Certificate of Status for Torchlight Mining Corp. from Corporations Canada (Industry Canada); (ii) Certificate of Status for Wolverine Lake Mining Ltd. from the Ontario Ministry of Public and Business Service Delivery; (iii) Certificate of Status for Torchlight Milling & Processing Inc. from the Ontario Ministry of Public and Business Service Delivery; and (iv) Certificate of Good Standing for Torchlight U.S. Holdings, Inc. from the Delaware Secretary of State;
(e) Comfort Letter from Aldgate Thornton LLP (Francesca Hui, Engagement Partner), addressed to the Initial Purchasers, containing customary "comfort" regarding the financial information included in the Final Offering Memorandum, including confirmation that no material changes in the financial condition of the Company had occurred since the date of the latest audited financial statements; and
(f) Independent Engineer's Report prepared by Cascade Technical Advisors Inc. (Dr. Elaine Whitaker, P.Eng., Principal Consultant), dated February 28, 2022, providing an independent technical assessment of the Wolverine Lake mine, including mineral resource and mineral reserve estimates, mine plan, processing infrastructure, and the Phase II expansion program. This report was delivered to the Initial Purchasers and included in the data room; a copy is included in the closing binder.
5. Post-Closing Obligations
The following matters require attention by the Company, in coordination with C&H and Pendleton Ross LLP, following the Closing Date. We have organized these items by category for ease of reference and recommend that the Company maintain an internal tracking system to monitor compliance with each obligation and the applicable deadlines.
5.1 UCC and PPSA Filing Confirmations
The following security interest filings are in the process of being completed or confirmed following the Closing Date:
(a) UCC-1 Financing Statements — to be filed with the Office of the Secretary of State of the State of Delaware with respect to Torchlight U.S. Holdings, Inc. as debtor, naming Northern Dominion Trust Company as secured party in its capacity as Collateral Agent, covering all assets constituting Collateral under the U.S. Security Agreement;
(b) PPSA Registrations (Ontario) — to be filed in the Province of Ontario under the Personal Property Security Act (Ontario) with respect to Wolverine Lake Mining Ltd. and Torchlight Milling & Processing Inc. as debtors, naming Northern Dominion Trust Company as secured party in its capacity as Collateral Agent;
(c) PPSA Registration (British Columbia) — to be filed in the Province of British Columbia under the Personal Property Security Act (British Columbia) with respect to Torchlight Mining Corp. as debtor, naming Northern Dominion Trust Company as secured party in its capacity as Collateral Agent;
(d) PPSA Discharge Filings — confirmations of the filing of discharges with respect to all liens and security interests of Ridgeline Bank of Canada in the assets of the Issuer and the Guarantors are being coordinated by Pendleton Ross LLP (Marie-Claire Bouchard, lead partner). These discharge filings are expected to be completed within ten (10) business days following the Closing Date; and
(e) Mining Lien Registrations — appropriate registrations with respect to Ontario Mining Claim Nos. WL-4492-01 through WL-4492-47 (comprising approximately 12,400 hectares in the Wolverine Lake property), in favor of Northern Dominion Trust Company as Collateral Agent, are being processed in coordination with Pendleton Ross LLP and the Ontario Ministry of Mines.
C&H and Pendleton Ross LLP will provide copies of all filed and confirmed filings to Torchlight Mining Corp. and to Northern Dominion Trust Company (Collateral Agent, attention: Sandra Leung) promptly following receipt. We expect to have confirmation of all filings within approximately three to four weeks following the Closing Date.
5.2 Registration Rights Obligations
Pursuant to the Registration Rights Agreement, dated April 19, 2022, the Company has undertaken certain obligations with respect to the registration of the Notes (or substantially identical exchange notes) under the Securities Act. Specifically:
(a) The Company is required to file with the SEC either (i) an exchange offer registration statement with respect to a registered offer to exchange the Notes for a new series of substantially identical notes registered under the Securities Act (an "Exchange Offer"), or (ii) a shelf registration statement for the resale of the Notes (a "Shelf Registration Statement"), within 365 days after the Closing Date;
(b) The applicable filing deadline is April 19, 2023; and
(c) Failure to meet this deadline will trigger additional interest provisions, requiring the Company to pay additional interest on the Notes at a rate increasing in increments as specified in the Registration Rights Agreement, until the applicable registration default is cured.
We strongly recommend that the Company commence preparations for the exchange offer or shelf registration process no later than the fourth quarter of 2022 (Q4 2022), in order to allow sufficient time for the preparation and review of the registration statement, SEC comment periods, and effectiveness. C&H is available to assist the Company with all aspects of this process, and we would welcome the opportunity to discuss the relative merits and practical considerations of an exchange offer versus a shelf registration statement at the Company's convenience.
5.3 Indenture Reporting Obligations
Notwithstanding that the Company is not presently an SEC reporting issuer, the Indenture imposes the following ongoing reporting obligations:
(a) Annual Financial Reporting — The Company is required to furnish to the Trustee (Northern Dominion Trust Company) and, upon request, to the holders of the Notes, annual financial reports containing substantially the same information as would be required in an Annual Report on Form 10-K filed with the SEC, including audited consolidated financial statements prepared in accordance with U.S. GAAP or IFRS (as elected by the Company), within 90 days after the end of each fiscal year;
(b) Quarterly Financial Reporting — The Company is required to furnish to the Trustee and, upon request, to the holders of the Notes, quarterly financial reports containing substantially the same information as would be required in a Quarterly Report on Form 10-Q filed with the SEC, including unaudited condensed consolidated financial statements, within 45 days after the end of each of the first three fiscal quarters; and
(c) Annual Compliance Certificate — The Company is required to deliver to the Trustee, together with each annual report, an officer's certificate certifying compliance with the covenants contained in the Indenture, including a statement as to whether any Default or Event of Default has occurred during the preceding fiscal year.
We recommend that the Company work with its auditors, Aldgate Thornton LLP, to establish procedures to ensure timely compliance with these reporting obligations.
5.4 Future Guarantor Joinder
Section [4.15] of the Indenture requires that any Restricted Subsidiary of Torchlight Mining Corp. that, at any time after the Closing Date, has total assets in excess of $5,000,000 (determined on a consolidated basis in accordance with the applicable accounting standards) must execute and deliver to the Trustee a supplemental indenture in substantially the form of the First Supplemental Indenture attached as an exhibit to the Indenture, pursuant to which such subsidiary will become a Guarantor and will grant a first-priority security interest in its assets to the Collateral Agent for the benefit of the holders of the Notes.
The Company should implement internal procedures to monitor the formation of any new subsidiaries and to track the total assets of all existing Restricted Subsidiaries, so as to ensure timely compliance with this joinder obligation. Any failure to comply with this requirement within the time periods specified in the Indenture could constitute a Default thereunder. C&H is available to assist with the preparation and execution of any required supplemental indenture and related security documents.
5.5 Key Covenant Reminders
We summarize below certain of the key financial and restrictive covenants contained in the Indenture. This summary is intended for the Company's general reference only and does not purport to be a complete description of all covenants. We urge the Company to review the Indenture in its entirety and to consult with counsel before taking any action that may implicate these covenants.
(a) Incurrence-Based Leverage Test — The Company may not incur additional Indebtedness (other than Permitted Indebtedness, as defined in the Indenture) unless, at the time of such incurrence and after giving pro forma effect thereto, the Consolidated Leverage Ratio does not exceed 3.75 to 1.00.
(b) Restricted Payments — The Company is subject to limitations on Restricted Payments (including dividends, share repurchases, and certain investments), which are permitted only within a cumulative basket starting at $25,000,000, plus 50% of Consolidated Net Income (for positive quarters only, calculated on a cumulative basis from the Issue Date), and subject to the condition that the Consolidated Leverage Ratio does not exceed 3.00 to 1.00 on a pro forma basis after giving effect to such Restricted Payment.
(c) Asset Sales — Any Asset Sale must be for at least fair market value, with at least 75% of the consideration received in the form of cash or Cash Equivalents. Net Proceeds from any Asset Sale must be applied within 365 days to (i) repay Notes or other Pari Passu Indebtedness, (ii) invest in Replacement Assets (as defined in the Indenture), or (iii) if not so applied, the Company must make an Asset Sale Offer to repurchase Notes at 100% of the principal amount thereof, plus accrued and unpaid interest to the date of repurchase.
(d) Change of Control — Upon the occurrence of a Change of Control (as defined in the Indenture), the Company is required to make an offer to repurchase all outstanding Notes at a price equal to 101% of the principal amount thereof, plus accrued and unpaid interest to the date of repurchase.
(e) Limitation on Liens — The Indenture contains a negative pledge covenant restricting the ability of the Company and the Guarantors to incur or permit to exist additional liens on their assets, subject to Permitted Liens as defined in the Indenture.
We strongly recommend that the Company establish internal compliance monitoring procedures, including periodic reviews of the Consolidated Leverage Ratio and the status of the Restricted Payments basket, and that any proposed transactions that may implicate these covenants be reviewed by counsel prior to execution.
5.6 Optional Redemption Schedule
The Indenture provides the Company with the following optional redemption rights with respect to the Notes:
Any optional redemption must be effected in accordance with the procedures set forth in Article 3 of the Indenture, including the delivery of a notice of redemption to the Trustee and the holders of the Notes not less than 15 nor more than 60 days prior to the redemption date.
5.7 Interest Payment Schedule
Interest on the Notes accrues at the rate of 8.750% per annum and is payable semi-annually in arrears on April 15 and October 15 of each year, commencing on October 15, 2022. Interest on the Notes will be computed on the basis of a 360-day year comprised of twelve 30-day months. Payments will be made through the Paying Agent:
Northern Dominion Trust Company Corporate Trust Division 101 Barclay Street, 7th Floor New York, New York 10286
The Company should ensure that funds sufficient to cover each semi-annual interest payment are deposited with the Paying Agent no later than the close of business on the business day immediately preceding each interest payment date.
6. Closing Binder
A complete closing binder in both electronic format (USB drive and secure data room access) and hard copy (bound volumes) is currently being assembled by Calderwood & Harkness LLP and will be delivered to the Company within approximately thirty (30) days of the Closing Date, or on or about May 19, 2022. The closing binder will be organized in accordance with the Master Closing Checklist and will contain executed originals or conformed copies of all transaction documents and closing deliverables.
The closing binder will be organized pursuant to the following index:
Closing Binder Index
Tab 1 — Engagement and Internal
1.1 Engagement Letter — Calderwood & Harkness LLP to Torchlight Mining Corp. (January 17, 2022)
Tab 2 — Offering Documents
2.1 Preliminary Offering Memorandum (draft, February 4, 2022)
2.2 Final Offering Memorandum (dated March 14, 2022)
Tab 3 — Principal Transaction Agreements
3.1 Purchase Agreement (executed March 29, 2022)
3.2 Indenture (dated April 19, 2022)
3.3 Form of First Supplemental Indenture (future guarantor joinder)
3.4 Registration Rights Agreement (dated April 19, 2022)
Tab 4 — Security and Collateral Documents
4.1 Security Agreement (U.S.) — Torchlight U.S. Holdings, Inc. / Northern Dominion Trust Company (April 19, 2022)
4.2 General Security Agreement (Canada) — Torchlight Mining Corp., Wolverine Lake Mining Ltd., Torchlight Milling & Processing Inc. / Northern Dominion Trust Company (April 19, 2022)
4.3 Collateral Agency Agreement (April 19, 2022)
Tab 5 — Legal Opinions
5.1 Calderwood & Harkness LLP Opinion (New York law) (April 19, 2022)
5.2 Calderwood & Harkness LLP Opinion (Delaware law — TUSHI) (April 19, 2022)
5.3 Pendleton Ross LLP Opinion (Canadian law) (April 19, 2022)
5.4 Clairmont & Voss LLP Opinion (to Initial Purchasers) (April 19, 2022)
Tab 6 — Officers' and Secretary's Certificates
6.1 Officer's Certificate of Torchlight Mining Corp. (April 19, 2022)
6.2 Secretary's Certificate of Torchlight Mining Corp. (with attachments: board resolutions, articles of incorporation, by-laws, and incumbency certificate) (April 19, 2022)
6.3 Secretary's Certificate of Wolverine Lake Mining Ltd. (April 19, 2022)
6.4 Secretary's Certificate of Torchlight Milling & Processing Inc. (April 19, 2022)
6.5 Secretary's Certificate of Torchlight U.S. Holdings, Inc. (April 19, 2022)
6.6 Bring-Down Certificate — Representations and Warranties (April 19, 2022)
Tab 7 — Ancillary Closing Documents
7.1 DTC Letter of Representations
7.2 Payoff Letter & Lien Release — Ridgeline Bank of Canada
7.3 Funds Flow Memorandum (April 18, 2022)
7.4 Global Note (Rule 144A) — Exhibit A-1 to Indenture
7.5 Global Note (Regulation S) — Exhibit A-2 to Indenture
Tab 8 — Good Standing / Status Certificates
8.1 Certificate of Status — Torchlight Mining Corp. (Industry Canada / Corporations Canada)
8.2 Certificate of Status — Wolverine Lake Mining Ltd. (Ontario Ministry of Public and Business Service Delivery)
8.3 Certificate of Status — Torchlight Milling & Processing Inc. (Ontario Ministry of Public and Business Service Delivery)
8.4 Certificate of Good Standing — Torchlight U.S. Holdings, Inc. (Delaware Secretary of State)
Tab 9 — Comfort Letter and Technical Reports
9.1 Comfort Letter — Aldgate Thornton LLP (Francesca Hui, Engagement Partner)
9.2 Independent Engineer's Report — Cascade Technical Advisors Inc. (Dr. Elaine Whitaker, P.Eng.) (February 28, 2022)
Tab 10 — Ratings
10.1 Northmark Ratings Group, Inc. — Rating Letter (B1, stable outlook; March 7, 2022)
10.2 Creston Analytics, Inc. — Rating Letter (B+, stable outlook; March 7, 2022)
Tab 11 — UCC / PPSA Filings (to be supplemented post-closing)
11.1 UCC-1 Financing Statements (Delaware — Torchlight U.S. Holdings, Inc.)
11.2 PPSA Registrations (Ontario — Wolverine Lake Mining Ltd. and Torchlight Milling & Processing Inc.)
11.3 PPSA Registration (British Columbia — Torchlight Mining Corp.)
11.4 PPSA Discharges (Ridgeline Bank of Canada liens)
11.5 Mining Lien Registrations (Ontario Mining Claim Nos. WL-4492-01 through WL-4492-47)
Tab 12 — Closing Checklist
12.1 Master Closing Checklist (Calderwood & Harkness LLP)
Additional hard copies of the closing binder will be prepared for Northern Dominion Trust Company (Collateral Agent) and for each of the Initial Purchasers, as requested. Electronic copies will be made available through our secure document portal.
7. Fees and Billing
A final statement of legal fees and disbursements for Calderwood & Harkness LLP's services in connection with the Offering will be sent to the Company under separate cover. For reference, the fee arrangements for this engagement are as follows, as set forth in our engagement letter dated January 17, 2022:
(a) Hourly Rates — Blended hourly rates of $1,350 per hour for partners and $825 per hour for associates;
(b) Estimated Legal Fees — Estimated aggregate legal fees in the range of $1,200,000 to $1,450,000, based on the anticipated scope and complexity of the engagement;
(c) Completion Fee — A completion fee of $150,000, payable upon the successful closing of the Offering; and
(d) Expense Cap — Reimbursable expenses capped at $75,000, excluding travel expenses incurred in connection with mine site visits to Thunder Bay, Ontario, which are reimbursable at cost.
We note that the $150,000 completion fee has been earned and is now payable following the successful closing of the Offering on April 19, 2022. We will include this amount in our final invoice.
8. Acknowledgments and Closing Remarks
We would like to express our sincere appreciation to Magnus Thornberg, Chief Executive Officer, Lianne Prokopchuk, Chief Financial Officer, Deepak Rathore, General Counsel and Corporate Secretary, and Colleen Hébert, Treasurer, for their exceptional cooperation, responsiveness, and diligence throughout the course of this transaction. The successful completion of the Offering is a testament to the professionalism and commitment of the entire Torchlight team.
We also wish to acknowledge the excellent collaboration of Marie-Claire Bouchard and her colleagues at Pendleton Ross LLP, whose timely and thorough work on the Canadian law aspects of the transaction contributed materially to the successful closing.
With the net proceeds of the Offering now in hand, the Company is well positioned to proceed with the Phase II expansion of the Wolverine Lake mine, including the construction of the new decline ramp and ventilation raise to access the Wolverine Deep zone. We understand that the construction program is expected to commence in Q2 2022 and to be completed in Q4 2024, with estimated capital expenditures of approximately CAD $215 million. We are pleased that the Offering provides the financing foundation for this important next phase of the Company's growth.
Calderwood & Harkness LLP remains available to assist the Company with all post-closing matters, including the UCC and PPSA filing confirmations, the exchange offer or shelf registration process under the Registration Rights Agreement, ongoing compliance with the Indenture covenants and reporting requirements, and any future capital markets transactions that the Company may consider. Please do not hesitate to contact us at any time.
Any questions regarding this memorandum or the post-closing matters described herein should be directed to:
Vivienne St. Claire, Partner, Capital Markets Telephone: (212) 558-4127
Email: vstclaire@calderwoodharkness.com
Audrey Zhou, Lead Associate, Capital Markets Telephone: (212) 558-4389
Email: azhou@calderwoodharkness.com
Very truly yours,
CALDERWOOD & HARKNESS LLP
By: ________
Vivienne St. Claire Partner, Capital Markets
cc:
Magnus Thornberg, Chief Executive Officer, Torchlight Mining Corp. Lianne Prokopchuk, Chief Financial Officer, Torchlight Mining Corp. Colleen Hébert, Treasurer, Torchlight Mining Corp. Robert Adeyemi, Billing Partner, Calderwood & Harkness LLP Audrey Zhou, Lead Associate, Calderwood & Harkness LLP Brendan Walsh, Working Associate, Calderwood & Harkness LLP Marie-Claire Bouchard, Partner, Pendleton Ross LLP
CONFIDENTIALITY NOTICE: This memorandum is a confidential communication from Calderwood & Harkness LLP and is protected by the attorney-client privilege and/or the work product doctrine. It is intended solely for the use of the addressee(s) and the individuals identified in the copy list above. Any unauthorized review, use, disclosure, or distribution of this memorandum is strictly prohibited. If you have received this communication in error, please notify us immediately and destroy all copies. Matter No. 1039-00002.
Security | CUSIP | ISIN
Rule 144A Global Note | 891207 AA 3 | US891207AA38
Regulation S Global Note | C89120 AA 5 | USC89120AA58
Term | Detail
Issuer | Torchlight Mining Corp.
Guarantors | Wolverine Lake Mining Ltd., Torchlight Milling & Processing Inc., and Torchlight U.S. Holdings, Inc. (jointly and severally)
Aggregate Principal Amount | $300,000,000
Coupon | 8.750% per annum
Interest Payment Dates | April 15 and October 15 of each year, commencing October 15, 2022
Maturity Date | April 15, 2029
Issue Price | 98.50% of par (reflecting original issue discount ("OID") of 1.50%, or $4,500,000)
Initial Purchaser discount | 2.25% of the aggregate principal amount ($6,750,000), allocated as follows: Kelvantis Capital Markets LLC — 60% ($4,050,000); Prestige Barrington & Co., Inc. — 25% ($1,687,500); Halcyon Securities Inc. — 15% ($1,012,500)
Net Proceeds to Issuer | $285,750,000
Ratings | Northmark Ratings Group, Inc. — B1 (stable outlook); Creston Analytics, Inc. — B+ (stable outlook); each assigned March 7, 2022
Form | Global Notes in book-entry form through The Depository Trust Company ("DTC") (Rule 144A Notes) and Stonefield Industries and Harborview Industries (Regulation S Notes)
Minimum Denomination | $2,000 and integral multiples of $1,000 in excess thereof
Guarantee | Joint and several senior secured guarantees of the Guarantors
Security | First-priority lien on substantially all tangible and intangible assets of the Issuer and the Guarantors, as more fully described in the Security Agreement (U.S.), the General Security Agreement (Canada), and the Collateral Agency Agreement
Governing Law | State of New York
Application | Amount (USD)
Phase II Wolverine Lake mine expansion capital expenditure | $167,000,000
Repayment of Ridgeline Bank of Canada revolving credit facility (CAD $140,000,000 drawn under the CAD $225,000,000 committed facility, converted at USD/CAD exchange rate of 0.7875) | $110,250,000
Transaction fees and expenses (including OID, initial purchaser discount, legal fees, trustee fees, rating agency fees, and printing costs) | $14,250,000
General corporate purposes and working capital | $8,500,000
Total | $300,000,000
Redemption Period | Redemption Price
Prior to April 15, 2025 (make-whole) | Applicable Treasury Rate + 50 basis points (plus accrued and unpaid interest)
Prior to April 15, 2025 (equity clawback — up to 40% of original aggregate principal amount) | 108.750% of principal (plus accrued and unpaid interest)
On or after April 15, 2025 | 104.375% of principal (plus accrued and unpaid interest)
On or after April 15, 2026 | 102.188% of principal (plus accrued and unpaid interest)
On or after April 15, 2027 | 100.000% of principal (plus accrued and unpaid interest)
Maturity | April 15, 2029

CALDERWOOD & HARKNESS LLP Attorneys at Law

CALDERWOOD & HARKNESS LLP

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