1039-00002 · Torchlight Mining Corp · Closing

officers-certificate-tmc.docx DOCUMENT Capital Markets

6 / 40 ← → ✕

OFFICER'S CERTIFICATE OF TORCHLIGHT MINING CORP.

Pursuant to Section 4.02 of the Indenture and Section 6(f) of the Purchase Agreement

Dated as of April 19, 2022

$300,000,000 Aggregate Principal Amount of 8.750% Senior Secured Notes due 2029 (the "Notes")

RECITALS

A. The Indenture. Reference is hereby made to that certain Indenture, dated as of April 19, 2022 (as may be amended, supplemented, restated, or otherwise modified from time to time, the "Indenture"), among Torchlight Mining Corp., a corporation incorporated under the Canada Business Corporations Act (the "Issuer" or the "Company"), Wolverine Lake Mining Ltd., an Ontario corporation, Torchlight Milling & Processing Inc., an Ontario corporation, and Torchlight U.S. Holdings, Inc., a Delaware corporation (collectively, the "Guarantors"), and Northern Dominion Trust Company, a national banking association, as trustee (in such capacity, the "Trustee") and as collateral agent (in such capacity, the "Collateral Agent"). Capitalized terms used but not otherwise defined herein shall have the meanings ascribed to them in the Indenture.

B. The Purchase Agreement. Reference is further made to that certain Purchase Agreement, dated as of March 29, 2022 (the "Purchase Agreement"), among the Company, the Guarantors, and Kelvantis Capital Markets LLC, Prestige Barrington & Co., Inc., and Halcyon Securities Inc. (collectively, the "Initial Purchasers"). This Officer's Certificate (this "Certificate") is being delivered pursuant to Section 6(f) of the Purchase Agreement as a condition precedent to the obligations of the Initial Purchasers to consummate the purchase of the Notes on the Closing Date (as defined below).

C. The Offering Memorandum. Reference is further made to the Final Offering Memorandum, dated March 14, 2022 (together with any supplements or amendments thereto, the "Offering Memorandum"), relating to the offering of the Notes by the Company pursuant to Rule 144A under the Securities Act of 1933, as amended (the "Securities Act"), and Regulation S under the Securities Act (the "Offering").

D. The Certifying Officers. Each of the undersigned, Lianne Prokopchuk, CPA, CFA, Chief Financial Officer of Torchlight Mining Corp., and Deepak Rathore, General Counsel and Corporate Secretary of Torchlight Mining Corp., is a duly authorized officer of the Company. Each of the undersigned is executing and delivering this Certificate solely in such officer's official capacity on behalf of the Company, and not in any individual or personal capacity, and no personal liability shall attach to, or be incurred by, either of the undersigned by reason of the execution and delivery of this Certificate.

NOW, THEREFORE, in consideration of the foregoing and the closing of the transactions contemplated by the Purchase Agreement and the Indenture, each of the undersigned hereby certifies, represents, and warrants to the Initial Purchasers and the Trustee as follows:

SECTION 1: COMPLIANCE WITH SECTION 4.02 OF THE INDENTURE

1.1 Certification of Conditions. The undersigned officers hereby certify, pursuant to Section 4.02 of the Indenture, that as of the date hereof (the "Closing Date"):

(a) The Company has complied with all conditions and covenants contained in the Indenture that are required to be complied with by the Company on or before the Closing Date. Without limiting the generality of the foregoing, the Company has satisfied each of the conditions to the issuance of the Notes set forth in Article IV of the Indenture, including the delivery of all opinions, certificates, and other documents required to be delivered on or prior to the Closing Date.

(b) No Event of Default (as defined in Section 6.01 of the Indenture), and no event which, with the giving of notice or lapse of time or both, would constitute an Event of Default under the Indenture, has occurred and is continuing as of the date hereof. The undersigned officers have reviewed the terms of the Indenture and have made, or caused to be made under their supervision, such examination or investigation as is necessary to enable them to express an informed opinion as to whether or not the Company is in compliance with all conditions and covenants under the Indenture to be performed by the Company.

SECTION 2: BRING-DOWN OF REPRESENTATIONS AND WARRANTIES

2.1 Truth and Correctness of Representations. The representations and warranties of the Company and the Guarantors set forth in Section 1 of the Purchase Agreement are true and correct in all material respects as of the date hereof, with the same force and effect as though expressly made on and as of the Closing Date; provided that, with respect to any representation or warranty that is qualified by materiality or "Material Adverse Effect" or any similar materiality qualification, such representation or warranty is true and correct in all respects (without giving effect to any such materiality qualification) as of the date hereof with the same force and effect as though expressly made on and as of the Closing Date; and provided, further that any representation or warranty that by its terms speaks as of a specified date was true and correct in all material respects (or, if qualified by materiality, in all respects) as of such specified date.

2.2 No Material Adverse Change. Since the date of the most recent audited financial statements of the Company included in the Offering Memorandum, being the consolidated financial statements for the fiscal year ended December 31, 2021 (the "FY 2021 Financial Statements"), which reflected, among other things, total revenue of CAD $612,400,000 and Adjusted EBITDA of CAD $189,700,000, there has been no Material Adverse Effect (as such term is defined in the Purchase Agreement and the Indenture) on the business, properties, operations, financial condition, or results of operations of the Company and its subsidiaries, taken as a whole. Without limiting the generality of the foregoing, the undersigned officers are not aware of any event, condition, circumstance, or development that, individually or in the aggregate, has had, or could reasonably be expected to have, a Material Adverse Effect since December 31, 2021.

SECTION 3: PERFORMANCE OF COVENANTS AND AGREEMENTS

3.1 Covenant Compliance. The Company and each Guarantor has duly and timely performed all covenants and agreements required to be performed by it under the Purchase Agreement and the Indenture on or before the Closing Date. Each such covenant and agreement has been performed in all material respects in accordance with its terms, and no default or breach exists under any provision of the Purchase Agreement or the Indenture that would, individually or in the aggregate, prevent or materially impair the ability of the Company or any Guarantor to consummate the transactions contemplated by the Purchase Agreement and the Indenture.

3.2 Delivery of Transaction Documents. All closing deliverables required to be delivered by the Company and the Guarantors on or prior to the Closing Date pursuant to the Purchase Agreement and the Indenture have been duly authorized, executed, and delivered by each of the Company and the Guarantors, as applicable. Such closing deliverables include, without limitation, each of the following (collectively, the "Transaction Documents"):

(a) The Indenture — dated as of April 19, 2022, among the Company, the Guarantors, and Northern Dominion Trust Company, as Trustee and Collateral Agent, governing the terms and conditions of the Notes and the Guarantees;

(b) The Notes — issued in the form of Global Notes, as follows:

(i) Rule 144A Global Note — CUSIP: 891207 AA 3; ISIN: US891207AA38; and

(ii) Regulation S Global Note — CUSIP: C89120 AA 5; ISIN: USC89120AA58;

(c) The Security Agreement (U.S.) — dated as of April 19, 2022, between Torchlight U.S. Holdings, Inc. (Employer Identification Number: 84-3921057) and Northern Dominion Trust Company, as Collateral Agent, granting a security interest in substantially all assets of Torchlight U.S. Holdings, Inc.;

(d) The General Security Agreement (Canada) — dated as of April 19, 2022, among the Company, Wolverine Lake Mining Ltd., and Torchlight Milling & Processing Inc., as grantors, and Northern Dominion Trust Company, as Collateral Agent, granting a security interest in substantially all personal property and assets of the Canadian grantors;

(e) The Collateral Agency Agreement — dated as of April 19, 2022, among the Company, the Guarantors, Northern Dominion Trust Company, as Trustee, and Northern Dominion Trust Company, as Collateral Agent, setting forth the rights, duties, and obligations of the Collateral Agent with respect to the Collateral securing the Notes and the Guarantees;

(f) The Registration Rights Agreement — dated as of April 19, 2022, among the Company, the Guarantors, and the Initial Purchasers, providing for the registration of the Notes and the related Guarantees under the Securities Act; and

(g) The DTC Letter of Representations — executed by the Company and delivered to The Depository Trust Company in connection with the book-entry settlement of the Notes.

Each of the foregoing Transaction Documents has been executed and delivered in form and substance consistent with the terms described in the Offering Memorandum and the Purchase Agreement.

SECTION 4: USE OF PROCEEDS

4.1 Application of Proceeds. The net proceeds from the Offering of the Notes (after deducting the initial purchaser discount and other offering expenses) shall be applied in the manner described in the Offering Memorandum under the heading "Use of Proceeds." Specifically, the Company intends to apply the net proceeds as follows:

With respect to the repayment of the revolving credit facility, the Company confirms that as of the Closing Date, CAD $140,000,000 is drawn and outstanding under the CAD $225,000,000 committed revolving credit facility with Ridgeline Bank of Canada (Gavin Forde, Relationship Manager). The equivalent U.S. dollar amount of such drawn balance is approximately $110,250,000, calculated using the applicable USD/CAD exchange rate of 0.7875 as of the date hereof. Upon application of a portion of the net proceeds of the Offering, the revolving credit facility with Ridgeline Bank of Canada shall be repaid in full, and the commitments thereunder shall be terminated, in each case in accordance with the terms of the Payoff Letter, dated as of the Closing Date, delivered by Ridgeline Bank of Canada. The Company has received such Payoff Letter and has confirmed the payoff amount and wire transfer instructions set forth therein.

The Phase II expansion capital expenditure relates to the continued development and expansion of the Wolverine Lake nickel-copper mine, including the construction of additional underground development drifts, expansion of the concentrator facility, acquisition of additional mining equipment, and related infrastructure improvements, all as more fully described in the Offering Memorandum.

SECTION 5: COLLATERAL AND SECURITY INTERESTS

5.1 Security Interests. All actions necessary to create and perfect the security interests contemplated by the Indenture, the Security Agreement (U.S.), the General Security Agreement (Canada), and the Collateral Agency Agreement have been taken, or will be taken promptly following the Closing Date (and in any event within the time periods specified in the Indenture and the applicable Security Agreements), including without limitation:

(a) the filing of UCC-1 financing statements in the State of Delaware (with the Delaware Secretary of State, Division of Corporations) with respect to the tangible and intangible personal property assets of Torchlight U.S. Holdings, Inc.;

(b) the filing of financing statements under the Personal Property Security Act (Ontario) ("PPSA") in the Province of Ontario (with the Ontario Ministry of Government and Consumer Services, Personal Property Security Registration System) with respect to the personal property assets of each of the Company, Wolverine Lake Mining Ltd., and Torchlight Milling & Processing Inc.; and

(c) the registration or filing of notices of security interests with the Ontario Ministry of Northern Development, Mines, Natural Resources and Forestry against Ontario Mining Claim Nos. WL-4492-01 through WL-4492-47, inclusive, and all related surface rights, comprising the Wolverine Lake property, a contiguous land package of approximately 12,400 hectares located approximately 85 kilometres northeast of Thunder Bay, Ontario, Canada.

The security interests created pursuant to the Security Agreement (U.S.), the General Security Agreement (Canada), and the Collateral Agency Agreement constitute, or upon the completion of such filings and registrations will constitute, a first-priority lien on substantially all tangible and intangible assets of the Company and the Guarantors, subject only to Permitted Liens (as defined in the Indenture), as more particularly described in the Indenture and the applicable Security Agreements. The Company has received the results of lien searches conducted on or about April 14, 2022 confirming the absence of any prior liens or encumbrances on such assets, other than Permitted Liens.

SECTION 6: NO PROCEEDING OR LITIGATION PREVENTING CLOSING

6.1 Absence of Proceedings. No action, suit, proceeding, or investigation before or by any court, governmental authority, regulatory body, arbitral tribunal, or other adjudicatory body is pending or, to the knowledge of the undersigned officers after due inquiry, threatened against the Company or any Guarantor that (a) seeks to restrain, prevent, or impose materially adverse conditions upon the issuance of the Notes, (b) seeks to restrain, prevent, or impose materially adverse conditions upon the granting of the Guarantees by the Guarantors, or (c) seeks to restrain, prevent, or impose materially adverse conditions upon the consummation of any of the other transactions contemplated by the Purchase Agreement and the Indenture. To the knowledge of the undersigned officers, there exists no order, decree, injunction, or judgment of any court or governmental authority that would prohibit or materially impair the consummation of the transactions contemplated hereby.

SECTION 7: RATINGS CONFIRMATION

7.1 Credit Ratings. The Notes have received the following credit ratings from nationally recognized statistical rating organizations, each of which remains in full force and effect as of the Closing Date:

As of the Closing Date, no rating agency has publicly announced that it has under surveillance or review its rating of the Notes, and no rating agency has given notice of any intended downgrade, qualification, or withdrawal of any rating assigned to the Notes. The undersigned officers have no knowledge of any facts or circumstances that could reasonably be expected to result in a downgrade or withdrawal of any such rating.

SECTION 8: CLOSING DATE CONFIRMATION

8.1 Extension of Closing Date. The original expected closing date for the issuance and sale of the Notes was April 5, 2022 (the "Original Closing Date"). Due to the timing of certain Canadian regulatory clearances required in connection with the transactions contemplated by the Purchase Agreement and the Indenture, the closing date was extended from the Original Closing Date to April 19, 2022, as previously communicated in writing to all parties to the Purchase Agreement, the Trustee, and their respective counsel.

Such extension of the closing date did not result in any material change to the terms or conditions of the Offering as described in the Offering Memorandum or the Purchase Agreement. The interest rate, principal amount, maturity date, covenants, security package, and all other material terms of the Notes remain unchanged from those described in the Offering Memorandum and the Purchase Agreement.

All conditions precedent to the closing of the purchase and sale of the Notes under the Purchase Agreement, including those set forth in Sections 6 and 7 thereof, have been satisfied (or, where applicable, waived by the party entitled to the benefit thereof) as of April 19, 2022.

SECTION 9: GUARANTOR SUBSIDIARIES

9.1 Confirmation of Guarantor Status. Each of the following entities has duly authorized, executed, and delivered its respective Guarantee of the Notes pursuant to Article X of the Indenture:

(a) Wolverine Lake Mining Ltd. — a corporation incorporated under the Business Corporations Act (Ontario); a wholly owned subsidiary of the Company; registered office located at 44 Lakeshore Boulevard, Wolverine Lake, Ontario P0L 1R0, Canada. Wolverine Lake Mining Ltd. is the operating entity for the Wolverine Lake nickel-copper mine, and holds the mining claims and related mineral rights comprising the Wolverine Lake property.

(b) Torchlight Milling & Processing Inc. — a corporation incorporated under the Business Corporations Act (Ontario); a wholly owned subsidiary of the Company; registered office located at 44 Lakeshore Boulevard, Wolverine Lake, Ontario P0L 1R0, Canada. Torchlight Milling & Processing Inc. owns and operates the concentrator and processing facilities adjacent to the Wolverine Lake mine, including the crushing, grinding, flotation, and dewatering circuits.

(c) Torchlight U.S. Holdings, Inc. — a corporation incorporated under the General Corporation Law of the State of Delaware; a wholly owned subsidiary of the Company; registered office located at 1209 Orange Street, Wilmington, Delaware 19801, United States; Employer Identification Number: 84-3921057. Torchlight U.S. Holdings, Inc. holds the Company's U.S. offtake agreements and marketing contracts with downstream customers.

As of the date hereof, no other subsidiary of the Company has total assets (determined in accordance with International Financial Reporting Standards, as adopted in Canada) equal to or exceeding $5,000,000, and therefore no additional subsidiary of the Company is required to become a Guarantor or to execute and deliver a Guarantee as of the Closing Date pursuant to the terms of the Indenture. The Company will cause any subsidiary that subsequently meets or exceeds such threshold to execute and deliver a supplemental indenture and Guarantee within the time period specified in the Indenture.

SECTION 10: ADDITIONAL CERTIFICATIONS

10.1 Good Standing. The Company is duly organized, validly existing, and in good standing under the Canada Business Corporations Act and has all necessary corporate power and authority to own and operate its properties and to carry on its business as currently conducted and as described in the Offering Memorandum. Each Guarantor is duly organized, validly existing, and in good standing under the laws of its respective jurisdiction of incorporation. Each of the Company and the Guarantors is duly qualified to do business and is in good standing in each jurisdiction in which the nature of its business or the ownership, leasing, or operation of its properties makes such qualification necessary, except where the failure to be so qualified or in good standing would not, individually or in the aggregate, have a Material Adverse Effect.

10.2 Corporate Power and Authority. The Company and each Guarantor has all requisite corporate power and authority to execute, deliver, and perform its obligations under each of the Transaction Documents to which it is a party, including the Indenture, the Notes, the Guarantees, the Security Agreements, the Collateral Agency Agreement, the Registration Rights Agreement, and the Purchase Agreement. The execution, delivery, and performance by the Company and each Guarantor of the Transaction Documents to which it is a party, and the consummation of the transactions contemplated thereby, have been duly authorized by all necessary corporate action on the part of the Company and each Guarantor, as applicable, and no further action or approval is required in connection therewith.

10.3 No Conflict. The execution, delivery, and performance by the Company and each Guarantor of the Transaction Documents to which it is a party, and the consummation of the transactions contemplated thereby, do not and will not:

(a) conflict with or result in a violation or breach of, or constitute a default under, any provision of the articles of incorporation, bylaws, or other organizational documents of the Company or any Guarantor;

(b) conflict with or result in a violation or breach of, or constitute a default (or an event which, with notice or lapse of time or both, would constitute a default) under, or give rise to any right of termination, cancellation, acceleration, or loss of any benefit under, any material agreement, contract, indenture, mortgage, lease, license, permit, instrument, or other obligation to which the Company or any Guarantor is a party or by which any of them or any of their respective properties or assets may be bound; or

(c) conflict with or result in a violation or breach of any applicable law, statute, regulation, order, judgment, writ, injunction, or decree of any governmental authority or regulatory body having jurisdiction over the Company or any Guarantor or any of their respective properties or assets.

SECTION 11: RELIANCE

This Certificate is being delivered for the benefit of the Initial Purchasers and the Trustee, as contemplated by Section 6(f) of the Purchase Agreement and Section 4.02 of the Indenture, and may be relied upon by each of them in connection with the closing of the transactions contemplated by the Purchase Agreement and the Indenture. The Initial Purchasers and the Trustee are entitled to rely upon the statements, representations, warranties, and certifications set forth herein as if such statements, representations, warranties, and certifications had been made directly to each of them. This Certificate may not be relied upon by any other person or entity without the prior written consent of the Company.

The undersigned officers have made due inquiry and have exercised reasonable diligence in connection with the preparation and delivery of this Certificate, and the statements, representations, warranties, and certifications contained herein are made to the best of the knowledge and belief of the undersigned officers, after due investigation and inquiry.

[Remainder of page intentionally left blank. Signature page follows.]

SIGNATURE PAGE TO OFFICER'S CERTIFICATE TORCHLIGHT MINING CORP.

IN WITNESS WHEREOF, each of the undersigned has executed this Officer's Certificate as of the date first written above.

TORCHLIGHT MINING CORP. 2200 – 400 Burrard Street Vancouver, British Columbia V6C 3A6, Canada

By: ________

Name: Lianne Prokopchuk, CPA, CFA

Title: Chief Financial Officer

Date: April 19, 2022

By: ________

Name: Deepak Rathore

Title: General Counsel and Corporate Secretary

Date: April 19, 2022

DELIVERY NOTICE

Copies of this Officer's Certificate shall be delivered to each of the following:

1. Kelvantis Capital Markets LLC

599 Lexington Avenue, 38th Floor New York, NY 10022

Attention: Julian Marchetti

2. Prestige Barrington & Co., Inc.

1285 Avenue of the Americas, 22nd Floor New York, NY 10019

Attention: Keith O'Sullivan

3. Halcyon Securities Inc.

200 Park Avenue, Suite 3100 New York, NY 10166

Attention: Priya Mehrotra

4. Northern Dominion Trust Company

101 Barclay Street, 7th Floor New York, NY 10286

Attention: Sandra Leung, Vice President, Corporate Trust

5. Calderwood & Harkness LLP (Counsel to the Initial Purchasers)

450 Park Avenue New York, NY 10022

Attention: Vivienne St. Claire

6. Clairmont & Voss LLP (Counsel to the Company)

51 West 52nd Street New York, NY 10019

Attention: Harrison Voss

This Officer's Certificate and the statements contained herein are furnished solely in connection with the transactions described herein and are not intended to be, and shall not be construed as, an admission of any fact, liability, or wrongdoing by the Company or any Guarantor.

Use of Proceeds	Amount (USD)
Phase II expansion capital expenditure — Wolverine Lake nickel-copper mine	$167,000,000
Repayment in full of revolving credit facility — Ridgeline Bank of Canada	$110,250,000
Transaction fees and expenses	$14,250,000
General corporate purposes and working capital	$8,500,000
Total	$300,000,000
Rating Agency	Rating	Outlook	Date Assigned
Northmark Ratings Group, Inc.	B1	Stable	March 7, 2022
Creston Analytics, Inc.	B+	Stable	March 7, 2022

OFFICER'S CERTIFICATE OF TORCHLIGHT MINING CORP.
Pursuant to Section 4.02 of the Indenture and Section 6(f) of the Purchase Agreement
Dated as of April 19, 2022
$300,000,000 Aggregate Principal Amount of 8.750% Senior Secured Notes due 2029 (the "Notes")
RECITALS
A. The Indenture. Reference is hereby made to that certain Indenture, dated as of April 19, 2022 (as may be amended, supplemented, restated, or otherwise modified from time to time, the "Indenture"), among Torchlight Mining Corp., a corporation incorporated under the Canada Business Corporations Act (the "Issuer" or the "Company"), Wolverine Lake Mining Ltd., an Ontario corporation, Torchlight Milling & Processing Inc., an Ontario corporation, and Torchlight U.S. Holdings, Inc., a Delaware corporation (collectively, the "Guarantors"), and Northern Dominion Trust Company, a national banking association, as trustee (in such capacity, the "Trustee") and as collateral agent (in such capacity, the "Collateral Agent"). Capitalized terms used but not otherwise defined herein shall have the meanings ascribed to them in the Indenture.
B. The Purchase Agreement. Reference is further made to that certain Purchase Agreement, dated as of March 29, 2022 (the "Purchase Agreement"), among the Company, the Guarantors, and Kelvantis Capital Markets LLC, Prestige Barrington & Co., Inc., and Halcyon Securities Inc. (collectively, the "Initial Purchasers"). This Officer's Certificate (this "Certificate") is being delivered pursuant to Section 6(f) of the Purchase Agreement as a condition precedent to the obligations of the Initial Purchasers to consummate the purchase of the Notes on the Closing Date (as defined below).
C. The Offering Memorandum. Reference is further made to the Final Offering Memorandum, dated March 14, 2022 (together with any supplements or amendments thereto, the "Offering Memorandum"), relating to the offering of the Notes by the Company pursuant to Rule 144A under the Securities Act of 1933, as amended (the "Securities Act"), and Regulation S under the Securities Act (the "Offering").
D. The Certifying Officers. Each of the undersigned, Lianne Prokopchuk, CPA, CFA, Chief Financial Officer of Torchlight Mining Corp., and Deepak Rathore, General Counsel and Corporate Secretary of Torchlight Mining Corp., is a duly authorized officer of the Company. Each of the undersigned is executing and delivering this Certificate solely in such officer's official capacity on behalf of the Company, and not in any individual or personal capacity, and no personal liability shall attach to, or be incurred by, either of the undersigned by reason of the execution and delivery of this Certificate.
NOW, THEREFORE, in consideration of the foregoing and the closing of the transactions contemplated by the Purchase Agreement and the Indenture, each of the undersigned hereby certifies, represents, and warrants to the Initial Purchasers and the Trustee as follows:
SECTION 1: COMPLIANCE WITH SECTION 4.02 OF THE INDENTURE
1.1 Certification of Conditions. The undersigned officers hereby certify, pursuant to Section 4.02 of the Indenture, that as of the date hereof (the "Closing Date"):
(a) The Company has complied with all conditions and covenants contained in the Indenture that are required to be complied with by the Company on or before the Closing Date. Without limiting the generality of the foregoing, the Company has satisfied each of the conditions to the issuance of the Notes set forth in Article IV of the Indenture, including the delivery of all opinions, certificates, and other documents required to be delivered on or prior to the Closing Date.
(b) No Event of Default (as defined in Section 6.01 of the Indenture), and no event which, with the giving of notice or lapse of time or both, would constitute an Event of Default under the Indenture, has occurred and is continuing as of the date hereof. The undersigned officers have reviewed the terms of the Indenture and have made, or caused to be made under their supervision, such examination or investigation as is necessary to enable them to express an informed opinion as to whether or not the Company is in compliance with all conditions and covenants under the Indenture to be performed by the Company.
SECTION 2: BRING-DOWN OF REPRESENTATIONS AND WARRANTIES
2.1 Truth and Correctness of Representations. The representations and warranties of the Company and the Guarantors set forth in Section 1 of the Purchase Agreement are true and correct in all material respects as of the date hereof, with the same force and effect as though expressly made on and as of the Closing Date; provided that, with respect to any representation or warranty that is qualified by materiality or "Material Adverse Effect" or any similar materiality qualification, such representation or warranty is true and correct in all respects (without giving effect to any such materiality qualification) as of the date hereof with the same force and effect as though expressly made on and as of the Closing Date; and provided, further that any representation or warranty that by its terms speaks as of a specified date was true and correct in all material respects (or, if qualified by materiality, in all respects) as of such specified date.
2.2 No Material Adverse Change. Since the date of the most recent audited financial statements of the Company included in the Offering Memorandum, being the consolidated financial statements for the fiscal year ended December 31, 2021 (the "FY 2021 Financial Statements"), which reflected, among other things, total revenue of CAD $612,400,000 and Adjusted EBITDA of CAD $189,700,000, there has been no Material Adverse Effect (as such term is defined in the Purchase Agreement and the Indenture) on the business, properties, operations, financial condition, or results of operations of the Company and its subsidiaries, taken as a whole. Without limiting the generality of the foregoing, the undersigned officers are not aware of any event, condition, circumstance, or development that, individually or in the aggregate, has had, or could reasonably be expected to have, a Material Adverse Effect since December 31, 2021.
SECTION 3: PERFORMANCE OF COVENANTS AND AGREEMENTS
3.1 Covenant Compliance. The Company and each Guarantor has duly and timely performed all covenants and agreements required to be performed by it under the Purchase Agreement and the Indenture on or before the Closing Date. Each such covenant and agreement has been performed in all material respects in accordance with its terms, and no default or breach exists under any provision of the Purchase Agreement or the Indenture that would, individually or in the aggregate, prevent or materially impair the ability of the Company or any Guarantor to consummate the transactions contemplated by the Purchase Agreement and the Indenture.
3.2 Delivery of Transaction Documents. All closing deliverables required to be delivered by the Company and the Guarantors on or prior to the Closing Date pursuant to the Purchase Agreement and the Indenture have been duly authorized, executed, and delivered by each of the Company and the Guarantors, as applicable. Such closing deliverables include, without limitation, each of the following (collectively, the "Transaction Documents"):
(a) The Indenture — dated as of April 19, 2022, among the Company, the Guarantors, and Northern Dominion Trust Company, as Trustee and Collateral Agent, governing the terms and conditions of the Notes and the Guarantees;
(b) The Notes — issued in the form of Global Notes, as follows:
(i) Rule 144A Global Note — CUSIP: 891207 AA 3; ISIN: US891207AA38; and
(ii) Regulation S Global Note — CUSIP: C89120 AA 5; ISIN: USC89120AA58;
(c) The Security Agreement (U.S.) — dated as of April 19, 2022, between Torchlight U.S. Holdings, Inc. (Employer Identification Number: 84-3921057) and Northern Dominion Trust Company, as Collateral Agent, granting a security interest in substantially all assets of Torchlight U.S. Holdings, Inc.;
(d) The General Security Agreement (Canada) — dated as of April 19, 2022, among the Company, Wolverine Lake Mining Ltd., and Torchlight Milling & Processing Inc., as grantors, and Northern Dominion Trust Company, as Collateral Agent, granting a security interest in substantially all personal property and assets of the Canadian grantors;
(e) The Collateral Agency Agreement — dated as of April 19, 2022, among the Company, the Guarantors, Northern Dominion Trust Company, as Trustee, and Northern Dominion Trust Company, as Collateral Agent, setting forth the rights, duties, and obligations of the Collateral Agent with respect to the Collateral securing the Notes and the Guarantees;
(f) The Registration Rights Agreement — dated as of April 19, 2022, among the Company, the Guarantors, and the Initial Purchasers, providing for the registration of the Notes and the related Guarantees under the Securities Act; and
(g) The DTC Letter of Representations — executed by the Company and delivered to The Depository Trust Company in connection with the book-entry settlement of the Notes.
Each of the foregoing Transaction Documents has been executed and delivered in form and substance consistent with the terms described in the Offering Memorandum and the Purchase Agreement.
SECTION 4: USE OF PROCEEDS
4.1 Application of Proceeds. The net proceeds from the Offering of the Notes (after deducting the initial purchaser discount and other offering expenses) shall be applied in the manner described in the Offering Memorandum under the heading "Use of Proceeds." Specifically, the Company intends to apply the net proceeds as follows:
With respect to the repayment of the revolving credit facility, the Company confirms that as of the Closing Date, CAD $140,000,000 is drawn and outstanding under the CAD $225,000,000 committed revolving credit facility with Ridgeline Bank of Canada (Gavin Forde, Relationship Manager). The equivalent U.S. dollar amount of such drawn balance is approximately $110,250,000, calculated using the applicable USD/CAD exchange rate of 0.7875 as of the date hereof. Upon application of a portion of the net proceeds of the Offering, the revolving credit facility with Ridgeline Bank of Canada shall be repaid in full, and the commitments thereunder shall be terminated, in each case in accordance with the terms of the Payoff Letter, dated as of the Closing Date, delivered by Ridgeline Bank of Canada. The Company has received such Payoff Letter and has confirmed the payoff amount and wire transfer instructions set forth therein.
The Phase II expansion capital expenditure relates to the continued development and expansion of the Wolverine Lake nickel-copper mine, including the construction of additional underground development drifts, expansion of the concentrator facility, acquisition of additional mining equipment, and related infrastructure improvements, all as more fully described in the Offering Memorandum.
SECTION 5: COLLATERAL AND SECURITY INTERESTS
5.1 Security Interests. All actions necessary to create and perfect the security interests contemplated by the Indenture, the Security Agreement (U.S.), the General Security Agreement (Canada), and the Collateral Agency Agreement have been taken, or will be taken promptly following the Closing Date (and in any event within the time periods specified in the Indenture and the applicable Security Agreements), including without limitation:
(a) the filing of UCC-1 financing statements in the State of Delaware (with the Delaware Secretary of State, Division of Corporations) with respect to the tangible and intangible personal property assets of Torchlight U.S. Holdings, Inc.;
(b) the filing of financing statements under the Personal Property Security Act (Ontario) ("PPSA") in the Province of Ontario (with the Ontario Ministry of Government and Consumer Services, Personal Property Security Registration System) with respect to the personal property assets of each of the Company, Wolverine Lake Mining Ltd., and Torchlight Milling & Processing Inc.; and
(c) the registration or filing of notices of security interests with the Ontario Ministry of Northern Development, Mines, Natural Resources and Forestry against Ontario Mining Claim Nos. WL-4492-01 through WL-4492-47, inclusive, and all related surface rights, comprising the Wolverine Lake property, a contiguous land package of approximately 12,400 hectares located approximately 85 kilometres northeast of Thunder Bay, Ontario, Canada.
The security interests created pursuant to the Security Agreement (U.S.), the General Security Agreement (Canada), and the Collateral Agency Agreement constitute, or upon the completion of such filings and registrations will constitute, a first-priority lien on substantially all tangible and intangible assets of the Company and the Guarantors, subject only to Permitted Liens (as defined in the Indenture), as more particularly described in the Indenture and the applicable Security Agreements. The Company has received the results of lien searches conducted on or about April 14, 2022 confirming the absence of any prior liens or encumbrances on such assets, other than Permitted Liens.
SECTION 6: NO PROCEEDING OR LITIGATION PREVENTING CLOSING
6.1 Absence of Proceedings. No action, suit, proceeding, or investigation before or by any court, governmental authority, regulatory body, arbitral tribunal, or other adjudicatory body is pending or, to the knowledge of the undersigned officers after due inquiry, threatened against the Company or any Guarantor that (a) seeks to restrain, prevent, or impose materially adverse conditions upon the issuance of the Notes, (b) seeks to restrain, prevent, or impose materially adverse conditions upon the granting of the Guarantees by the Guarantors, or (c) seeks to restrain, prevent, or impose materially adverse conditions upon the consummation of any of the other transactions contemplated by the Purchase Agreement and the Indenture. To the knowledge of the undersigned officers, there exists no order, decree, injunction, or judgment of any court or governmental authority that would prohibit or materially impair the consummation of the transactions contemplated hereby.
SECTION 7: RATINGS CONFIRMATION
7.1 Credit Ratings. The Notes have received the following credit ratings from nationally recognized statistical rating organizations, each of which remains in full force and effect as of the Closing Date:
As of the Closing Date, no rating agency has publicly announced that it has under surveillance or review its rating of the Notes, and no rating agency has given notice of any intended downgrade, qualification, or withdrawal of any rating assigned to the Notes. The undersigned officers have no knowledge of any facts or circumstances that could reasonably be expected to result in a downgrade or withdrawal of any such rating.
SECTION 8: CLOSING DATE CONFIRMATION
8.1 Extension of Closing Date. The original expected closing date for the issuance and sale of the Notes was April 5, 2022 (the "Original Closing Date"). Due to the timing of certain Canadian regulatory clearances required in connection with the transactions contemplated by the Purchase Agreement and the Indenture, the closing date was extended from the Original Closing Date to April 19, 2022, as previously communicated in writing to all parties to the Purchase Agreement, the Trustee, and their respective counsel.
Such extension of the closing date did not result in any material change to the terms or conditions of the Offering as described in the Offering Memorandum or the Purchase Agreement. The interest rate, principal amount, maturity date, covenants, security package, and all other material terms of the Notes remain unchanged from those described in the Offering Memorandum and the Purchase Agreement.
All conditions precedent to the closing of the purchase and sale of the Notes under the Purchase Agreement, including those set forth in Sections 6 and 7 thereof, have been satisfied (or, where applicable, waived by the party entitled to the benefit thereof) as of April 19, 2022.
SECTION 9: GUARANTOR SUBSIDIARIES
9.1 Confirmation of Guarantor Status. Each of the following entities has duly authorized, executed, and delivered its respective Guarantee of the Notes pursuant to Article X of the Indenture:
(a) Wolverine Lake Mining Ltd. — a corporation incorporated under the Business Corporations Act (Ontario); a wholly owned subsidiary of the Company; registered office located at 44 Lakeshore Boulevard, Wolverine Lake, Ontario P0L 1R0, Canada. Wolverine Lake Mining Ltd. is the operating entity for the Wolverine Lake nickel-copper mine, and holds the mining claims and related mineral rights comprising the Wolverine Lake property.
(b) Torchlight Milling & Processing Inc. — a corporation incorporated under the Business Corporations Act (Ontario); a wholly owned subsidiary of the Company; registered office located at 44 Lakeshore Boulevard, Wolverine Lake, Ontario P0L 1R0, Canada. Torchlight Milling & Processing Inc. owns and operates the concentrator and processing facilities adjacent to the Wolverine Lake mine, including the crushing, grinding, flotation, and dewatering circuits.
(c) Torchlight U.S. Holdings, Inc. — a corporation incorporated under the General Corporation Law of the State of Delaware; a wholly owned subsidiary of the Company; registered office located at 1209 Orange Street, Wilmington, Delaware 19801, United States; Employer Identification Number: 84-3921057. Torchlight U.S. Holdings, Inc. holds the Company's U.S. offtake agreements and marketing contracts with downstream customers.
As of the date hereof, no other subsidiary of the Company has total assets (determined in accordance with International Financial Reporting Standards, as adopted in Canada) equal to or exceeding $5,000,000, and therefore no additional subsidiary of the Company is required to become a Guarantor or to execute and deliver a Guarantee as of the Closing Date pursuant to the terms of the Indenture. The Company will cause any subsidiary that subsequently meets or exceeds such threshold to execute and deliver a supplemental indenture and Guarantee within the time period specified in the Indenture.
SECTION 10: ADDITIONAL CERTIFICATIONS
10.1 Good Standing. The Company is duly organized, validly existing, and in good standing under the Canada Business Corporations Act and has all necessary corporate power and authority to own and operate its properties and to carry on its business as currently conducted and as described in the Offering Memorandum. Each Guarantor is duly organized, validly existing, and in good standing under the laws of its respective jurisdiction of incorporation. Each of the Company and the Guarantors is duly qualified to do business and is in good standing in each jurisdiction in which the nature of its business or the ownership, leasing, or operation of its properties makes such qualification necessary, except where the failure to be so qualified or in good standing would not, individually or in the aggregate, have a Material Adverse Effect.
10.2 Corporate Power and Authority. The Company and each Guarantor has all requisite corporate power and authority to execute, deliver, and perform its obligations under each of the Transaction Documents to which it is a party, including the Indenture, the Notes, the Guarantees, the Security Agreements, the Collateral Agency Agreement, the Registration Rights Agreement, and the Purchase Agreement. The execution, delivery, and performance by the Company and each Guarantor of the Transaction Documents to which it is a party, and the consummation of the transactions contemplated thereby, have been duly authorized by all necessary corporate action on the part of the Company and each Guarantor, as applicable, and no further action or approval is required in connection therewith.
10.3 No Conflict. The execution, delivery, and performance by the Company and each Guarantor of the Transaction Documents to which it is a party, and the consummation of the transactions contemplated thereby, do not and will not:
(a) conflict with or result in a violation or breach of, or constitute a default under, any provision of the articles of incorporation, bylaws, or other organizational documents of the Company or any Guarantor;
(b) conflict with or result in a violation or breach of, or constitute a default (or an event which, with notice or lapse of time or both, would constitute a default) under, or give rise to any right of termination, cancellation, acceleration, or loss of any benefit under, any material agreement, contract, indenture, mortgage, lease, license, permit, instrument, or other obligation to which the Company or any Guarantor is a party or by which any of them or any of their respective properties or assets may be bound; or
(c) conflict with or result in a violation or breach of any applicable law, statute, regulation, order, judgment, writ, injunction, or decree of any governmental authority or regulatory body having jurisdiction over the Company or any Guarantor or any of their respective properties or assets.
SECTION 11: RELIANCE
This Certificate is being delivered for the benefit of the Initial Purchasers and the Trustee, as contemplated by Section 6(f) of the Purchase Agreement and Section 4.02 of the Indenture, and may be relied upon by each of them in connection with the closing of the transactions contemplated by the Purchase Agreement and the Indenture. The Initial Purchasers and the Trustee are entitled to rely upon the statements, representations, warranties, and certifications set forth herein as if such statements, representations, warranties, and certifications had been made directly to each of them. This Certificate may not be relied upon by any other person or entity without the prior written consent of the Company.
The undersigned officers have made due inquiry and have exercised reasonable diligence in connection with the preparation and delivery of this Certificate, and the statements, representations, warranties, and certifications contained herein are made to the best of the knowledge and belief of the undersigned officers, after due investigation and inquiry.
[Remainder of page intentionally left blank. Signature page follows.]
SIGNATURE PAGE TO OFFICER'S CERTIFICATE TORCHLIGHT MINING CORP.
IN WITNESS WHEREOF, each of the undersigned has executed this Officer's Certificate as of the date first written above.
TORCHLIGHT MINING CORP. 2200 – 400 Burrard Street Vancouver, British Columbia V6C 3A6, Canada
By: ________
Name: Lianne Prokopchuk, CPA, CFA
Title: Chief Financial Officer
Date: April 19, 2022
By: ________
Name: Deepak Rathore
Title: General Counsel and Corporate Secretary
Date: April 19, 2022
DELIVERY NOTICE
Copies of this Officer's Certificate shall be delivered to each of the following:
1.  Kelvantis Capital Markets LLC
599 Lexington Avenue, 38th Floor New York, NY 10022
Attention: Julian Marchetti
2.  Prestige Barrington & Co., Inc.
1285 Avenue of the Americas, 22nd Floor New York, NY 10019
Attention: Keith O'Sullivan
3.  Halcyon Securities Inc.
200 Park Avenue, Suite 3100 New York, NY 10166
Attention: Priya Mehrotra
4.  Northern Dominion Trust Company
101 Barclay Street, 7th Floor New York, NY 10286
Attention: Sandra Leung, Vice President, Corporate Trust
5.  Calderwood & Harkness LLP (Counsel to the Initial Purchasers)
450 Park Avenue New York, NY 10022
Attention: Vivienne St. Claire
6.  Clairmont & Voss LLP (Counsel to the Company)
51 West 52nd Street New York, NY 10019
Attention: Harrison Voss
This Officer's Certificate and the statements contained herein are furnished solely in connection with the transactions described herein and are not intended to be, and shall not be construed as, an admission of any fact, liability, or wrongdoing by the Company or any Guarantor.
Use of Proceeds | Amount (USD)
Phase II expansion capital expenditure — Wolverine Lake nickel-copper mine | $167,000,000
Repayment in full of revolving credit facility — Ridgeline Bank of Canada | $110,250,000
Transaction fees and expenses | $14,250,000
General corporate purposes and working capital | $8,500,000
Total | $300,000,000
Rating Agency | Rating | Outlook | Date Assigned
Northmark Ratings Group, Inc. | B1 | Stable | March 7, 2022
Creston Analytics, Inc. | B+ | Stable | March 7, 2022