1039-00003 · Torchlight Mining Corp · Credit Facility & Financial Impact

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CALDERWOOD & HARKNESS LLP Attorneys at Law

One Liberty Plaza, 165 Broadway, 44th Floor New York, New York 10006

Telephone: (212) 558-4000 Facsimile: (212) 558-3588

www.calderwoodharkness.com

March 1, 2025

VIA OVERNIGHT COURIER AND ELECTRONIC MAIL

Harborstone National Bank, N.A. as Administrative Agent Loan Administration / Syndicated Credit Division

Attention: Senior Credit Officer — Torchlight Mining Corp. Facility

277 Park Avenue, 15th Floor New York, New York 10172

Re: Disclosure of Environmental Consent Decree and Related Financial Obligations — Torchlight Mining Corp. (TSX: TRC / NYSE: TRC)

Syndicated Revolving Credit Facility dated September 15, 2022; Administrative Agent: Harborstone National Bank, N.A.; Borrower: Torchlight Mining Corp.; Facility Amount: C$750,000,000; Maturity Date: March 15, 2027

Dear Sir or Madam:

1. Purpose and Authorization

Calderwood & Harkness LLP ("C&H") acts as outside environmental and regulatory counsel to Torchlight Mining Corp. ("TMC" or the "Borrower"), a corporation incorporated under the Canada Business Corporations Act (R.S.C., 1985, c. C-44) (the "CBCA"), with its Canadian headquarters located at 1800 Bayfield Tower, 401 Bay Street, Toronto, Ontario M5H 2Y4, Canada, and its U.S. headquarters located at 750 Copper Ridge Boulevard, Suite 200, Helena, Montana 59601. This matter is being handled under C&H Matter No. 1039-00003.

This letter is being delivered on behalf of TMC pursuant to, and in satisfaction of, the disclosure and notification covenants contained in that certain C$750.0 million syndicated revolving credit facility agreement, dated as of September 15, 2022, as amended by Amendment No. 1 dated March 30, 2023, and Amendment No. 2 dated August 12, 2024 (as so amended, the "Credit Agreement"), for which Harborstone National Bank, N.A. (the "Administrative Agent" or "Harborstone") serves as Administrative Agent on behalf of the lending syndicate. The Credit Agreement has a stated maturity date of March 15, 2027.

TMC's General Counsel, Miriam Soo-Hwan Park, and Chief Financial Officer, Carolyn Bracebridge, have each reviewed and authorized the delivery of this disclosure letter. This letter has been prepared based upon information furnished to C&H by TMC's management team, its financial advisor, Northspire Capital Markets, Inc. ("Northspire"), its external auditor, Ridgeline Accounting Partners LLP, and upon C&H's own independent review of the relevant legal instruments and public filings.

The purpose of this letter is to inform the Administrative Agent and, through it, the lending syndicate, of a multi-site environmental consent decree (the "Consent Decree") that has been lodged with the United States District Court for the District of Montana and the associated financial obligations arising thereunder. As described in greater detail below, the aggregate nominal financial obligation of TMC and its U.S. operating subsidiaries under the Consent Decree is estimated at approximately US$409.9 million. Notwithstanding the magnitude of these obligations, TMC believes, and C&H concurs based upon its review, that TMC remains in full compliance with the environmental liability covenants and other relevant provisions of the Credit Agreement.

2. Background — The Enforcement Action

On January 18, 2024, the United States Department of Justice, Environment and Natural Resources Division ("DOJ ENRD"), acting on behalf of the United States Environmental Protection Agency ("EPA"), filed a civil complaint (the "Complaint") against TMC and certain of its U.S. operating subsidiaries in the United States District Court for the District of Montana, Missoula Division, under Civil Action No. 9:24-cv-00087-DWM, before the Honorable Donald W. Molloy, Senior United States District Judge. The action was commenced under the Federal Rules of Civil Procedure and the applicable environmental statutes described below.

The States of Montana, Nevada, and West Virginia (collectively, the "State Co-Plaintiffs") joined the action as co-plaintiffs, asserting both federal and state-law claims arising out of the same operative facts and affected facilities.

The named defendants in the enforcement action (collectively, the "Defendants") are:

(a) Torchlight Mining Corp., a CBCA corporation (the parent entity and Borrower under the Credit Agreement);

(b) Torchlight Mining (U.S.) Inc., a Delaware corporation (EIN 83-2047156), which serves as the principal U.S. holding company for TMC's domestic mining and chemical operations;

(c) Torchlight Specialty Chemicals, Inc., a Delaware corporation (EIN 47-3819204), TMC's U.S. specialty chemicals manufacturing subsidiary;

(d) Ridgecrest Mine Holdings, LLC, a Montana limited liability company (Montana Secretary of State ID E1042738), the entity that holds the permits and real property interests associated with the Ridgecrest Mine; and

(e) Bonanza Creek Mining, LLC, a Nevada limited liability company (Nevada Secretary of State Entity No. E0518294731), the operator of the Bonanza Creek Gold Mine.

The Complaint alleges violations of the following federal environmental statutes at four TMC-operated or formerly operated facilities:

(i) The Clean Water Act ("CWA"), 33 U.S.C. § 1311 (Section 301), relating to unpermitted discharges of pollutants to waters of the United States;

(ii) The Resource Conservation and Recovery Act ("RCRA"), 42 U.S.C. §§ 6924 and 6925 (Sections 3004 and 3005), relating to the treatment, storage, and disposal of hazardous wastes without proper permits and in violation of applicable standards; and

(iii) The Comprehensive Environmental Response, Compensation, and Liability Act ("CERCLA"), 42 U.S.C. § 9607 (Section 107), relating to liability for the costs of response actions undertaken by EPA at contaminated facilities.

The four facilities at issue in the enforcement action are as follows:

1. Ridgecrest Copper-Molybdenum Mine. Located at 14200 Ridgecrest Mine Road, Drummond, Granite County, Montana 59832. This facility is a former large-scale copper-molybdenum mine currently in the closure and reclamation phase, with an approximately 3,200-acre mine footprint. The Complaint alleges historic and ongoing CWA violations arising from acid mine drainage entering Flint Creek and its tributaries, as well as RCRA violations relating to the management of mine tailings and waste rock containing hazardous constituents. EPA conducted removal actions at this site between 2021 and 2023 and seeks reimbursement of its response costs under CERCLA § 107.

2. Gallatin Chemical Works. Located at 8800 Industrial Park Lane, Belgrade, Gallatin County, Montana 59714. This is an active specialty chemical manufacturing facility on approximately 145 acres that produces flotation reagents and other mineral processing chemicals. The Complaint alleges RCRA violations relating to the storage and disposal of spent solvents and process waste, as well as CWA violations arising from unpermitted stormwater discharges containing elevated concentrations of heavy metals and organic compounds.

3. Bonanza Creek Gold Mine. Located at County Road 447, Mile Marker 12, Lander County, Nevada 89820. This is an active open-pit heap-leach gold mining operation with an approximately 5,600-acre mine footprint. The Complaint alleges CWA violations arising from seepage of cyanide-bearing process solution from heap leach pads into adjacent groundwater and surface water systems, as well as RCRA violations relating to the characterization and management of spent carbon and other process wastes.

4. Kanawha Bend Chemical Plant. Located at 2200 Chemical Valley Road, Institute, Kanawha County, West Virginia 25112. This is an active chemical manufacturing facility on approximately 78 acres that produces leaching agents and related products. The Complaint alleges CWA and RCRA violations, as well as CERCLA liability arising from a sulfuric acid release that occurred on June 14, 2020, which required EPA emergency response action.

3. The Consent Decree — Status and Key Terms

3.1 Procedural History and Current Status

Following the filing of the Complaint on January 18, 2024, the parties engaged in preliminary proceedings, including the filing of responsive pleadings by the Defendants and initial discovery. The Court entered an order referring the matter to court-ordered mediation before Magistrate Judge Clara Finnegan on May 15, 2024. Mediation sessions were conducted over the course of approximately ten weeks, supplemented by direct negotiations among the parties' counsel and technical representatives.

The parties reached an agreement in principle with respect to all claims, sites, and financial terms on July 30, 2024. Thereafter, the parties, through their respective counsel, engaged in the drafting and negotiation of the definitive consent decree text, which was finalized on February 3, 2025. The execution version of the Consent Decree was signed by all parties and lodged with the United States District Court for the District of Montana on February 19, 2025, in accordance with the procedures set forth in 28 C.F.R. § 50.7 and the DOJ ENRD's consent decree lodging and public notice requirements.

Pursuant to the DOJ's standard practice, a notice of the lodging of the Consent Decree was published in the Federal Register, and a 30-day public comment period commenced, running through March 21, 2025. As of the date of this letter, the public comment period remains open. Upon the close of the public comment period and DOJ's review of any comments received, DOJ is expected to file a motion for entry of the Consent Decree on or about April 7, 2025. The Court has indicated a target hearing date for the motion of April 28, 2025. Based on the foregoing procedural timeline, entry of the Consent Decree by the Court is expected on or about May 15, 2025.

The "Effective Date" under the Consent Decree is defined as the date that is thirty (30) days after entry of the Consent Decree by the Court, which is anticipated to be June 14, 2025. Certain obligations under the Consent Decree are measured from the Effective Date, while others are measured from the date of entry itself. The distinction is noted where relevant in the discussion below.

3.2 Remediation Obligations — Aggregate Financial Summary

The Consent Decree imposes comprehensive remediation obligations on the Defendants at each of the four facilities. The total nominal remediation cost across all four sites, as set forth in the Consent Decree and its appendices, is estimated at US$343.5 million. This figure represents the parties' agreed-upon estimate of the total cost to complete all required remedial activities at each site over the applicable remediation period, and is broken down on a site-by-site basis as follows:

The Ridgecrest Copper-Molybdenum Mine represents the largest single component of the remediation obligation, reflecting the scale of the site, the complexity of the acid mine drainage issues, the length of the tailings management area, and the 30-year remediation horizon. The agreed remediation cost of $198.6 million for Ridgecrest was the product of extensive negotiation between the parties, representing a figure intermediate between TMC's internal estimate of $187.5 million and EPA's estimate of $224.0 million, as supported by competing expert analyses submitted during the mediation.

The net present value ("NPV") of the total remediation obligation, calculated at a 3% discount rate consistent with standard EPA financial assurance valuation methodology, is approximately US$245.1 million.

3.3 Civil Penalties

The Consent Decree requires the Defendants to pay an aggregate civil penalty of US$31.5 million in satisfaction of all penalty claims asserted by the United States and the State Co-Plaintiffs. The penalty is allocated among the four sites as follows:

• Ridgecrest Copper-Molybdenum Mine: $14.2 million

• Gallatin Chemical Works: $5.8 million

• Bonanza Creek Gold Mine: $7.9 million

• Kanawha Bend Chemical Plant: $3.6 million

The civil penalty is payable in four equal quarterly installments of US$7.875 million each, on the following schedule:

(a) First installment: Due thirty (30) days after the Effective Date (anticipated payment date: July 14, 2025);

(b) Second installment: Due twelve (12) months after entry of the Consent Decree (anticipated payment date: approximately May 15, 2026);

(c) Third installment: Due twenty-four (24) months after entry of the Consent Decree (anticipated payment date: approximately May 15, 2027); and

(d) Fourth installment: Due thirty-six (36) months after entry of the Consent Decree (anticipated payment date: approximately May 15, 2028).

Interest will accrue on any late payment at the rate specified in 28 U.S.C. § 1961.

3.4 EPA Past-Costs Reimbursement (CERCLA § 107)

In addition to the remediation obligations and civil penalties described above, the Consent Decree requires the Defendants to reimburse EPA for past response costs incurred by the agency at two of the four facilities, in a total amount of US$18.1 million, broken down as follows:

(a) Ridgecrest removal action costs: $14.3 million, representing EPA's costs for removal actions conducted at the Ridgecrest Copper-Molybdenum Mine between 2021 and 2023, including emergency stabilization of tailings impoundment structures, installation of temporary water treatment systems, and associated oversight costs; and

(b) Kanawha Bend emergency response costs: $3.8 million, representing EPA's costs for emergency response actions undertaken following the June 14, 2020 sulfuric acid release at the Kanawha Bend Chemical Plant, including containment, neutralization, and temporary remediation of affected soils and surface water.

The past-costs reimbursement amount is payable within sixty (60) days of the Effective Date. TMC has confirmed that it does not contest the reasonableness or necessity of the costs reflected in EPA's documentation and has waived its right to seek judicial review of these costs under the Consent Decree.

3.5 Supplemental Environmental Projects (SEPs)

The Consent Decree further requires the Defendants to fund and implement three Supplemental Environmental Projects ("SEPs") with a total commitment of US$12.0 million. The SEPs, which are designed to provide environmental and public health benefits to communities affected by the Defendants' operations, are as follows:

(a) Flint Creek Watershed Restoration Project (Montana): Total commitment of $5.5 million. This project involves restoration of riparian habitat, installation of fish passage structures, and water quality improvement measures in the Flint Creek watershed downstream of the Ridgecrest Mine. The project will be implemented in coordination with the Montana Department of Environmental Quality and the Granite Conservation District over a period of five years from the Effective Date.

(b) Battle Mountain Community Drinking Water Improvement Project (Nevada): Total commitment of $3.5 million. This project involves the upgrade and expansion of the community drinking water system serving the town of Battle Mountain in Lander County, Nevada, including installation of advanced filtration and treatment capacity. The project will be implemented in coordination with the Nevada Division of Environmental Protection and completed within three years of the Effective Date.

(c) Institute Community Air Quality Monitoring Network (West Virginia): Total commitment of $3.0 million. This project involves the installation and operation of a network of air quality monitoring stations in the communities surrounding the Kanawha Bend Chemical Plant, with real-time public reporting capabilities. The monitoring network will be operated for a minimum of five years from the Effective Date, after which ownership and operation will be transferred to the West Virginia Department of Environmental Protection.

3.6 Independent Environmental Monitor

The Consent Decree provides for the appointment of an independent environmental monitor to oversee the Defendants' compliance with the remedial obligations and other terms of the decree. Verdant Analytics, Inc., a consulting firm headquartered in Portland, Oregon, has been appointed as the court-approved independent environmental monitor (the "Monitor").

The estimated cost of the Monitor's services is approximately US$4.8 million over a five-year initial monitoring period, representing an annualized cost of approximately $960,000 per year. These costs are borne by the Defendants. The Monitor's scope of work includes the conduct of quarterly compliance audits at each of the four facilities, review of the Defendants' progress reports and remedial design submissions, and the issuance of annual public reports summarizing compliance status. The Monitor reports to the Court and to EPA, and is entitled to access all facilities, records, and personnel reasonably necessary to carry out its monitoring functions.

3.7 Aggregate Financial Obligation

The following table summarizes the aggregate financial obligation of TMC and its subsidiary Defendants under the Consent Decree, on both a nominal and NPV basis:

On a net present value / cash-equivalent basis, the grand total estimated obligation is approximately US$311.5 million, reflecting the application of a 3% discount rate to the long-term remediation expenditures as described in Section 3.2 above, and treating the penalty, past-costs, SEP, and monitor obligations at their nominal values due to their near-term payment schedules.

3.8 Key Remediation Milestones

The Consent Decree establishes a series of remediation milestones and deadlines, the most significant of which are summarized below. All dates are calculated based on the anticipated Effective Date of June 14, 2025, unless otherwise noted:

(a) September 12, 2025: Deadline to establish the Remediation Trust Fund and post all required financial assurance (i.e., ninety (90) days after the anticipated Effective Date);

(b) December 14, 2025: Deadline to submit the Ridgecrest Remedial Action Work Plan to EPA for review and approval (i.e., six (6) months after the anticipated Effective Date);

(c) June 14, 2026: Deadline to submit the Gallatin Corrective Measures Study to EPA for review and approval (i.e., twelve (12) months after the anticipated Effective Date);

(d) June 14, 2026: Deadline to commence Bonanza Creek liner repair and containment activities (i.e., twelve (12) months after the anticipated Effective Date);

(e) December 14, 2026: Deadline to complete Kanawha Bend interim stabilization measures (i.e., eighteen (18) months after the anticipated Effective Date);

(f) June 14, 2027: Commencement of Ridgecrest remedy construction (i.e., twenty-four (24) months after the anticipated Effective Date); and

(g) June 14, 2055: End of the thirty (30)-year Ridgecrest remediation obligation (i.e., thirty (30) years after the anticipated Effective Date).

3.9 Other Key Decree Provisions

The Consent Decree contains a number of additional provisions that are standard in EPA consent decrees but are nonetheless material to TMC's ongoing obligations. We highlight the following:

Stipulated Penalties. The Consent Decree provides for stipulated penalties for each day that the Defendants fail to comply with any requirement of the decree, calculated as follows: $1,500 per day per violation for the first thirty (30) days of noncompliance; $3,000 per day per violation for days thirty-one (31) through sixty (60); and $5,500 per day per violation for each day of noncompliance thereafter. Stipulated penalties are in addition to any other remedies available to the government, including the right to seek judicial enforcement or modification of the decree.

Dispute Resolution. The Consent Decree establishes a multi-tier dispute resolution process consisting of: (i) a thirty (30)-day period for informal negotiation between the parties; (ii) issuance of a formal EPA decision within thirty (30) days following the conclusion of the informal negotiation period; and (iii) judicial review by the Court upon petition filed within thirty (30) days of EPA's formal decision. The burden of proof in any judicial review proceeding lies with the Defendants.

Force Majeure. The Consent Decree includes a standard EPA force majeure provision. Any party claiming force majeure must provide written notice to EPA and the other parties within fifteen (15) days of the event giving rise to the claim. Force majeure does not excuse the obligation to pay civil penalties or reimburse EPA past costs.

Termination. Termination of the Consent Decree is on a site-by-site basis, upon certification by both EPA and the independent environmental monitor that all remedial construction at the relevant site has been completed and that all performance standards have been met for a continuous period of no fewer than five (5) years following the completion of remedial construction. Based on the remediation timelines described in Section 3.8, TMC anticipates that the Ridgecrest site will be the last to achieve termination, potentially no earlier than 2060.

4. Financial Assurance Instruments

The Consent Decree requires TMC and the Defendant entities to post total financial assurance in the amount of US$245.0 million by September 12, 2025 (i.e., ninety (90) days after the anticipated Effective Date). The required financial assurance is structured in the following two primary components, supplemented by a separate escrow arrangement for stipulated penalty purposes.

4.1 Surety Bond

TMC has procured a surety bond to satisfy a portion of the financial assurance requirement, the material terms of which are as follows:

Issuer: Ironbark Surety of America, Inc., a New York corporation and a subsidiary of Ironbark Surety Group, Ltd. (Bermuda). Ironbark Surety of America is domiciled and maintains its principal office at 599 Lexington Avenue, 26th Floor, New York, New York 10022.

Bond Number: ISA-ENV-2025-08934

Face Amount: US$165,000,000

Annual Premium: 1.85% of face value, equal to approximately US$3,052,500 per annum

Obligee: United States Environmental Protection Agency

Execution Date: February 15, 2025

Term: The bond remains in effect until released by EPA upon termination of the Consent Decree with respect to all sites, or upon substitution of an alternative form of financial assurance acceptable to EPA.

C&H notes that the surety bond is accompanied by an indemnity agreement between TMC, its applicable subsidiaries, and Ironbark Surety of America, Inc. (the "Ironbark Indemnity Agreement"), pursuant to which TMC agrees to indemnify Ironbark for any losses incurred in connection with claims under the bond. The Ironbark Indemnity Agreement creates a contingent indemnification obligation of TMC in favor of Ironbark, the potential implications of which under the Credit Agreement's negative covenants and lien restrictions are addressed in Section 6 below.

4.2 Remediation Trust Fund

TMC has established a remediation trust fund to satisfy the remaining portion of the financial assurance requirement, the material terms of which are as follows:

Trustee: Larchfield Trust Company, N.A., a national banking association, with offices at 200 South Tryon Street, Suite 1100, Charlotte, North Carolina 28202.

Trust Agreement Number: LTC-REM-2025-1177

Trust Officer: David Henshaw, Senior Vice President, Environmental Trust Services

Initial Deposit: US$80,000,000

Execution Date: February 17, 2025

The Remediation Trust Agreement includes detailed investment guidelines limiting the trust corpus to investment-grade fixed-income securities and money market instruments, disbursement procedures requiring EPA approval for all expenditures from the trust, and an annual adjustment mechanism pursuant to which the required trust balance is recalculated based on updated cost estimates and inflation indices. The trust is irrevocable for the duration of the Consent Decree, and the corpus may be used solely for the purposes specified in the decree.

4.3 Escrow for Stipulated Penalties

In addition to the surety bond and remediation trust, TMC has entered into a separate escrow agreement with Larchfield Trust Company, N.A., dated February 17, 2025, to satisfy the stipulated penalty deposit requirements under the Consent Decree. The escrow is funded on an as-needed basis and is available to satisfy any stipulated penalty assessments that may arise during the term of the decree. As of the date of this letter, no stipulated penalties have been assessed.

5. TMC's Environmental Reserve and Insurance Coverage

5.1 Environmental Remediation Reserve

As disclosed in TMC's Quarterly Report on Form 10-Q for the fiscal quarter ended September 30, 2024, filed with the U.S. Securities and Exchange Commission and the Canadian securities regulatory authorities on November 14, 2024, TMC's environmental remediation reserve stood at C$340.0 million as of September 30, 2024. At the exchange rate of C$1.00 = US$0.7394 (the Bank of Canada noon rate as of September 30, 2024), this reserve is equivalent to approximately US$251.4 million.

As noted in Section 3.7, the nominal grand total obligation under the Consent Decree is approximately US$409.9 million. Accordingly, there is a shortfall between the current reserve balance and the nominal grand total obligation of approximately US$158.5 million (US$409.9 million less US$251.4 million). However, we note the following mitigating factors:

(a) The nominal grand total includes long-tail remediation expenditures extending over a 30-year period; the NPV of the total obligation is approximately US$311.5 million, which reduces the effective shortfall relative to the reserve;

(b) The reserve was established before the finalization of the Consent Decree terms and may be adjusted upward in connection with TMC's year-end financial reporting for fiscal year 2024; and

(c) Potential insurance recoveries (discussed in Section 5.2 below) could materially offset the shortfall, although these recoveries are not currently factored into the reserve for Credit Agreement compliance purposes.

TMC's management is actively evaluating the need to increase the environmental remediation reserve in connection with its year-end financial reporting for the fiscal year ended December 31, 2024. TMC's external auditor, Ridgeline Accounting Partners LLP, of Calgary, Alberta, has been apprised of the terms of the Consent Decree and is reviewing the accounting treatment of the consent decree obligations under IFRS (specifically, IAS 37 — Provisions, Contingent Liabilities and Contingent Assets) and ASC 410-30 (Environmental Obligations) for purposes of TMC's dual-GAAP reporting.

Northspire Capital Markets, Inc. ("Northspire"), TMC's financial advisor, is advising TMC management on the financial structuring of the remediation reserve, including the allocation of expenditures over time, the impact on free cash flow projections, and the potential implications for credit facility covenants and overall capital structure.

5.2 Insurance Coverage

TMC maintains a Pollution Legal Liability ("PLL") insurance policy with Meridian Environmental Insurance Company ("Meridian"), the material terms of which are as follows:

Policy Number: MEI-ENV-2021-04738

Per-Occurrence Limit: US$50,000,000

Aggregate Limit: US$75,000,000

Self-Insured Retention ("SIR"): US$5,000,000 per occurrence

Policy Period: January 1, 2021 through January 1, 2026 (subject to renewal)

TMC has submitted claims to Meridian under the PLL policy with respect to each of the four facilities. Meridian's coverage determinations are summarized as follows:

(a) Ridgecrest Copper-Molybdenum Mine: Coverage denied. Meridian has invoked the policy's known-conditions/pollution exclusion, asserting that the contamination at the Ridgecrest site was known to TMC prior to the inception of the policy. TMC disputes this characterization and has reserved all rights to contest the coverage denial.

(b) Gallatin Chemical Works: Coverage acknowledged, subject to the applicable SIR of $5.0 million per occurrence. Meridian has agreed to participate in defense and indemnity costs relating to the Gallatin site remediation.

(c) Bonanza Creek Gold Mine: Coverage acknowledged, subject to the applicable SIR of $5.0 million per occurrence. Meridian has agreed to participate in defense and indemnity costs relating to the Bonanza Creek site remediation.

(d) Kanawha Bend Chemical Plant: Coverage denied. Meridian has asserted that TMC failed to provide timely notice of the sulfuric acid release and resulting enforcement action, in violation of the policy's notice provisions. TMC disputes this assertion, noting that notice was provided within the policy's reporting period, and has reserved all rights.

Based upon Northspire's analysis, the estimated realistic insurance recovery from Meridian, assuming favorable resolution of the coverage disputes with respect to the Gallatin and Bonanza Creek sites and no recovery for the Ridgecrest and Kanawha Bend sites, is in the range of US$45.0 million to US$55.0 million. If realized, these recoveries would materially offset the shortfall between TMC's environmental remediation reserve and the nominal grand total obligation under the Consent Decree.

A coverage dispute with Meridian is pending with respect to the Ridgecrest and Kanawha Bend denials, and TMC has retained coverage counsel to evaluate available legal remedies, including potential arbitration or litigation. TMC has reserved all rights under the PLL policy and applicable law.

For purposes of Credit Agreement covenant compliance, these insurance recovery estimates are not currently factored into TMC's environmental remediation reserve. TMC's management has adopted a conservative approach and will only recognize insurance recoveries for covenant compliance purposes upon receipt of payment or binding settlement.

6. Environmental Liability Covenant Compliance

The Credit Agreement contains an environmental liability covenant (Section 7.14 thereof) pursuant to which TMC's aggregate disclosed and undisclosed environmental liabilities shall not exceed twenty-five percent (25%) of TMC's consolidated net tangible assets ("CNTA"), as defined in the Credit Agreement.

C&H has reviewed the relevant provisions of the Credit Agreement and TMC's most recently reported financial data to assess TMC's compliance with this covenant in light of the Consent Decree obligations. Our analysis is as follows:

CNTA as of Q3 2024: C$3.92 billion (as reported in TMC's Form 10-Q for the fiscal quarter ended September 30, 2024).

25% Covenant Threshold: C$980.0 million (25% × C$3.92 billion), equivalent to approximately US$724.4 million at the exchange rate of C$1.00 = US$0.7394.

Current Total Environmental Liabilities (including all Consent Decree obligations): Approximately US$409.9 million (the nominal grand total as set forth in Section 3.7 above), equivalent to approximately C$554.4 million at the exchange rate of C$1.00 = US$0.7394.

Covenant Headroom: C$980.0 million less C$554.4 million = approximately C$425.6 million of headroom under the environmental liability covenant.

Conclusion: Based on the foregoing analysis, TMC remains in compliance with the environmental liability covenant set forth in Section 7.14 of the Credit Agreement, with substantial headroom of approximately C$425.6 million. Even assuming the full nominal obligation under the Consent Decree without any offset for insurance recoveries, time-value discounting, or reserve adjustments, TMC's aggregate environmental liabilities remain well within the covenant threshold.

C&H further notes the following matters for the Administrative Agent's consideration:

Surety Bond Indemnity Agreement. C&H has reviewed the Ironbark Indemnity Agreement described in Section 4.1 above and has concluded that, while it creates a contingent indemnification obligation of TMC in favor of Ironbark Surety of America, Inc., this obligation does not constitute "Indebtedness" as defined in the Credit Agreement and does not create a "Lien" on TMC's assets that would trigger the negative covenants set forth in Sections 7.01 (Liens) or 7.03 (Indebtedness) of the Credit Agreement. The Ironbark Indemnity Agreement is unsecured and does not contain any grant of a security interest, mortgage, pledge, or other encumbrance on TMC's assets. TMC will continue to monitor the status of this obligation and will promptly notify the Administrative Agent if circumstances change.

Remediation Trust Fund Deposit. As described in Section 4.2 above, TMC has deposited US$80.0 million into the Remediation Trust Fund held by Larchfield Trust Company, N.A. This deposit constitutes restricted cash, as the funds are irrevocably dedicated to the remediation obligations set forth in the Consent Decree and are not available for TMC's general corporate purposes. TMC's finance team, in consultation with Northspire and Ridgeline Accounting Partners LLP, is evaluating the appropriate treatment of this restricted cash deposit under the Credit Agreement's definition of "Unrestricted Cash" and the liquidity covenants set forth in Section 7.12 of the Credit Agreement. C&H will advise the Administrative Agent of the results of this evaluation in due course.

Formal Covenant Compliance Certificate. TMC will deliver a formal covenant compliance certificate to the Administrative Agent in due course, confirming TMC's continued compliance with all financial and non-financial covenants under the Credit Agreement following entry of the Consent Decree and the commencement of TMC's obligations thereunder. This certificate is expected to be delivered concurrently with or promptly following entry of the Consent Decree.

7. TMC Corporate and Financial Overview

For the convenience of the Administrative Agent and the lending syndicate, and to provide context for the financial obligations described in this letter, the following is a summary overview of TMC's corporate profile and financial position:

Corporate Organization. Torchlight Mining Corp. is a corporation incorporated under the CBCA, with dual listings on the Toronto Stock Exchange (TSX) and the New York Stock Exchange (NYSE), trading under the ticker symbol "TRC" on both exchanges.

Business Description. TMC is a diversified mining and specialty chemicals company, with operations spanning copper, molybdenum, and gold mining, as well as the manufacture of specialty chemicals including flotation reagents and leaching agents used in mineral processing. TMC operates fourteen (14) mines and six (6) chemical processing facilities across North America, South America, and Australia.

Financial Highlights (Fiscal Year 2023):

• Revenue: C$4.82 billion (approximately US$3.56 billion)

• Adjusted EBITDA: C$1.14 billion (approximately US$843 million)

• Market Capitalization (as of October 2024): approximately C$7.6 billion

Employees. TMC employs approximately 11,400 people worldwide, including approximately 4,200 in the United States.

Senior Management:

• Chief Executive Officer: Douglas K. Prennell

• Chief Financial Officer: Carolyn Bracebridge

• General Counsel: Miriam Soo-Hwan Park

The Consent Decree obligations, while significant in absolute terms, represent approximately 8.5% of TMC's fiscal year 2023 revenue and approximately 36.0% of TMC's fiscal year 2023 adjusted EBITDA on a nominal basis, or approximately 27.3% of adjusted EBITDA on an NPV basis. TMC's management, in consultation with Northspire, believes that the Consent Decree obligations are manageable within TMC's existing capital structure and cash flow generation capacity, subject to appropriate financial planning and reserve management.

8. Ongoing Obligations and Undertakings

TMC undertakes to keep the Administrative Agent and, through it, the lending syndicate, informed of material developments in the Consent Decree proceedings and related matters. Specifically, TMC will provide prompt written notice to the Administrative Agent of each of the following:

(a) Entry of the Consent Decree by the Court;

(b) The occurrence of the Effective Date under the Consent Decree;

(c) Any material amendments, modifications, or supplements to the Consent Decree, whether agreed to by the parties or ordered by the Court;

(d) Any assessments of stipulated penalties under the Consent Decree, or any disputes arising under the decree's dispute resolution provisions, that individually or in the aggregate exceed US$1.0 million or are otherwise material to TMC's financial condition or covenant compliance;

(e) Any material changes to the estimated remediation costs at any of the four facilities, including any upward or downward adjustments resulting from updated engineering studies, changed site conditions, regulatory modifications, or the annual financial assurance adjustment process;

(f) Any material developments in the insurance coverage dispute with Meridian Environmental Insurance Company, including any settlement, arbitration award, or judicial determination;

(g) Delivery of the formal covenant compliance certificate reflecting the Consent Decree obligations, as described in Section 6 above; and

(h) Any other events or developments arising out of or relating to the Consent Decree that would constitute a "Material Adverse Effect" or require disclosure under the Credit Agreement.

In addition, TMC will provide copies of the following documents to the Administrative Agent upon request or as required under the reporting covenants of the Credit Agreement:

(i) The entered Consent Decree (i.e., the version bearing the Court's order of entry);

(ii) The surety bond (Bond No. ISA-ENV-2025-08934, Ironbark Surety of America, Inc.);

(iii) The Remediation Trust Agreement (Trust No. LTC-REM-2025-1177, Larchfield Trust Company, N.A.); and

(iv) Updated financial statements and reserve schedules reflecting adjusted environmental reserves in connection with TMC's year-end and quarterly financial reporting.

9. Request for Acknowledgment

We respectfully request that Harborstone National Bank, N.A., as Administrative Agent under the Credit Agreement, acknowledge receipt of this disclosure letter and circulate it to the members of the lending syndicate in accordance with the information-sharing and distribution provisions of the Credit Agreement (Section 10.02 thereof, or such other applicable provision).

TMC does not currently believe that any amendment, waiver, or consent under the Credit Agreement is required as a result of the Consent Decree or the financial obligations described herein. As set forth in Section 6, TMC remains in compliance with the environmental liability covenant and other applicable covenants under the Credit Agreement with substantial headroom. Notwithstanding the foregoing, TMC expressly reserves the right to seek an amendment, waiver, or consent under the Credit Agreement if circumstances change or if TMC's continued analysis, in consultation with its advisors, indicates that such action would be prudent or necessary.

For the Administrative Agent's information, C&H is concurrently preparing a separate internal analysis memorandum evaluating in greater detail the potential need for any Credit Agreement amendment or waiver in connection with the Consent Decree and the associated financial assurance instruments. That analysis will address, among other things, the treatment of the Remediation Trust Fund deposit under the liquidity covenants, the characterization of the Ironbark Indemnity Agreement under the negative covenants, and any potential impact of the remediation spending profile on the financial covenants over the remaining term of the Credit Agreement. We expect to complete that analysis within approximately thirty (30) days and will share its conclusions with the Administrative Agent, to the extent authorized by TMC's management.

10. Reservation of Rights

Nothing in this letter shall constitute or be deemed to constitute a waiver, release, or modification of any rights, remedies, claims, or defenses of TMC, its subsidiaries, or any of the Defendants under the Credit Agreement, any ancillary loan documents, applicable law, or otherwise. TMC expressly reserves all such rights and defenses in their entirety.

This letter is provided solely for informational purposes pursuant to TMC's disclosure and notification covenants under the Credit Agreement and does not constitute, and shall not be construed as constituting, legal advice to the Administrative Agent, any member of the lending syndicate, or any other party. The Administrative Agent and each lender should consult with their own counsel regarding the matters described herein.

11. Confidentiality

TMC respectfully requests that the contents of this letter, including all enclosures, be treated as confidential information in accordance with the confidentiality provisions set forth in Section 10.08 of the Credit Agreement. Distribution of this letter by the Administrative Agent to members of the lending syndicate shall be subject to the confidentiality obligations binding upon each lender under the Credit Agreement.

TMC acknowledges that certain information relating to the Consent Decree will become publicly available upon publication of the Federal Register notice (which has already occurred), entry of the Consent Decree by the Court, and the filing of related public reports. To the extent that information contained in this letter is or becomes publicly available through such governmental proceedings, the confidentiality restrictions set forth herein shall not apply to such publicly available information. However, the analysis and commentary provided by C&H in this letter, including the covenant compliance analysis, financial projections, insurance recovery estimates, and TMC's internal assessments, shall remain confidential and proprietary regardless of the public availability of the underlying governmental records.

We trust that this letter provides the Administrative Agent and the lending syndicate with a comprehensive disclosure of the Consent Decree and associated obligations. We remain available to discuss any aspect of this disclosure at the Administrative Agent's convenience and would be pleased to arrange a call or meeting among counsel to address any questions. Please do not hesitate to contact the undersigned at (212) 558-4127 or harrison.wexford@calderwoodharkness.com, or my colleague Beatrice Holloway, Partner, at (212) 558-4209 or beatrice.holloway@calderwoodharkness.com.

Very truly yours,

CALDERWOOD & HARKNESS LLP

By: ________

Harrison Wexford Partner

On behalf of Torchlight Mining Corp. C&H Matter No.: 1039-00003

Enclosures:

1. Consent Decree — Execution Version (lodged with the U.S. District Court for the District of Montana, February 19, 2025)

2. Surety Bond (Bond No. ISA-ENV-2025-08934, Ironbark Surety of America, Inc., dated February 15, 2025)

3. Remediation Trust Agreement (Trust No. LTC-REM-2025-1177, Larchfield Trust Company, N.A., dated February 17, 2025)

4. Aggregate Financial Obligation Summary Table

cc:

Miriam Soo-Hwan Park, General Counsel, Torchlight Mining Corp. Carolyn Bracebridge, Chief Financial Officer, Torchlight Mining Corp. Vivian Okafor, Managing Director, Northspire Capital Markets, Inc. Beatrice Holloway, Partner, Calderwood & Harkness LLP File: C&H Matter No. 1039-00003

Facility	Nominal Remediation Cost	Remediation Period	NPV (3% discount Rate)
Ridgecrest Copper-Molybdenum Mine	$198.6 million	30 years	$134.9 million
Gallatin Chemical Works	$42.8 million	15 years	$34.1 million
Bonanza Creek Gold Mine	$63.2 million	20 years	$47.1 million
Kanawha Bend Chemical Plant	$38.9 million	20 years	$29.0 million
Total	$343.5 million	—	$245.1 million
Obligation Category	Nominal Amount (US$)
Remediation costs (four sites)	$343,500,000
Civil penalties	$31,500,000
EPA past-costs reimbursement (CERCLA § 107)	$18,100,000
Supplemental Environmental Projects (SEPs)	$12,000,000
Independent environmental monitor costs (5 years)	$4,800,000
Grand Total (Nominal)	$409,900,000

CALDERWOOD & HARKNESS LLP Attorneys at Law
One Liberty Plaza, 165 Broadway, 44th Floor New York, New York 10006
Telephone: (212) 558-4000 Facsimile: (212) 558-3588
www.calderwoodharkness.com
March 1, 2025
VIA OVERNIGHT COURIER AND ELECTRONIC MAIL
Harborstone National Bank, N.A. as Administrative Agent Loan Administration / Syndicated Credit Division
Attention: Senior Credit Officer — Torchlight Mining Corp. Facility
277 Park Avenue, 15th Floor New York, New York 10172
Re: Disclosure of Environmental Consent Decree and Related Financial Obligations — Torchlight Mining Corp. (TSX: TRC / NYSE: TRC)
Syndicated Revolving Credit Facility dated September 15, 2022; Administrative Agent: Harborstone National Bank, N.A.; Borrower: Torchlight Mining Corp.; Facility Amount: C$750,000,000; Maturity Date: March 15, 2027
Dear Sir or Madam:
1. Purpose and Authorization
Calderwood & Harkness LLP ("C&H") acts as outside environmental and regulatory counsel to Torchlight Mining Corp. ("TMC" or the "Borrower"), a corporation incorporated under the Canada Business Corporations Act (R.S.C., 1985, c. C-44) (the "CBCA"), with its Canadian headquarters located at 1800 Bayfield Tower, 401 Bay Street, Toronto, Ontario M5H 2Y4, Canada, and its U.S. headquarters located at 750 Copper Ridge Boulevard, Suite 200, Helena, Montana 59601. This matter is being handled under C&H Matter No. 1039-00003.
This letter is being delivered on behalf of TMC pursuant to, and in satisfaction of, the disclosure and notification covenants contained in that certain C$750.0 million syndicated revolving credit facility agreement, dated as of September 15, 2022, as amended by Amendment No. 1 dated March 30, 2023, and Amendment No. 2 dated August 12, 2024 (as so amended, the "Credit Agreement"), for which Harborstone National Bank, N.A. (the "Administrative Agent" or "Harborstone") serves as Administrative Agent on behalf of the lending syndicate. The Credit Agreement has a stated maturity date of March 15, 2027.
TMC's General Counsel, Miriam Soo-Hwan Park, and Chief Financial Officer, Carolyn Bracebridge, have each reviewed and authorized the delivery of this disclosure letter. This letter has been prepared based upon information furnished to C&H by TMC's management team, its financial advisor, Northspire Capital Markets, Inc. ("Northspire"), its external auditor, Ridgeline Accounting Partners LLP, and upon C&H's own independent review of the relevant legal instruments and public filings.
The purpose of this letter is to inform the Administrative Agent and, through it, the lending syndicate, of a multi-site environmental consent decree (the "Consent Decree") that has been lodged with the United States District Court for the District of Montana and the associated financial obligations arising thereunder. As described in greater detail below, the aggregate nominal financial obligation of TMC and its U.S. operating subsidiaries under the Consent Decree is estimated at approximately US$409.9 million. Notwithstanding the magnitude of these obligations, TMC believes, and C&H concurs based upon its review, that TMC remains in full compliance with the environmental liability covenants and other relevant provisions of the Credit Agreement.
2. Background — The Enforcement Action
On January 18, 2024, the United States Department of Justice, Environment and Natural Resources Division ("DOJ ENRD"), acting on behalf of the United States Environmental Protection Agency ("EPA"), filed a civil complaint (the "Complaint") against TMC and certain of its U.S. operating subsidiaries in the United States District Court for the District of Montana, Missoula Division, under Civil Action No. 9:24-cv-00087-DWM, before the Honorable Donald W. Molloy, Senior United States District Judge. The action was commenced under the Federal Rules of Civil Procedure and the applicable environmental statutes described below.
The States of Montana, Nevada, and West Virginia (collectively, the "State Co-Plaintiffs") joined the action as co-plaintiffs, asserting both federal and state-law claims arising out of the same operative facts and affected facilities.
The named defendants in the enforcement action (collectively, the "Defendants") are:
(a) Torchlight Mining Corp., a CBCA corporation (the parent entity and Borrower under the Credit Agreement);
(b) Torchlight Mining (U.S.) Inc., a Delaware corporation (EIN 83-2047156), which serves as the principal U.S. holding company for TMC's domestic mining and chemical operations;
(c) Torchlight Specialty Chemicals, Inc., a Delaware corporation (EIN 47-3819204), TMC's U.S. specialty chemicals manufacturing subsidiary;
(d) Ridgecrest Mine Holdings, LLC, a Montana limited liability company (Montana Secretary of State ID E1042738), the entity that holds the permits and real property interests associated with the Ridgecrest Mine; and
(e) Bonanza Creek Mining, LLC, a Nevada limited liability company (Nevada Secretary of State Entity No. E0518294731), the operator of the Bonanza Creek Gold Mine.
The Complaint alleges violations of the following federal environmental statutes at four TMC-operated or formerly operated facilities:
(i) The Clean Water Act ("CWA"), 33 U.S.C. § 1311 (Section 301), relating to unpermitted discharges of pollutants to waters of the United States;
(ii) The Resource Conservation and Recovery Act ("RCRA"), 42 U.S.C. §§ 6924 and 6925 (Sections 3004 and 3005), relating to the treatment, storage, and disposal of hazardous wastes without proper permits and in violation of applicable standards; and
(iii) The Comprehensive Environmental Response, Compensation, and Liability Act ("CERCLA"), 42 U.S.C. § 9607 (Section 107), relating to liability for the costs of response actions undertaken by EPA at contaminated facilities.
The four facilities at issue in the enforcement action are as follows:
1. Ridgecrest Copper-Molybdenum Mine. Located at 14200 Ridgecrest Mine Road, Drummond, Granite County, Montana 59832. This facility is a former large-scale copper-molybdenum mine currently in the closure and reclamation phase, with an approximately 3,200-acre mine footprint. The Complaint alleges historic and ongoing CWA violations arising from acid mine drainage entering Flint Creek and its tributaries, as well as RCRA violations relating to the management of mine tailings and waste rock containing hazardous constituents. EPA conducted removal actions at this site between 2021 and 2023 and seeks reimbursement of its response costs under CERCLA § 107.
2. Gallatin Chemical Works. Located at 8800 Industrial Park Lane, Belgrade, Gallatin County, Montana 59714. This is an active specialty chemical manufacturing facility on approximately 145 acres that produces flotation reagents and other mineral processing chemicals. The Complaint alleges RCRA violations relating to the storage and disposal of spent solvents and process waste, as well as CWA violations arising from unpermitted stormwater discharges containing elevated concentrations of heavy metals and organic compounds.
3. Bonanza Creek Gold Mine. Located at County Road 447, Mile Marker 12, Lander County, Nevada 89820. This is an active open-pit heap-leach gold mining operation with an approximately 5,600-acre mine footprint. The Complaint alleges CWA violations arising from seepage of cyanide-bearing process solution from heap leach pads into adjacent groundwater and surface water systems, as well as RCRA violations relating to the characterization and management of spent carbon and other process wastes.
4. Kanawha Bend Chemical Plant. Located at 2200 Chemical Valley Road, Institute, Kanawha County, West Virginia 25112. This is an active chemical manufacturing facility on approximately 78 acres that produces leaching agents and related products. The Complaint alleges CWA and RCRA violations, as well as CERCLA liability arising from a sulfuric acid release that occurred on June 14, 2020, which required EPA emergency response action.
3. The Consent Decree — Status and Key Terms
3.1 Procedural History and Current Status
Following the filing of the Complaint on January 18, 2024, the parties engaged in preliminary proceedings, including the filing of responsive pleadings by the Defendants and initial discovery. The Court entered an order referring the matter to court-ordered mediation before Magistrate Judge Clara Finnegan on May 15, 2024. Mediation sessions were conducted over the course of approximately ten weeks, supplemented by direct negotiations among the parties' counsel and technical representatives.
The parties reached an agreement in principle with respect to all claims, sites, and financial terms on July 30, 2024. Thereafter, the parties, through their respective counsel, engaged in the drafting and negotiation of the definitive consent decree text, which was finalized on February 3, 2025. The execution version of the Consent Decree was signed by all parties and lodged with the United States District Court for the District of Montana on February 19, 2025, in accordance with the procedures set forth in 28 C.F.R. § 50.7 and the DOJ ENRD's consent decree lodging and public notice requirements.
Pursuant to the DOJ's standard practice, a notice of the lodging of the Consent Decree was published in the Federal Register, and a 30-day public comment period commenced, running through March 21, 2025. As of the date of this letter, the public comment period remains open. Upon the close of the public comment period and DOJ's review of any comments received, DOJ is expected to file a motion for entry of the Consent Decree on or about April 7, 2025. The Court has indicated a target hearing date for the motion of April 28, 2025. Based on the foregoing procedural timeline, entry of the Consent Decree by the Court is expected on or about May 15, 2025.
The "Effective Date" under the Consent Decree is defined as the date that is thirty (30) days after entry of the Consent Decree by the Court, which is anticipated to be June 14, 2025. Certain obligations under the Consent Decree are measured from the Effective Date, while others are measured from the date of entry itself. The distinction is noted where relevant in the discussion below.
3.2 Remediation Obligations — Aggregate Financial Summary
The Consent Decree imposes comprehensive remediation obligations on the Defendants at each of the four facilities. The total nominal remediation cost across all four sites, as set forth in the Consent Decree and its appendices, is estimated at US$343.5 million. This figure represents the parties' agreed-upon estimate of the total cost to complete all required remedial activities at each site over the applicable remediation period, and is broken down on a site-by-site basis as follows:
The Ridgecrest Copper-Molybdenum Mine represents the largest single component of the remediation obligation, reflecting the scale of the site, the complexity of the acid mine drainage issues, the length of the tailings management area, and the 30-year remediation horizon. The agreed remediation cost of $198.6 million for Ridgecrest was the product of extensive negotiation between the parties, representing a figure intermediate between TMC's internal estimate of $187.5 million and EPA's estimate of $224.0 million, as supported by competing expert analyses submitted during the mediation.
The net present value ("NPV") of the total remediation obligation, calculated at a 3% discount rate consistent with standard EPA financial assurance valuation methodology, is approximately US$245.1 million.
3.3 Civil Penalties
The Consent Decree requires the Defendants to pay an aggregate civil penalty of US$31.5 million in satisfaction of all penalty claims asserted by the United States and the State Co-Plaintiffs. The penalty is allocated among the four sites as follows:
• Ridgecrest Copper-Molybdenum Mine: $14.2 million
• Gallatin Chemical Works: $5.8 million
• Bonanza Creek Gold Mine: $7.9 million
• Kanawha Bend Chemical Plant: $3.6 million
The civil penalty is payable in four equal quarterly installments of US$7.875 million each, on the following schedule:
(a) First installment: Due thirty (30) days after the Effective Date (anticipated payment date: July 14, 2025);
(b) Second installment: Due twelve (12) months after entry of the Consent Decree (anticipated payment date: approximately May 15, 2026);
(c) Third installment: Due twenty-four (24) months after entry of the Consent Decree (anticipated payment date: approximately May 15, 2027); and
(d) Fourth installment: Due thirty-six (36) months after entry of the Consent Decree (anticipated payment date: approximately May 15, 2028).
Interest will accrue on any late payment at the rate specified in 28 U.S.C. § 1961.
3.4 EPA Past-Costs Reimbursement (CERCLA § 107)
In addition to the remediation obligations and civil penalties described above, the Consent Decree requires the Defendants to reimburse EPA for past response costs incurred by the agency at two of the four facilities, in a total amount of US$18.1 million, broken down as follows:
(a) Ridgecrest removal action costs: $14.3 million, representing EPA's costs for removal actions conducted at the Ridgecrest Copper-Molybdenum Mine between 2021 and 2023, including emergency stabilization of tailings impoundment structures, installation of temporary water treatment systems, and associated oversight costs; and
(b) Kanawha Bend emergency response costs: $3.8 million, representing EPA's costs for emergency response actions undertaken following the June 14, 2020 sulfuric acid release at the Kanawha Bend Chemical Plant, including containment, neutralization, and temporary remediation of affected soils and surface water.
The past-costs reimbursement amount is payable within sixty (60) days of the Effective Date. TMC has confirmed that it does not contest the reasonableness or necessity of the costs reflected in EPA's documentation and has waived its right to seek judicial review of these costs under the Consent Decree.
3.5 Supplemental Environmental Projects (SEPs)
The Consent Decree further requires the Defendants to fund and implement three Supplemental Environmental Projects ("SEPs") with a total commitment of US$12.0 million. The SEPs, which are designed to provide environmental and public health benefits to communities affected by the Defendants' operations, are as follows:
(a) Flint Creek Watershed Restoration Project (Montana): Total commitment of $5.5 million. This project involves restoration of riparian habitat, installation of fish passage structures, and water quality improvement measures in the Flint Creek watershed downstream of the Ridgecrest Mine. The project will be implemented in coordination with the Montana Department of Environmental Quality and the Granite Conservation District over a period of five years from the Effective Date.
(b) Battle Mountain Community Drinking Water Improvement Project (Nevada): Total commitment of $3.5 million. This project involves the upgrade and expansion of the community drinking water system serving the town of Battle Mountain in Lander County, Nevada, including installation of advanced filtration and treatment capacity. The project will be implemented in coordination with the Nevada Division of Environmental Protection and completed within three years of the Effective Date.
(c) Institute Community Air Quality Monitoring Network (West Virginia): Total commitment of $3.0 million. This project involves the installation and operation of a network of air quality monitoring stations in the communities surrounding the Kanawha Bend Chemical Plant, with real-time public reporting capabilities. The monitoring network will be operated for a minimum of five years from the Effective Date, after which ownership and operation will be transferred to the West Virginia Department of Environmental Protection.
3.6 Independent Environmental Monitor
The Consent Decree provides for the appointment of an independent environmental monitor to oversee the Defendants' compliance with the remedial obligations and other terms of the decree. Verdant Analytics, Inc., a consulting firm headquartered in Portland, Oregon, has been appointed as the court-approved independent environmental monitor (the "Monitor").
The estimated cost of the Monitor's services is approximately US$4.8 million over a five-year initial monitoring period, representing an annualized cost of approximately $960,000 per year. These costs are borne by the Defendants. The Monitor's scope of work includes the conduct of quarterly compliance audits at each of the four facilities, review of the Defendants' progress reports and remedial design submissions, and the issuance of annual public reports summarizing compliance status. The Monitor reports to the Court and to EPA, and is entitled to access all facilities, records, and personnel reasonably necessary to carry out its monitoring functions.
3.7 Aggregate Financial Obligation
The following table summarizes the aggregate financial obligation of TMC and its subsidiary Defendants under the Consent Decree, on both a nominal and NPV basis:
On a net present value / cash-equivalent basis, the grand total estimated obligation is approximately US$311.5 million, reflecting the application of a 3% discount rate to the long-term remediation expenditures as described in Section 3.2 above, and treating the penalty, past-costs, SEP, and monitor obligations at their nominal values due to their near-term payment schedules.
3.8 Key Remediation Milestones
The Consent Decree establishes a series of remediation milestones and deadlines, the most significant of which are summarized below. All dates are calculated based on the anticipated Effective Date of June 14, 2025, unless otherwise noted:
(a) September 12, 2025: Deadline to establish the Remediation Trust Fund and post all required financial assurance (i.e., ninety (90) days after the anticipated Effective Date);
(b) December 14, 2025: Deadline to submit the Ridgecrest Remedial Action Work Plan to EPA for review and approval (i.e., six (6) months after the anticipated Effective Date);
(c) June 14, 2026: Deadline to submit the Gallatin Corrective Measures Study to EPA for review and approval (i.e., twelve (12) months after the anticipated Effective Date);
(d) June 14, 2026: Deadline to commence Bonanza Creek liner repair and containment activities (i.e., twelve (12) months after the anticipated Effective Date);
(e) December 14, 2026: Deadline to complete Kanawha Bend interim stabilization measures (i.e., eighteen (18) months after the anticipated Effective Date);
(f) June 14, 2027: Commencement of Ridgecrest remedy construction (i.e., twenty-four (24) months after the anticipated Effective Date); and
(g) June 14, 2055: End of the thirty (30)-year Ridgecrest remediation obligation (i.e., thirty (30) years after the anticipated Effective Date).
3.9 Other Key Decree Provisions
The Consent Decree contains a number of additional provisions that are standard in EPA consent decrees but are nonetheless material to TMC's ongoing obligations. We highlight the following:
Stipulated Penalties. The Consent Decree provides for stipulated penalties for each day that the Defendants fail to comply with any requirement of the decree, calculated as follows: $1,500 per day per violation for the first thirty (30) days of noncompliance; $3,000 per day per violation for days thirty-one (31) through sixty (60); and $5,500 per day per violation for each day of noncompliance thereafter. Stipulated penalties are in addition to any other remedies available to the government, including the right to seek judicial enforcement or modification of the decree.
Dispute Resolution. The Consent Decree establishes a multi-tier dispute resolution process consisting of: (i) a thirty (30)-day period for informal negotiation between the parties; (ii) issuance of a formal EPA decision within thirty (30) days following the conclusion of the informal negotiation period; and (iii) judicial review by the Court upon petition filed within thirty (30) days of EPA's formal decision. The burden of proof in any judicial review proceeding lies with the Defendants.
Force Majeure. The Consent Decree includes a standard EPA force majeure provision. Any party claiming force majeure must provide written notice to EPA and the other parties within fifteen (15) days of the event giving rise to the claim. Force majeure does not excuse the obligation to pay civil penalties or reimburse EPA past costs.
Termination. Termination of the Consent Decree is on a site-by-site basis, upon certification by both EPA and the independent environmental monitor that all remedial construction at the relevant site has been completed and that all performance standards have been met for a continuous period of no fewer than five (5) years following the completion of remedial construction. Based on the remediation timelines described in Section 3.8, TMC anticipates that the Ridgecrest site will be the last to achieve termination, potentially no earlier than 2060.
4. Financial Assurance Instruments
The Consent Decree requires TMC and the Defendant entities to post total financial assurance in the amount of US$245.0 million by September 12, 2025 (i.e., ninety (90) days after the anticipated Effective Date). The required financial assurance is structured in the following two primary components, supplemented by a separate escrow arrangement for stipulated penalty purposes.
4.1 Surety Bond
TMC has procured a surety bond to satisfy a portion of the financial assurance requirement, the material terms of which are as follows:
Issuer: Ironbark Surety of America, Inc., a New York corporation and a subsidiary of Ironbark Surety Group, Ltd. (Bermuda). Ironbark Surety of America is domiciled and maintains its principal office at 599 Lexington Avenue, 26th Floor, New York, New York 10022.
Bond Number: ISA-ENV-2025-08934
Face Amount: US$165,000,000
Annual Premium: 1.85% of face value, equal to approximately US$3,052,500 per annum
Obligee: United States Environmental Protection Agency
Execution Date: February 15, 2025
Term: The bond remains in effect until released by EPA upon termination of the Consent Decree with respect to all sites, or upon substitution of an alternative form of financial assurance acceptable to EPA.
C&H notes that the surety bond is accompanied by an indemnity agreement between TMC, its applicable subsidiaries, and Ironbark Surety of America, Inc. (the "Ironbark Indemnity Agreement"), pursuant to which TMC agrees to indemnify Ironbark for any losses incurred in connection with claims under the bond. The Ironbark Indemnity Agreement creates a contingent indemnification obligation of TMC in favor of Ironbark, the potential implications of which under the Credit Agreement's negative covenants and lien restrictions are addressed in Section 6 below.
4.2 Remediation Trust Fund
TMC has established a remediation trust fund to satisfy the remaining portion of the financial assurance requirement, the material terms of which are as follows:
Trustee: Larchfield Trust Company, N.A., a national banking association, with offices at 200 South Tryon Street, Suite 1100, Charlotte, North Carolina 28202.
Trust Agreement Number: LTC-REM-2025-1177
Trust Officer: David Henshaw, Senior Vice President, Environmental Trust Services
Initial Deposit: US$80,000,000
Execution Date: February 17, 2025
The Remediation Trust Agreement includes detailed investment guidelines limiting the trust corpus to investment-grade fixed-income securities and money market instruments, disbursement procedures requiring EPA approval for all expenditures from the trust, and an annual adjustment mechanism pursuant to which the required trust balance is recalculated based on updated cost estimates and inflation indices. The trust is irrevocable for the duration of the Consent Decree, and the corpus may be used solely for the purposes specified in the decree.
4.3 Escrow for Stipulated Penalties
In addition to the surety bond and remediation trust, TMC has entered into a separate escrow agreement with Larchfield Trust Company, N.A., dated February 17, 2025, to satisfy the stipulated penalty deposit requirements under the Consent Decree. The escrow is funded on an as-needed basis and is available to satisfy any stipulated penalty assessments that may arise during the term of the decree. As of the date of this letter, no stipulated penalties have been assessed.
5. TMC's Environmental Reserve and Insurance Coverage
5.1 Environmental Remediation Reserve
As disclosed in TMC's Quarterly Report on Form 10-Q for the fiscal quarter ended September 30, 2024, filed with the U.S. Securities and Exchange Commission and the Canadian securities regulatory authorities on November 14, 2024, TMC's environmental remediation reserve stood at C$340.0 million as of September 30, 2024. At the exchange rate of C$1.00 = US$0.7394 (the Bank of Canada noon rate as of September 30, 2024), this reserve is equivalent to approximately US$251.4 million.
As noted in Section 3.7, the nominal grand total obligation under the Consent Decree is approximately US$409.9 million. Accordingly, there is a shortfall between the current reserve balance and the nominal grand total obligation of approximately US$158.5 million (US$409.9 million less US$251.4 million). However, we note the following mitigating factors:
(a) The nominal grand total includes long-tail remediation expenditures extending over a 30-year period; the NPV of the total obligation is approximately US$311.5 million, which reduces the effective shortfall relative to the reserve;
(b) The reserve was established before the finalization of the Consent Decree terms and may be adjusted upward in connection with TMC's year-end financial reporting for fiscal year 2024; and
(c) Potential insurance recoveries (discussed in Section 5.2 below) could materially offset the shortfall, although these recoveries are not currently factored into the reserve for Credit Agreement compliance purposes.
TMC's management is actively evaluating the need to increase the environmental remediation reserve in connection with its year-end financial reporting for the fiscal year ended December 31, 2024. TMC's external auditor, Ridgeline Accounting Partners LLP, of Calgary, Alberta, has been apprised of the terms of the Consent Decree and is reviewing the accounting treatment of the consent decree obligations under IFRS (specifically, IAS 37 — Provisions, Contingent Liabilities and Contingent Assets) and ASC 410-30 (Environmental Obligations) for purposes of TMC's dual-GAAP reporting.
Northspire Capital Markets, Inc. ("Northspire"), TMC's financial advisor, is advising TMC management on the financial structuring of the remediation reserve, including the allocation of expenditures over time, the impact on free cash flow projections, and the potential implications for credit facility covenants and overall capital structure.
5.2 Insurance Coverage
TMC maintains a Pollution Legal Liability ("PLL") insurance policy with Meridian Environmental Insurance Company ("Meridian"), the material terms of which are as follows:
Policy Number: MEI-ENV-2021-04738
Per-Occurrence Limit: US$50,000,000
Aggregate Limit: US$75,000,000
Self-Insured Retention ("SIR"): US$5,000,000 per occurrence
Policy Period: January 1, 2021 through January 1, 2026 (subject to renewal)
TMC has submitted claims to Meridian under the PLL policy with respect to each of the four facilities. Meridian's coverage determinations are summarized as follows:
(a) Ridgecrest Copper-Molybdenum Mine: Coverage denied. Meridian has invoked the policy's known-conditions/pollution exclusion, asserting that the contamination at the Ridgecrest site was known to TMC prior to the inception of the policy. TMC disputes this characterization and has reserved all rights to contest the coverage denial.
(b) Gallatin Chemical Works: Coverage acknowledged, subject to the applicable SIR of $5.0 million per occurrence. Meridian has agreed to participate in defense and indemnity costs relating to the Gallatin site remediation.
(c) Bonanza Creek Gold Mine: Coverage acknowledged, subject to the applicable SIR of $5.0 million per occurrence. Meridian has agreed to participate in defense and indemnity costs relating to the Bonanza Creek site remediation.
(d) Kanawha Bend Chemical Plant: Coverage denied. Meridian has asserted that TMC failed to provide timely notice of the sulfuric acid release and resulting enforcement action, in violation of the policy's notice provisions. TMC disputes this assertion, noting that notice was provided within the policy's reporting period, and has reserved all rights.
Based upon Northspire's analysis, the estimated realistic insurance recovery from Meridian, assuming favorable resolution of the coverage disputes with respect to the Gallatin and Bonanza Creek sites and no recovery for the Ridgecrest and Kanawha Bend sites, is in the range of US$45.0 million to US$55.0 million. If realized, these recoveries would materially offset the shortfall between TMC's environmental remediation reserve and the nominal grand total obligation under the Consent Decree.
A coverage dispute with Meridian is pending with respect to the Ridgecrest and Kanawha Bend denials, and TMC has retained coverage counsel to evaluate available legal remedies, including potential arbitration or litigation. TMC has reserved all rights under the PLL policy and applicable law.
For purposes of Credit Agreement covenant compliance, these insurance recovery estimates are not currently factored into TMC's environmental remediation reserve. TMC's management has adopted a conservative approach and will only recognize insurance recoveries for covenant compliance purposes upon receipt of payment or binding settlement.
6. Environmental Liability Covenant Compliance
The Credit Agreement contains an environmental liability covenant (Section 7.14 thereof) pursuant to which TMC's aggregate disclosed and undisclosed environmental liabilities shall not exceed twenty-five percent (25%) of TMC's consolidated net tangible assets ("CNTA"), as defined in the Credit Agreement.
C&H has reviewed the relevant provisions of the Credit Agreement and TMC's most recently reported financial data to assess TMC's compliance with this covenant in light of the Consent Decree obligations. Our analysis is as follows:
CNTA as of Q3 2024: C$3.92 billion (as reported in TMC's Form 10-Q for the fiscal quarter ended September 30, 2024).
25% Covenant Threshold: C$980.0 million (25% × C$3.92 billion), equivalent to approximately US$724.4 million at the exchange rate of C$1.00 = US$0.7394.
Current Total Environmental Liabilities (including all Consent Decree obligations): Approximately US$409.9 million (the nominal grand total as set forth in Section 3.7 above), equivalent to approximately C$554.4 million at the exchange rate of C$1.00 = US$0.7394.
Covenant Headroom: C$980.0 million less C$554.4 million = approximately C$425.6 million of headroom under the environmental liability covenant.
Conclusion: Based on the foregoing analysis, TMC remains in compliance with the environmental liability covenant set forth in Section 7.14 of the Credit Agreement, with substantial headroom of approximately C$425.6 million. Even assuming the full nominal obligation under the Consent Decree without any offset for insurance recoveries, time-value discounting, or reserve adjustments, TMC's aggregate environmental liabilities remain well within the covenant threshold.
C&H further notes the following matters for the Administrative Agent's consideration:
Surety Bond Indemnity Agreement. C&H has reviewed the Ironbark Indemnity Agreement described in Section 4.1 above and has concluded that, while it creates a contingent indemnification obligation of TMC in favor of Ironbark Surety of America, Inc., this obligation does not constitute "Indebtedness" as defined in the Credit Agreement and does not create a "Lien" on TMC's assets that would trigger the negative covenants set forth in Sections 7.01 (Liens) or 7.03 (Indebtedness) of the Credit Agreement. The Ironbark Indemnity Agreement is unsecured and does not contain any grant of a security interest, mortgage, pledge, or other encumbrance on TMC's assets. TMC will continue to monitor the status of this obligation and will promptly notify the Administrative Agent if circumstances change.
Remediation Trust Fund Deposit. As described in Section 4.2 above, TMC has deposited US$80.0 million into the Remediation Trust Fund held by Larchfield Trust Company, N.A. This deposit constitutes restricted cash, as the funds are irrevocably dedicated to the remediation obligations set forth in the Consent Decree and are not available for TMC's general corporate purposes. TMC's finance team, in consultation with Northspire and Ridgeline Accounting Partners LLP, is evaluating the appropriate treatment of this restricted cash deposit under the Credit Agreement's definition of "Unrestricted Cash" and the liquidity covenants set forth in Section 7.12 of the Credit Agreement. C&H will advise the Administrative Agent of the results of this evaluation in due course.
Formal Covenant Compliance Certificate. TMC will deliver a formal covenant compliance certificate to the Administrative Agent in due course, confirming TMC's continued compliance with all financial and non-financial covenants under the Credit Agreement following entry of the Consent Decree and the commencement of TMC's obligations thereunder. This certificate is expected to be delivered concurrently with or promptly following entry of the Consent Decree.
7. TMC Corporate and Financial Overview
For the convenience of the Administrative Agent and the lending syndicate, and to provide context for the financial obligations described in this letter, the following is a summary overview of TMC's corporate profile and financial position:
Corporate Organization. Torchlight Mining Corp. is a corporation incorporated under the CBCA, with dual listings on the Toronto Stock Exchange (TSX) and the New York Stock Exchange (NYSE), trading under the ticker symbol "TRC" on both exchanges.
Business Description. TMC is a diversified mining and specialty chemicals company, with operations spanning copper, molybdenum, and gold mining, as well as the manufacture of specialty chemicals including flotation reagents and leaching agents used in mineral processing. TMC operates fourteen (14) mines and six (6) chemical processing facilities across North America, South America, and Australia.
Financial Highlights (Fiscal Year 2023):
• Revenue: C$4.82 billion (approximately US$3.56 billion)
• Adjusted EBITDA: C$1.14 billion (approximately US$843 million)
• Market Capitalization (as of October 2024): approximately C$7.6 billion
Employees. TMC employs approximately 11,400 people worldwide, including approximately 4,200 in the United States.
Senior Management:
• Chief Executive Officer: Douglas K. Prennell
• Chief Financial Officer: Carolyn Bracebridge
• General Counsel: Miriam Soo-Hwan Park
The Consent Decree obligations, while significant in absolute terms, represent approximately 8.5% of TMC's fiscal year 2023 revenue and approximately 36.0% of TMC's fiscal year 2023 adjusted EBITDA on a nominal basis, or approximately 27.3% of adjusted EBITDA on an NPV basis. TMC's management, in consultation with Northspire, believes that the Consent Decree obligations are manageable within TMC's existing capital structure and cash flow generation capacity, subject to appropriate financial planning and reserve management.
8. Ongoing Obligations and Undertakings
TMC undertakes to keep the Administrative Agent and, through it, the lending syndicate, informed of material developments in the Consent Decree proceedings and related matters. Specifically, TMC will provide prompt written notice to the Administrative Agent of each of the following:
(a) Entry of the Consent Decree by the Court;
(b) The occurrence of the Effective Date under the Consent Decree;
(c) Any material amendments, modifications, or supplements to the Consent Decree, whether agreed to by the parties or ordered by the Court;
(d) Any assessments of stipulated penalties under the Consent Decree, or any disputes arising under the decree's dispute resolution provisions, that individually or in the aggregate exceed US$1.0 million or are otherwise material to TMC's financial condition or covenant compliance;
(e) Any material changes to the estimated remediation costs at any of the four facilities, including any upward or downward adjustments resulting from updated engineering studies, changed site conditions, regulatory modifications, or the annual financial assurance adjustment process;
(f) Any material developments in the insurance coverage dispute with Meridian Environmental Insurance Company, including any settlement, arbitration award, or judicial determination;
(g) Delivery of the formal covenant compliance certificate reflecting the Consent Decree obligations, as described in Section 6 above; and
(h) Any other events or developments arising out of or relating to the Consent Decree that would constitute a "Material Adverse Effect" or require disclosure under the Credit Agreement.
In addition, TMC will provide copies of the following documents to the Administrative Agent upon request or as required under the reporting covenants of the Credit Agreement:
(i) The entered Consent Decree (i.e., the version bearing the Court's order of entry);
(ii) The surety bond (Bond No. ISA-ENV-2025-08934, Ironbark Surety of America, Inc.);
(iii) The Remediation Trust Agreement (Trust No. LTC-REM-2025-1177, Larchfield Trust Company, N.A.); and
(iv) Updated financial statements and reserve schedules reflecting adjusted environmental reserves in connection with TMC's year-end and quarterly financial reporting.
9. Request for Acknowledgment
We respectfully request that Harborstone National Bank, N.A., as Administrative Agent under the Credit Agreement, acknowledge receipt of this disclosure letter and circulate it to the members of the lending syndicate in accordance with the information-sharing and distribution provisions of the Credit Agreement (Section 10.02 thereof, or such other applicable provision).
TMC does not currently believe that any amendment, waiver, or consent under the Credit Agreement is required as a result of the Consent Decree or the financial obligations described herein. As set forth in Section 6, TMC remains in compliance with the environmental liability covenant and other applicable covenants under the Credit Agreement with substantial headroom. Notwithstanding the foregoing, TMC expressly reserves the right to seek an amendment, waiver, or consent under the Credit Agreement if circumstances change or if TMC's continued analysis, in consultation with its advisors, indicates that such action would be prudent or necessary.
For the Administrative Agent's information, C&H is concurrently preparing a separate internal analysis memorandum evaluating in greater detail the potential need for any Credit Agreement amendment or waiver in connection with the Consent Decree and the associated financial assurance instruments. That analysis will address, among other things, the treatment of the Remediation Trust Fund deposit under the liquidity covenants, the characterization of the Ironbark Indemnity Agreement under the negative covenants, and any potential impact of the remediation spending profile on the financial covenants over the remaining term of the Credit Agreement. We expect to complete that analysis within approximately thirty (30) days and will share its conclusions with the Administrative Agent, to the extent authorized by TMC's management.
10. Reservation of Rights
Nothing in this letter shall constitute or be deemed to constitute a waiver, release, or modification of any rights, remedies, claims, or defenses of TMC, its subsidiaries, or any of the Defendants under the Credit Agreement, any ancillary loan documents, applicable law, or otherwise. TMC expressly reserves all such rights and defenses in their entirety.
This letter is provided solely for informational purposes pursuant to TMC's disclosure and notification covenants under the Credit Agreement and does not constitute, and shall not be construed as constituting, legal advice to the Administrative Agent, any member of the lending syndicate, or any other party. The Administrative Agent and each lender should consult with their own counsel regarding the matters described herein.
11. Confidentiality
TMC respectfully requests that the contents of this letter, including all enclosures, be treated as confidential information in accordance with the confidentiality provisions set forth in Section 10.08 of the Credit Agreement. Distribution of this letter by the Administrative Agent to members of the lending syndicate shall be subject to the confidentiality obligations binding upon each lender under the Credit Agreement.
TMC acknowledges that certain information relating to the Consent Decree will become publicly available upon publication of the Federal Register notice (which has already occurred), entry of the Consent Decree by the Court, and the filing of related public reports. To the extent that information contained in this letter is or becomes publicly available through such governmental proceedings, the confidentiality restrictions set forth herein shall not apply to such publicly available information. However, the analysis and commentary provided by C&H in this letter, including the covenant compliance analysis, financial projections, insurance recovery estimates, and TMC's internal assessments, shall remain confidential and proprietary regardless of the public availability of the underlying governmental records.
We trust that this letter provides the Administrative Agent and the lending syndicate with a comprehensive disclosure of the Consent Decree and associated obligations. We remain available to discuss any aspect of this disclosure at the Administrative Agent's convenience and would be pleased to arrange a call or meeting among counsel to address any questions. Please do not hesitate to contact the undersigned at (212) 558-4127 or harrison.wexford@calderwoodharkness.com, or my colleague Beatrice Holloway, Partner, at (212) 558-4209 or beatrice.holloway@calderwoodharkness.com.
Very truly yours,
CALDERWOOD & HARKNESS LLP
By: ________
Harrison Wexford Partner
On behalf of Torchlight Mining Corp. C&H Matter No.: 1039-00003
Enclosures:
1. Consent Decree — Execution Version (lodged with the U.S. District Court for the District of Montana, February 19, 2025)
2. Surety Bond (Bond No. ISA-ENV-2025-08934, Ironbark Surety of America, Inc., dated February 15, 2025)
3. Remediation Trust Agreement (Trust No. LTC-REM-2025-1177, Larchfield Trust Company, N.A., dated February 17, 2025)
4. Aggregate Financial Obligation Summary Table
cc:
Miriam Soo-Hwan Park, General Counsel, Torchlight Mining Corp. Carolyn Bracebridge, Chief Financial Officer, Torchlight Mining Corp. Vivian Okafor, Managing Director, Northspire Capital Markets, Inc. Beatrice Holloway, Partner, Calderwood & Harkness LLP File: C&H Matter No. 1039-00003
Facility | Nominal Remediation Cost | Remediation Period | NPV (3% discount Rate)
Ridgecrest Copper-Molybdenum Mine | $198.6 million | 30 years | $134.9 million
Gallatin Chemical Works | $42.8 million | 15 years | $34.1 million
Bonanza Creek Gold Mine | $63.2 million | 20 years | $47.1 million
Kanawha Bend Chemical Plant | $38.9 million | 20 years | $29.0 million
Total | $343.5 million | — | $245.1 million
Obligation Category | Nominal Amount (US$)
Remediation costs (four sites) | $343,500,000
Civil penalties | $31,500,000
EPA past-costs reimbursement (CERCLA § 107) | $18,100,000
Supplemental Environmental Projects (SEPs) | $12,000,000
Independent environmental monitor costs (5 years) | $4,800,000
Grand Total (Nominal) | $409,900,000

CALDERWOOD & HARKNESS LLP Attorneys at Law

VIA OVERNIGHT COURIER AND ELECTRONIC MAIL

CALDERWOOD & HARKNESS LLP

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