PRIVILEGED & CONFIDENTIAL
FROM: Harrison Wexford, Beatrice Holloway, Elliot Nguyen, Grace Nakamura — Calderwood & Harkness LLP
TO:
RE: Civil Action No. 9:24-cv-00087-DWM, *United States of America and State of Montana v. Torchlight Mining Corp. et al.*, U.S. District Court for the District of Montana, Missoula Division
MATTER NO.: 1039-00003
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• First installment of 25% ($7,875,000) due within thirty (30) days of the Effective Date;
• Second installment of 25% ($7,875,000) due on the twelve (12) month anniversary of the Effective Date;
• Third installment of 25% ($7,875,000) due on the twenty-four (24) month anniversary of the Effective Date; and
• Fourth and final installment of 25% ($7,875,000) due on the thirty-six (36) month anniversary of the Effective Date.
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Remediation Cost — Ridgecrest Site
** .** The $198.6 million discussed at the July 30, 2024 agreement-in-principle session. The government's counter-redline (i) the extent of tailings reprocessing required in the East Impoundment (PCE estimates 420,000 cubic yards vs. Cascade's estimate of 540,000 cubic yards); (ii) groundwater treatment duration (PCE models 18 years vs. Cascade's 25-year model); and (iii) long-term monitoring and maintenance costs.
Remediation — Ridgecrest
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** .** Dr. Astrid Bergmann of Pinnacle Creek Environmental has that a minimum of twenty-four (24) months from the Effective Date (and eighteen (18) months from RAWP submission) is the minimum realistic timeline for remedy design finalization,
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§ VIII. SUPPLEMENTAL ENVIRONMENTAL PROJECTS
§ VIII.A. Flint Creek Watershed Restoration Project (Montana)
TMC accepts government counter-redline: $5,500,000 for 12 miles of stream-bank stabilization, riparian replanting, and fish-passage improvements along Flint Creek downstream of Ridgecrest. TMC's first redline had proposed $4.5M for 8 miles; government counter-redline proposed $5.5M for 12 miles; the $5.5M/12-mile scope is a reasonable compromise that demonstrates good faith and aligns with MT DEQ recommendations conveyed through Annika Hedstrom.
TMC redline note: No changes; accepted.
§ VIII.B. Battle Mountain Community Drinking Water Improvement Project (Nevada)
$3,500,000 for upgrade of the municipal water treatment facility in Battle Mountain, Lander County, Nevada.
TMC redline note: No changes; this figure was not in dispute.
§ VIII.C. Institute Community Air Quality Monitoring Network (West Virginia)
$3,000,000 for installation and 10-year operation of six ambient air quality monitoring stations in the Institute/South Charleston area, Kanawha County, West Virginia.
TMC redline note: No changes; this figure was not in dispute.
§ VIII.D. Community Engagement Requirements (NEW — Government Counter-Proposal)
TMC REDLINE — CONDITIONAL ACCEPTANCE WITH MODIFICATIONS:
TMC accepts in principle the government counter-proposal requiring TMC to establish and fund community advisory groups at each site location (Drummond, MT; Belgrade, MT; Battle Mountain, NV; Institute, WV). Estimated cost: $100,000–$150,000 per year across all four sites.
TMC proposes additional limiting language: "Defendants' obligations under this subsection shall be limited to (a) providing financial support in an amount not to exceed $150,000 per year in the aggregate for all four Site locations, and (b) logistical support for meetings of the community advisory groups. The community advisory groups shall serve in an advisory capacity only, and their recommendations shall not be binding on Defendants' remediation decisions or implementation schedules."
Rationale: The government's environmental justice emphasis is acknowledged and the reputational benefit is recognized; however, TMC must ensure that the advisory groups do not acquire de facto veto authority over remediation design or scheduling decisions.
§ VIII.E. Total SEPs
Total: $12,000,000 ($5.5M + $3.5M + $3.0M). Community engagement costs are operational costs, not SEPs, and are estimated separately.
§ IX. REPORTING REQUIREMENTS
§ IX.A. Annual Reports
Annual progress reports for all four sites, submitted to EPA and respective state agencies.
TMC redline note: No changes to existing annual reporting requirement.
§ IX.B. Quarterly Reports (NEW — Government Counter-Proposal)
TMC REDLINE — ACCEPTANCE WITH MODIFICATIONS:
TMC accepts the government counter-proposal requiring quarterly progress reports for all four sites during the first 5 years post-Effective Date. Reports to be submitted to EPA Project Coordinators (Dr. Samuel Tesfaye for Ridgecrest and Gallatin; Jennifer Whitfield for Bonanza Creek and Kanawha Bend) and respective state agencies (MT DEQ, NV DEP, WV DEP).
TMC proposes modification: Quarterly report submission dates shall be aligned with the Independent Monitor's quarterly audit schedule (per § XI) to avoid duplication of effort and ensure consistency of data.
Additional estimated administrative cost: $150,000–$200,000 per year, to be managed by Pinnacle Creek Environmental (Dr. Astrid Bergmann) as part of ongoing monitoring workstreams.
§ X. FINANCIAL ASSURANCE
§ X.A. Total Financial Assurance Amount
TMC REDLINE — KEY CHANGE: TMC proposes to strike "$250,000,000" (government counter-redline) and insert "$245,000,000."
Rationale: The $245.0M figure is supported by Northspire Capital Markets (Vivian Okafor) modeling as the appropriate level given the NPV of total remediation obligations ($245.1M at 3% discount rate); the $5.0M difference from the government's $250.0M is modest and the proposed figure precisely aligns with the actuarial analysis.
§ X.B. Financial Assurance Structure (TMC Proposed Split)
TMC REDLINE — NEW DETAIL (not specified in government counter-redline): TMC proposes specific split:
• Surety Bond: $165,000,000 — Ironbark Surety of America, Inc. (Bond No. ISA-ENV-2025-08934), account executive Thomas Rennick; annual premium: 1.85% of face value ($3,052,500 per year)
• Remediation Trust Fund: $80,000,000 — Larchfield Trust Company, N.A. (Trust Agreement No. LTC-REM-2025-1177), trust officer David Henshaw; initial deposit of $80,000,000
• Total: $165.0M + $80.0M = $245.0M
Rationale: The surety/trust split is operationally efficient and consistent with RCRA and CERCLA financial assurance regulations (40 C.F.R. Parts 264 and 265); Ironbark and Larchfield are prepared to execute on the proposed structure.
Deadline to establish trust fund and post surety bond: September 12, 2025 (90 days after Effective Date).
Financial
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TMC proposes to strike the government's broad "material default" language and insert: "For purposes of this Section, a 'material default' shall mean only (a) a willful violation of the terms of this Consent Decree, or (b) a repeated (i) pending resolution under the dispute-resolution mechanism (ii) delays attributable to (iii)
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This has been prepared by Calderwood & Harkness LLP for in connection with Matter No. 1039-00003.
CALDERWOOD & HARKNESS LLP
By: ________
Harrison Wexford, Partner Environmental Litigation & Enforcement
By: ________
Beatrice Holloway, Partner Environmental Regulatory
By: ________
Elliot Nguyen, Counsel Environmental Litigation & Enforcement
By: ________
Grace Nakamura, Associate Environmental Litigation & Enforcement
cc:
| Category | Gov't Counter-Redline | TMC Second Redline | Difference |
| Ridgecrest remediation | $205.0M | $198.6M | -$6.4M |
| Gallatin remediation | $42.8M | $42.8M | $0 |
| Bonanza Creek remediation | $63.2M | $63.2M | $0 |
| Kanawha Bend remediation | $38.9M | $38.9M | $0 |
| Total remediation | $349.9M | $343.5M | -$6.4M |
| Civil penalty | $31.5M | $31.5M | $0 |
| EPA past costs | $18.1M | $18.1M | $0 |
| SEPs | $12.0M | $12.0M | $0 |
| Independent monitor (5 yr) | $4.8M | $4.8M | $0 |
| Grand total | $416.3M | $409.9M | -$6.4M |
| Financial assurance | $250.0M | $245.0M | -$5.0M |