1039-00003 · Torchlight Mining Corp · Insurance Coverage

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PRIVILEGED AND CONFIDENTIAL

CALDERWOOD & HARKNESS LLP Counselors at Law

One Vanderbilt Avenue, 44th Floor New York, New York 10017

Telephone: (212) 884-7200 Facsimile: (212) 884-7201 www.calderwoodharkness.com

Harrison Wexford Direct: (212) 884-7244 hwexford@calderwoodharkness.com

Matter No.: 1039-00003

December 15, 2024

VIA CERTIFIED MAIL, RETURN RECEIPT REQUESTED AND VIA EMAIL

Mr. Brendan Forsythe Account Manager Clearwater Mutual Services, Inc. 1345 Avenue of the Americas, Suite 3200 New York, New York 10105

Re: Notice of Circumstances Under Policy No. CMI-DO-2023-10221 — Torchlight Mining Corp. Directors' and Officers' Liability Insurance

Dear Mr. Forsythe:

I. Purpose and Policy Identification

We write on behalf of our client, Torchlight Mining Corp. ("TMC"), and its U.S. subsidiaries identified herein, in connection with a multi-site environmental enforcement matter brought by the United States Environmental Protection Agency ("EPA") and the United States Department of Justice ("DOJ"), as more fully described below. Calderwood & Harkness LLP serves as counsel to TMC and its U.S. subsidiaries in this matter.

This letter constitutes formal notice of circumstances that may give rise to a claim under Directors' and Officers' Liability Insurance Policy No. CMI-DO-2023-10221 (the "Policy"), issued by Clearwater Mutual Insurance, Ltd., a Bermuda exempted company, with its principal office located at Crawford House, 50 Cedar Avenue, Hamilton HM 11, Bermuda, and administered by its U.S. managing agent, Clearwater Mutual Services, Inc. ("Clearwater Mutual" or the "Insurer"). This notice is provided in accordance with the notice-of-circumstances provision set forth in the Policy.

This notice is provided to preserve all rights of TMC and its directors and officers (collectively, the "Insured Persons") under the Policy. Nothing in this letter shall be construed as a waiver of, or limitation upon, any rights that TMC or any Insured Person may have under the Policy or at law. TMC expressly reserves all such rights, including but not limited to the right to supplement this notice as additional facts and circumstances develop.

II. Identification of the Insured

The Named Insured under the Policy is Torchlight Mining Corp., a corporation incorporated under the Canada Business Corporations Act ("CBCA"). TMC is dual-listed on the Toronto Stock Exchange (ticker symbol: TRC) and the New York Stock Exchange (ticker symbol: TRC).

TMC's Canadian headquarters is located at 1800 Bayfield Tower, 401 Bay Street, Toronto, Ontario M5H 2Y4, Canada. TMC's U.S. headquarters is located at 750 Copper Ridge Boulevard, Suite 200, Helena, Montana 59601.

The insured directors and officers include, without limitation, the following individuals who have specific responsibilities relevant to the circumstances described herein:

• Douglas K. Prennell, Chief Executive Officer;

• Miriam Soo-Hwan Park, General Counsel;

• Carolyn Bracebridge, Chief Financial Officer; and

• Gareth Linford, Vice President, Environmental Health & Safety.

In addition to the foregoing, this notice is intended to cover all other directors and officers of TMC as that term is defined in the Policy.

The following U.S. subsidiaries of TMC are parties to the underlying enforcement action described in Section III below, and their respective directors and officers may also be covered under the Policy:

1. Torchlight Mining (U.S.) Inc., a Delaware corporation (EIN: 83-2047156);

2. Torchlight Specialty Chemicals, Inc., a Delaware corporation (EIN: 47-3819204);

3. Ridgecrest Mine Holdings, LLC, a Montana limited liability company (Montana Secretary of State ID: E1042738); and

4. Bonanza Creek Mining, LLC, a Nevada limited liability company (Nevada Secretary of State Entity No.: E0518294731).

Each of the foregoing subsidiaries is wholly owned, directly or indirectly, by TMC.

III. Description of the Underlying Enforcement Matter

A. Overview of the Government Action

On January 18, 2024, the DOJ, acting through the Environment and Natural Resources Division ("ENRD"), filed a civil complaint in the United States District Court for the District of Montana, Missoula Division, captioned:

United States of America and State of Montana v. Torchlight Mining Corp., Torchlight Mining (U.S.) Inc., Torchlight Specialty Chemicals, Inc., Ridgecrest Mine Holdings, LLC, and Bonanza Creek Mining, LLC

Civil Action No. 9:24-cv-00087-DWM

The action was assigned to the Honorable Donald W. Molloy, Senior United States District Judge. The States of Nevada and West Virginia have joined the action as co-plaintiffs and intervenors.

TMC filed its answer to the complaint on March 5, 2024, denying the material allegations of the complaint and asserting affirmative defenses.

The complaint alleges violations of federal environmental statutes at four separate sites operated by TMC and its subsidiaries. Specifically, the government alleges violations of:

• Section 301 of the Clean Water Act ("CWA"), 33 U.S.C. § 1311;

• Sections 3004 and 3005 of the Resource Conservation and Recovery Act ("RCRA"), 42 U.S.C. §§ 6924, 6925;

• Section 107 of the Comprehensive Environmental Response, Compensation, and Liability Act ("CERCLA"), 42 U.S.C. § 9607; and

• The Migratory Bird Treaty Act ("MBTA"), 16 U.S.C. §§ 703–712.

B. Government Counsel

The government is represented in this matter by the following attorneys:

• Philip Orenstein, Trial Attorney, Environmental Enforcement Section, ENRD, U.S. Department of Justice (Lead DOJ Trial Attorney);

• Katherine Rowe-Halpern, Senior Counsel, Environmental Enforcement Section, ENRD, U.S. Department of Justice (Supervising DOJ Attorney);

• Margaret Coulson, Attorney, Office of Enforcement and Compliance Assurance ("OECA"), U.S. Environmental Protection Agency (Lead EPA Case Attorney);

• Annika Hedstrom, Assistant Attorney General, Montana Attorney General's Office (State of Montana counsel);

• Ricardo Fuentes, Deputy Attorney General, Nevada Attorney General's Office (State of Nevada counsel); and

• Loretta May Hatcher, Assistant Attorney General, West Virginia Attorney General's Office (State of West Virginia counsel).

C. The Four Sites

The government's complaint and the ongoing consent decree negotiations involve four facilities across three states. Each site is described in detail below.

1. Ridgecrest Copper-Molybdenum Mine. The Ridgecrest Copper-Molybdenum Mine is located at 14200 Ridgecrest Mine Road, Drummond, Granite County, Montana 59832. The facility is an open-pit copper-molybdenum mine that has been operational since 1978. Active mining operations ceased in December 2019, and the site is currently in a closure and reclamation phase. The mine footprint encompasses approximately 3,200 acres.

The government's complaint alleges the following violations at the Ridgecrest site:

• Unpermitted CWA discharges: The government alleges that acid mine drainage from the facility's tailings storage area and waste rock dumps has been discharged into Flint Creek and the Clark Fork River without authorization under a National Pollutant Discharge Elimination System ("NPDES") permit. The complaint asserts that dissolved copper concentrations in the discharge averaged 47 mg/L, compared to the applicable Montana ambient water quality standard of 0.0087 mg/L—a factor of approximately 5,400 times in excess of the standard.

• RCRA hazardous waste mismanagement: The complaint alleges that TMC and its subsidiaries failed to properly characterize and manage hazardous waste generated at the site, including waste rock and process residuals exhibiting the toxicity characteristic for metals.

• CERCLA cost recovery: The government seeks recovery under CERCLA § 107 of $14.3 million in costs incurred by the EPA in connection with removal actions conducted at the site between 2021 and 2023.

The Ridgecrest site has been proposed for listing on the National Priorities List ("NPL"). The site is also subject to an existing Administrative Order on Consent ("AOC") (Docket No. CERCLA-08-2022-0039), executed on September 15, 2022. The EPA Project Coordinator for the Ridgecrest site is Dr. Samuel Tesfaye.

2. Gallatin Chemical Works. The Gallatin Chemical Works is located at 8800 Industrial Park Lane, Belgrade, Gallatin County, Montana 59714. The facility is a specialty chemical manufacturing plant that has been operational since 1993 and remains active. The facility encompasses approximately 145 acres and operates under RCRA Permit No. MTD098712456.

The government's complaint alleges the following violations at the Gallatin Chemical Works:

• Unpermitted hazardous-waste storage: The government alleges that TMC stored hazardous wastes at the facility in excess of the quantities and durations permitted under the facility's RCRA permit.

• Failure to perform corrective action: The complaint alleges that TMC failed to implement corrective action at three Solid Waste Management Units ("SWMUs") identified during a RCRA Facility Investigation.

• CWA effluent limit exceedances: The complaint identifies fourteen (14) separate CWA effluent limit exceedances at the facility during the period from January 2021 through June 2024. Groundwater monitoring at the facility has detected carbon disulfide at a concentration of 890 µg/L, compared to the federal Maximum Contaminant Level ("MCL") of 10 µg/L.

3. Bonanza Creek Gold Mine. The Bonanza Creek Gold Mine is located at County Road 447, Mile Marker 12, Lander County, Nevada 89820. The facility is an open-pit, heap-leach gold mine that has been operational since 2001 and remains in active production. The mine footprint encompasses approximately 5,600 acres.

The government's complaint alleges the following violations at the Bonanza Creek site:

• Unpermitted CWA discharges from heap-leach pad liner failures: The complaint identifies three separate unpermitted discharge events resulting from tears in the heap-leach pad liner, occurring in March 2022, August 2022, and January 2023. Sampling data indicates weak acid dissociable ("WAD") cyanide concentrations at 0.62 mg/L versus the applicable effluent limit of 0.022 mg/L, and mercury at 12.4 µg/L versus the applicable water quality criterion of 0.77 µg/L.

• RCRA mismanagement of spent heap-leach ore: The government alleges that spent ore from the heap-leach process was improperly characterized and managed.

• MBTA violations: The complaint alleges that seventeen (17) avian mortalities occurred at the facility's solution ponds between 2021 and 2023, in violation of the Migratory Bird Treaty Act.

The EPA Project Coordinator for the Bonanza Creek site is Jennifer Whitfield.

4. Kanawha Bend Chemical Plant. The Kanawha Bend Chemical Plant is located at 2200 Chemical Valley Road, Institute, Kanawha County, West Virginia 25112. The facility is a chemical manufacturing plant that has been operational since 1985 and remains active. The plant encompasses approximately 78 acres and operates under RCRA Permit No. WVD048823915.

The government's complaint alleges the following violations at the Kanawha Bend site:

• Failure to properly close former surface impoundment: The complaint alleges that TMC's subsidiary failed to close a former surface impoundment in accordance with the requirements of RCRA and the facility's RCRA permit.

• Unpermitted treatment of listed hazardous wastes: The government alleges that the facility engaged in the unpermitted treatment of listed hazardous wastes identified as K062 (spent pickle liquor from steel finishing operations) and D002 (corrosivity characteristic waste).

• CERCLA cost recovery: The government seeks recovery of $3.8 million in EPA emergency response costs incurred following a sulfuric acid release that occurred at the facility on June 14, 2020.

Environmental investigations at the Kanawha Bend site have identified dense non-aqueous phase liquid ("DNAPL") contamination in the fractured bedrock aquifer beneath the facility, as well as lead at concentrations of 4,200 mg/kg and arsenic at 890 mg/kg in subsurface soils.

D. Procedural History and Current Status

The following is a summary of significant events in the procedural history of the enforcement action:

• September 12, 2023: The EPA issued a comprehensive Notice of Violation covering all four sites described above.

• January 18, 2024: The DOJ filed its complaint (Civil Action No. 9:24-cv-00087-DWM) in the U.S. District Court for the District of Montana, Missoula Division.

• March 5, 2024: TMC filed its answer to the complaint, denying the material allegations and asserting affirmative defenses.

• April 22, 2024: The parties entered into a Tolling Agreement, tolling the applicable statutes of limitations through December 31, 2025.

• May 15, 2024: The Court ordered mediation of the dispute before Magistrate Judge Clara Finnegan.

• July 30, 2024: Following mediation, the parties reached an agreement in principle on a consent decree framework.

• October 21, 2024: Calderwood & Harkness LLP was engaged by TMC as counsel in this matter, replacing prior environmental counsel Whitfield, Palmer & Goss LLP.

• November 8, 2024: The DOJ circulated its first draft of the proposed consent decree.

• December 16, 2024: TMC, through Calderwood & Harkness LLP, submitted a revised draft (redline) of the proposed consent decree to the DOJ and EPA.

As of the date of this letter, the parties are actively negotiating the final terms of the consent decree. Based on current discussions, it is anticipated that the consent decree will be lodged with the Court for public comment in early 2025, consistent with the requirements of 28 C.F.R. § 50.7.

IV. Financial Magnitude of the Enforcement Matter

The total estimated financial obligations arising from the enforcement action, as reflected in the current state of consent decree negotiations, are summarized below. These figures are based on the most current information available as of the date of this letter and are subject to change as negotiations continue.

A. Remediation Obligations

The total negotiated remediation costs across all four sites are estimated at $343.5 million in nominal terms, which equates to approximately $245.1 million on a net present value ("NPV") basis, calculated using a 3% discount rate. The site-by-site breakdown is as follows:

B. Civil Penalties

The total civil penalty amount under the proposed consent decree is $31.5 million, payable in four quarterly installments of $7,875,000 each. The site-by-site allocation of civil penalties is 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

C. EPA Past-Costs Reimbursement (CERCLA § 107)

The proposed consent decree requires TMC to reimburse the EPA a total of $18.1 million for past response costs incurred under CERCLA § 107, comprising $14.3 million for removal actions conducted at the Ridgecrest site between 2021 and 2023, and $3.8 million for the emergency response at the Kanawha Bend site following the June 14, 2020 sulfuric acid release.

D. Supplemental Environmental Projects (SEPs)

TMC has agreed to fund Supplemental Environmental Projects totaling $12.0 million across three projects, the specific terms and scope of which are being finalized in the consent decree negotiations.

E. Independent Monitor Costs

The proposed consent decree provides for the appointment of an independent monitor to oversee TMC's compliance with the consent decree terms. The estimated cost of the independent monitor is approximately $4.8 million over a five-year monitoring period, or approximately $960,000 per year. The proposed monitor is Verdant Analytics, Inc. (Dr. Kamal Osei, principal).

F. Financial Assurance

The proposed consent decree requires TMC to provide total financial assurance in the amount of $245.0 million, consisting of:

• A surety bond in the amount of $165.0 million, to be issued by Ironbark Surety of America, Inc. (Bond No. ISA-ENV-2025-08934); and

• A remediation trust fund in the amount of $80.0 million, to be established with Larchfield Trust Company, N.A. (Trust Agreement No. LTC-REM-2025-1177).

G. Grand Total Estimated Obligation

The aggregate estimated financial obligation arising from the enforcement matter, encompassing remediation costs, civil penalties, past-costs reimbursement, supplemental environmental projects, and independent monitor costs, is approximately $409.9 million in nominal terms, or approximately $311.5 million on a cash-equivalent NPV basis.

H. TMC's Current Environmental Reserve

As of the third quarter of 2024, TMC's consolidated financial statements reflect an environmental reserve of C$340.0 million (approximately US$251.4 million at the prevailing exchange rate of C$1.00 = US$0.7394). On the basis of the nominal grand total estimated obligation of US$409.9 million, the estimated shortfall is approximately US$158.5 million.

I. TMC Financial Context

To provide context for the foregoing figures, TMC's key financial metrics are as follows:

• Fiscal Year 2023 Revenue: C$4.82 billion (approximately US$3.56 billion)

• Fiscal Year 2023 EBITDA: C$1.14 billion (approximately US$843 million)

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

• Global Workforce: approximately 11,400 employees worldwide, of which approximately 4,200 are located in the United States

V. Circumstances Giving Rise to Potential Claims Under the D&O Policy

A. Potential Director and Officer Exposure from the Enforcement Action

The government's complaint and proposed consent decree involve allegations that TMC and its subsidiaries, through the actions and decisions of their directors and officers, violated federal environmental statutes—specifically the CWA, RCRA, CERCLA, and the MBTA—at four separate facilities across three states. The nature and scope of the alleged violations, the prolonged duration over which the violations are alleged to have occurred, and the substantial financial magnitude of the resulting obligations create circumstances in which TMC's directors and officers may face individual scrutiny, claims, or proceedings.

Individual directors and officers who had responsibility for environmental compliance oversight, capital expenditure decisions relating to site maintenance and environmental controls, and the approval of public disclosures of environmental liabilities may be subject to claims or proceedings. Without limitation, the officers with specific decision-making authority relevant to these circumstances include:

• Douglas K. Prennell (Chief Executive Officer) — as the senior executive with ultimate management responsibility for TMC's operations, including oversight of environmental compliance and capital allocation decisions;

• Gareth Linford (Vice President, Environmental Health & Safety) — as the officer with direct responsibility for TMC's environmental health and safety programs, regulatory compliance, and reporting;

• Miriam Soo-Hwan Park (General Counsel) — as the officer with responsibility for advising the board and management on legal compliance obligations, regulatory matters, and disclosure obligations; and

• Carolyn Bracebridge (Chief Financial Officer) — as the officer with responsibility for financial reporting, the establishment and adequacy of environmental reserves, and certifications of TMC's periodic reports filed with applicable securities regulators.

B. Potential Securities and Disclosure-Related Claims

Given TMC's dual listing on the TSX and NYSE, the magnitude of the environmental obligations described herein (US$409.9 million in aggregate nominal obligations), and the significant shortfall between TMC's current environmental reserve (approximately US$251.4 million) and its total nominal obligations (US$409.9 million), there is a foreseeable risk that shareholders, securities regulators, or other parties may allege that TMC's directors and officers failed to timely and adequately disclose the nature and magnitude of TMC's environmental liabilities in its public filings, including its annual report on Form 20-F filed with the U.S. Securities and Exchange Commission, its annual information form and management discussion and analysis filed with Canadian securities regulators, and its quarterly interim reports.

In this regard, we note that TMC's external auditor, Ridgeline Accounting Partners LLP (engagement partner: Frances Whitmore), is currently reviewing the adequacy of TMC's environmental liability disclosures under Accounting Standards Codification ("ASC") Topic 450 (Contingencies) and International Accounting Standard 37 (Provisions, Contingent Liabilities and Contingent Assets). The outcome of this review could have implications for the potential exposure of TMC's directors and officers to securities- and disclosure-related claims.

C. Potential Derivative or Shareholder Actions

The circumstances described in this letter may give rise to shareholder derivative claims or direct shareholder actions alleging breach of fiduciary duty by TMC's directors and officers. Such claims could allege, among other things, that TMC's directors and officers failed to exercise adequate oversight of environmental compliance at the four sites (so-called Caremark claims or analogous claims under Canadian corporate law), or that they failed to ensure the adequacy of TMC's corporate reserves and public disclosures with respect to the company's environmental liabilities.

D. Regulatory Investigation or Proceedings

Although, as of the date of this letter, no separate regulatory investigation or enforcement proceeding directed at individual directors or officers of TMC has been initiated, the nature and magnitude of the violations alleged in the government's complaint—spanning multiple federal environmental statutes, four sites, and several years—create a circumstance in which such investigations or proceedings could reasonably be anticipated. We are providing this notice in recognition of that possibility and to preserve the rights of the Insured Persons under the Policy.

VI. Insurance Coverage Considerations and Related Matters

A. Meridian PLL Policy Coverage Dispute

We wish to bring to Clearwater Mutual's attention that TMC separately maintains a Pollution Legal Liability ("PLL") insurance policy with Meridian Environmental Insurance Company, Policy No. MEI-ENV-2021-04738, with a per-occurrence limit of $50.0 million, an aggregate limit of $75.0 million, and a self-insured retention ("SIR") of $5.0 million per occurrence. TMC has submitted claims under the Meridian PLL policy in connection with the enforcement matter described herein.

Meridian has denied coverage for the Ridgecrest Copper-Molybdenum Mine site, citing the pollution/known-conditions exclusion in the PLL policy, and has also denied coverage for the Kanawha Bend Chemical Plant site on the basis of late notice. The coverage disputes with Meridian are being handled separately from the D&O policy matters addressed in this letter.

For the avoidance of doubt, this notice of circumstances under the D&O Policy (Policy No. CMI-DO-2023-10221) is distinct from, and in addition to, TMC's claims under the Meridian PLL policy. The existence of the Meridian PLL policy, and the coverage disputes arising thereunder, do not affect or diminish the rights of TMC or its directors and officers under the Clearwater Mutual D&O Policy.

B. Credit Facility Implications

TMC maintains a C$750.0 million syndicated revolving credit facility with Harborstone National Bank, N.A. as administrative agent (maturity date: March 15, 2027). The credit facility contains, among other covenants, an environmental liability covenant that requires TMC's aggregate environmental liabilities not to exceed 25% of TMC's consolidated net tangible assets ("CNTA").

As of the most recent compliance certificate, TMC's CNTA is C$3.92 billion. The 25% covenant threshold is therefore C$980.0 million, and TMC's current aggregate environmental liabilities are approximately C$554.4 million, providing headroom of approximately C$425.6 million. TMC is currently in compliance with this covenant.

However, should the total nominal obligations under the consent decree (US$409.9 million, or approximately C$554.5 million at current exchange rates) be required to be recognized in full on TMC's balance sheet, or should additional environmental liabilities arise, the resulting increase in aggregate environmental liabilities could affect TMC's compliance with the covenant. A covenant breach could trigger acceleration of the credit facility, cross-default provisions in other debt instruments, and material adverse consequences for TMC's financial position and the potential exposure of TMC's directors and officers.

We raise these matters to ensure that Clearwater Mutual has a complete understanding of the financial context in which the circumstances described in this letter arise.

VII. Reservation of Rights

TMC and its directors and officers expressly reserve all rights under Policy No. CMI-DO-2023-10221, including but not limited to:

(a) all rights under Side A coverage (insuring individual directors and officers for non-indemnifiable losses);

(b) all rights under Side B coverage (reimbursing TMC for indemnification payments made to directors and officers);

(d) all other rights and benefits afforded to the Named Insured and Insured Persons under the terms and conditions of the Policy.

TMC further reserves the right to supplement, amend, or update this notice as additional facts, circumstances, or developments arise in connection with the matters described herein. This notice is not intended to be, and should not be construed as, an exhaustive or final statement of all facts and circumstances relevant to potential claims under the Policy.

TMC respectfully requests that Clearwater Mutual acknowledge receipt of this notice and confirm, in writing, that the notice has been recorded and accepted in accordance with the terms and conditions of the Policy.

VIII. Request for Confirmation and Contact Information

We respectfully request that Clearwater Mutual provide written confirmation of receipt of this notice within ten (10) business days of the date of this letter. Please confirm that this notice has been duly recorded in Clearwater Mutual's files as a notice of circumstances under Policy No. CMI-DO-2023-10221.

All communications regarding this notice and any claims arising from the circumstances described herein should be directed to the following:

Harrison Wexford Partner Calderwood & Harkness LLP One Vanderbilt Avenue, 44th Floor New York, New York 10017 Telephone: (212) 884-7244 Facsimile: (212) 884-7201

Email: hwexford@calderwoodharkness.com

Miriam Soo-Hwan Park General Counsel Torchlight Mining Corp. 1800 Bayfield Tower, 401 Bay Street Toronto, Ontario M5H 2Y4, Canada Telephone: (416) 361-8500

Email: mspark@torchlightmining.com

U.S. Contact Address: 750 Copper Ridge Boulevard, Suite 200 Helena, Montana 59601 Telephone: (406) 442-7800

IX. Confidentiality Notice

This letter and all enclosures and attachments hereto contain information that is privileged, confidential, and commercially sensitive. This letter is protected by the attorney-client privilege, the attorney work product doctrine, and such other privileges and protections as may be applicable. The transmission of this letter to Clearwater Mutual and Clearwater Mutual Services, Inc. is not intended to, and does not, constitute a waiver of any applicable privilege, protection, or immunity, including without limitation the attorney-client privilege, the work product doctrine, and any common-interest or joint-defense privilege. This letter is provided solely for the purpose of providing notice under the Policy and is not intended for any other purpose. Any unauthorized use, disclosure, distribution, or copying of this letter or the information contained herein is strictly prohibited.

We trust that the foregoing provides Clearwater Mutual with sufficient information to record this notice of circumstances. We look forward to receiving your written confirmation of receipt and stand ready to provide any additional information that may be required. Please do not hesitate to contact the undersigned with any questions or to discuss this matter further.

Very truly yours,

CALDERWOOD & HARKNESS LLP

By: ________

Harrison Wexford Partner

Direct: (212) 884-7244

Email: hwexford@calderwoodharkness.com

Enclosures: None. Copies of the DOJ complaint (Civil Action No. 9:24-cv-00087-DWM), TMC's answer, the draft consent decree, and related documents are available upon request and subject to applicable confidentiality restrictions.

cc:

Miriam Soo-Hwan Park, General Counsel, Torchlight Mining Corp. Douglas K. Prennell, Chief Executive Officer, Torchlight Mining Corp. Carolyn Bracebridge, Chief Financial Officer, Torchlight Mining Corp. Beatrice Holloway, Partner, Calderwood & Harkness LLP

Site	Nominal Remediation Cost	Duration	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

PRIVILEGED AND CONFIDENTIAL
CALDERWOOD & HARKNESS LLP Counselors at Law
One Vanderbilt Avenue, 44th Floor New York, New York 10017
Telephone: (212) 884-7200 Facsimile: (212) 884-7201 www.calderwoodharkness.com
Harrison Wexford Direct: (212) 884-7244 hwexford@calderwoodharkness.com
Matter No.: 1039-00003
December 15, 2024
VIA CERTIFIED MAIL, RETURN RECEIPT REQUESTED AND VIA EMAIL
Mr. Brendan Forsythe Account Manager Clearwater Mutual Services, Inc. 1345 Avenue of the Americas, Suite 3200 New York, New York 10105
Re: Notice of Circumstances Under Policy No. CMI-DO-2023-10221 — Torchlight Mining Corp. Directors' and Officers' Liability Insurance
Dear Mr. Forsythe:
I. Purpose and Policy Identification
We write on behalf of our client, Torchlight Mining Corp. ("TMC"), and its U.S. subsidiaries identified herein, in connection with a multi-site environmental enforcement matter brought by the United States Environmental Protection Agency ("EPA") and the United States Department of Justice ("DOJ"), as more fully described below. Calderwood & Harkness LLP serves as counsel to TMC and its U.S. subsidiaries in this matter.
This letter constitutes formal notice of circumstances that may give rise to a claim under Directors' and Officers' Liability Insurance Policy No. CMI-DO-2023-10221 (the "Policy"), issued by Clearwater Mutual Insurance, Ltd., a Bermuda exempted company, with its principal office located at Crawford House, 50 Cedar Avenue, Hamilton HM 11, Bermuda, and administered by its U.S. managing agent, Clearwater Mutual Services, Inc. ("Clearwater Mutual" or the "Insurer"). This notice is provided in accordance with the notice-of-circumstances provision set forth in the Policy.
This notice is provided to preserve all rights of TMC and its directors and officers (collectively, the "Insured Persons") under the Policy. Nothing in this letter shall be construed as a waiver of, or limitation upon, any rights that TMC or any Insured Person may have under the Policy or at law. TMC expressly reserves all such rights, including but not limited to the right to supplement this notice as additional facts and circumstances develop.
II. Identification of the Insured
The Named Insured under the Policy is Torchlight Mining Corp., a corporation incorporated under the Canada Business Corporations Act ("CBCA"). TMC is dual-listed on the Toronto Stock Exchange (ticker symbol: TRC) and the New York Stock Exchange (ticker symbol: TRC).
TMC's Canadian headquarters is located at 1800 Bayfield Tower, 401 Bay Street, Toronto, Ontario M5H 2Y4, Canada. TMC's U.S. headquarters is located at 750 Copper Ridge Boulevard, Suite 200, Helena, Montana 59601.
The insured directors and officers include, without limitation, the following individuals who have specific responsibilities relevant to the circumstances described herein:
• Douglas K. Prennell, Chief Executive Officer;
• Miriam Soo-Hwan Park, General Counsel;
• Carolyn Bracebridge, Chief Financial Officer; and
• Gareth Linford, Vice President, Environmental Health & Safety.
In addition to the foregoing, this notice is intended to cover all other directors and officers of TMC as that term is defined in the Policy.
The following U.S. subsidiaries of TMC are parties to the underlying enforcement action described in Section III below, and their respective directors and officers may also be covered under the Policy:
1. Torchlight Mining (U.S.) Inc., a Delaware corporation (EIN: 83-2047156);
2. Torchlight Specialty Chemicals, Inc., a Delaware corporation (EIN: 47-3819204);
3. Ridgecrest Mine Holdings, LLC, a Montana limited liability company (Montana Secretary of State ID: E1042738); and
4. Bonanza Creek Mining, LLC, a Nevada limited liability company (Nevada Secretary of State Entity No.: E0518294731).
Each of the foregoing subsidiaries is wholly owned, directly or indirectly, by TMC.
III. Description of the Underlying Enforcement Matter
A. Overview of the Government Action
On January 18, 2024, the DOJ, acting through the Environment and Natural Resources Division ("ENRD"), filed a civil complaint in the United States District Court for the District of Montana, Missoula Division, captioned:
United States of America and State of Montana v. Torchlight Mining Corp., Torchlight Mining (U.S.) Inc., Torchlight Specialty Chemicals, Inc., Ridgecrest Mine Holdings, LLC, and Bonanza Creek Mining, LLC
Civil Action No. 9:24-cv-00087-DWM
The action was assigned to the Honorable Donald W. Molloy, Senior United States District Judge. The States of Nevada and West Virginia have joined the action as co-plaintiffs and intervenors.
TMC filed its answer to the complaint on March 5, 2024, denying the material allegations of the complaint and asserting affirmative defenses.
The complaint alleges violations of federal environmental statutes at four separate sites operated by TMC and its subsidiaries. Specifically, the government alleges violations of:
• Section 301 of the Clean Water Act ("CWA"), 33 U.S.C. § 1311;
• Sections 3004 and 3005 of the Resource Conservation and Recovery Act ("RCRA"), 42 U.S.C. §§ 6924, 6925;
• Section 107 of the Comprehensive Environmental Response, Compensation, and Liability Act ("CERCLA"), 42 U.S.C. § 9607; and
• The Migratory Bird Treaty Act ("MBTA"), 16 U.S.C. §§ 703–712.
B. Government Counsel
The government is represented in this matter by the following attorneys:
• Philip Orenstein, Trial Attorney, Environmental Enforcement Section, ENRD, U.S. Department of Justice (Lead DOJ Trial Attorney);
• Katherine Rowe-Halpern, Senior Counsel, Environmental Enforcement Section, ENRD, U.S. Department of Justice (Supervising DOJ Attorney);
• Margaret Coulson, Attorney, Office of Enforcement and Compliance Assurance ("OECA"), U.S. Environmental Protection Agency (Lead EPA Case Attorney);
• Annika Hedstrom, Assistant Attorney General, Montana Attorney General's Office (State of Montana counsel);
• Ricardo Fuentes, Deputy Attorney General, Nevada Attorney General's Office (State of Nevada counsel); and
• Loretta May Hatcher, Assistant Attorney General, West Virginia Attorney General's Office (State of West Virginia counsel).
C. The Four Sites
The government's complaint and the ongoing consent decree negotiations involve four facilities across three states. Each site is described in detail below.
1. Ridgecrest Copper-Molybdenum Mine. The Ridgecrest Copper-Molybdenum Mine is located at 14200 Ridgecrest Mine Road, Drummond, Granite County, Montana 59832. The facility is an open-pit copper-molybdenum mine that has been operational since 1978. Active mining operations ceased in December 2019, and the site is currently in a closure and reclamation phase. The mine footprint encompasses approximately 3,200 acres.
The government's complaint alleges the following violations at the Ridgecrest site:
• Unpermitted CWA discharges: The government alleges that acid mine drainage from the facility's tailings storage area and waste rock dumps has been discharged into Flint Creek and the Clark Fork River without authorization under a National Pollutant Discharge Elimination System ("NPDES") permit. The complaint asserts that dissolved copper concentrations in the discharge averaged 47 mg/L, compared to the applicable Montana ambient water quality standard of 0.0087 mg/L—a factor of approximately 5,400 times in excess of the standard.
• RCRA hazardous waste mismanagement: The complaint alleges that TMC and its subsidiaries failed to properly characterize and manage hazardous waste generated at the site, including waste rock and process residuals exhibiting the toxicity characteristic for metals.
• CERCLA cost recovery: The government seeks recovery under CERCLA § 107 of $14.3 million in costs incurred by the EPA in connection with removal actions conducted at the site between 2021 and 2023.
The Ridgecrest site has been proposed for listing on the National Priorities List ("NPL"). The site is also subject to an existing Administrative Order on Consent ("AOC") (Docket No. CERCLA-08-2022-0039), executed on September 15, 2022. The EPA Project Coordinator for the Ridgecrest site is Dr. Samuel Tesfaye.
2. Gallatin Chemical Works. The Gallatin Chemical Works is located at 8800 Industrial Park Lane, Belgrade, Gallatin County, Montana 59714. The facility is a specialty chemical manufacturing plant that has been operational since 1993 and remains active. The facility encompasses approximately 145 acres and operates under RCRA Permit No. MTD098712456.
The government's complaint alleges the following violations at the Gallatin Chemical Works:
• Unpermitted hazardous-waste storage: The government alleges that TMC stored hazardous wastes at the facility in excess of the quantities and durations permitted under the facility's RCRA permit.
• Failure to perform corrective action: The complaint alleges that TMC failed to implement corrective action at three Solid Waste Management Units ("SWMUs") identified during a RCRA Facility Investigation.
• CWA effluent limit exceedances: The complaint identifies fourteen (14) separate CWA effluent limit exceedances at the facility during the period from January 2021 through June 2024. Groundwater monitoring at the facility has detected carbon disulfide at a concentration of 890 µg/L, compared to the federal Maximum Contaminant Level ("MCL") of 10 µg/L.
3. Bonanza Creek Gold Mine. The Bonanza Creek Gold Mine is located at County Road 447, Mile Marker 12, Lander County, Nevada 89820. The facility is an open-pit, heap-leach gold mine that has been operational since 2001 and remains in active production. The mine footprint encompasses approximately 5,600 acres.
The government's complaint alleges the following violations at the Bonanza Creek site:
• Unpermitted CWA discharges from heap-leach pad liner failures: The complaint identifies three separate unpermitted discharge events resulting from tears in the heap-leach pad liner, occurring in March 2022, August 2022, and January 2023. Sampling data indicates weak acid dissociable ("WAD") cyanide concentrations at 0.62 mg/L versus the applicable effluent limit of 0.022 mg/L, and mercury at 12.4 µg/L versus the applicable water quality criterion of 0.77 µg/L.
• RCRA mismanagement of spent heap-leach ore: The government alleges that spent ore from the heap-leach process was improperly characterized and managed.
• MBTA violations: The complaint alleges that seventeen (17) avian mortalities occurred at the facility's solution ponds between 2021 and 2023, in violation of the Migratory Bird Treaty Act.
The EPA Project Coordinator for the Bonanza Creek site is Jennifer Whitfield.
4. Kanawha Bend Chemical Plant. The Kanawha Bend Chemical Plant is located at 2200 Chemical Valley Road, Institute, Kanawha County, West Virginia 25112. The facility is a chemical manufacturing plant that has been operational since 1985 and remains active. The plant encompasses approximately 78 acres and operates under RCRA Permit No. WVD048823915.
The government's complaint alleges the following violations at the Kanawha Bend site:
• Failure to properly close former surface impoundment: The complaint alleges that TMC's subsidiary failed to close a former surface impoundment in accordance with the requirements of RCRA and the facility's RCRA permit.
• Unpermitted treatment of listed hazardous wastes: The government alleges that the facility engaged in the unpermitted treatment of listed hazardous wastes identified as K062 (spent pickle liquor from steel finishing operations) and D002 (corrosivity characteristic waste).
• CERCLA cost recovery: The government seeks recovery of $3.8 million in EPA emergency response costs incurred following a sulfuric acid release that occurred at the facility on June 14, 2020.
Environmental investigations at the Kanawha Bend site have identified dense non-aqueous phase liquid ("DNAPL") contamination in the fractured bedrock aquifer beneath the facility, as well as lead at concentrations of 4,200 mg/kg and arsenic at 890 mg/kg in subsurface soils.
D. Procedural History and Current Status
The following is a summary of significant events in the procedural history of the enforcement action:
• September 12, 2023: The EPA issued a comprehensive Notice of Violation covering all four sites described above.
• January 18, 2024: The DOJ filed its complaint (Civil Action No. 9:24-cv-00087-DWM) in the U.S. District Court for the District of Montana, Missoula Division.
• March 5, 2024: TMC filed its answer to the complaint, denying the material allegations and asserting affirmative defenses.
• April 22, 2024: The parties entered into a Tolling Agreement, tolling the applicable statutes of limitations through December 31, 2025.
• May 15, 2024: The Court ordered mediation of the dispute before Magistrate Judge Clara Finnegan.
• July 30, 2024: Following mediation, the parties reached an agreement in principle on a consent decree framework.
• October 21, 2024: Calderwood & Harkness LLP was engaged by TMC as counsel in this matter, replacing prior environmental counsel Whitfield, Palmer & Goss LLP.
• November 8, 2024: The DOJ circulated its first draft of the proposed consent decree.
• December 16, 2024: TMC, through Calderwood & Harkness LLP, submitted a revised draft (redline) of the proposed consent decree to the DOJ and EPA.
As of the date of this letter, the parties are actively negotiating the final terms of the consent decree. Based on current discussions, it is anticipated that the consent decree will be lodged with the Court for public comment in early 2025, consistent with the requirements of 28 C.F.R. § 50.7.
IV. Financial Magnitude of the Enforcement Matter
The total estimated financial obligations arising from the enforcement action, as reflected in the current state of consent decree negotiations, are summarized below. These figures are based on the most current information available as of the date of this letter and are subject to change as negotiations continue.
A. Remediation Obligations
The total negotiated remediation costs across all four sites are estimated at $343.5 million in nominal terms, which equates to approximately $245.1 million on a net present value ("NPV") basis, calculated using a 3% discount rate. The site-by-site breakdown is as follows:
B. Civil Penalties
The total civil penalty amount under the proposed consent decree is $31.5 million, payable in four quarterly installments of $7,875,000 each. The site-by-site allocation of civil penalties is 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
C. EPA Past-Costs Reimbursement (CERCLA § 107)
The proposed consent decree requires TMC to reimburse the EPA a total of $18.1 million for past response costs incurred under CERCLA § 107, comprising $14.3 million for removal actions conducted at the Ridgecrest site between 2021 and 2023, and $3.8 million for the emergency response at the Kanawha Bend site following the June 14, 2020 sulfuric acid release.
D. Supplemental Environmental Projects (SEPs)
TMC has agreed to fund Supplemental Environmental Projects totaling $12.0 million across three projects, the specific terms and scope of which are being finalized in the consent decree negotiations.
E. Independent Monitor Costs
The proposed consent decree provides for the appointment of an independent monitor to oversee TMC's compliance with the consent decree terms. The estimated cost of the independent monitor is approximately $4.8 million over a five-year monitoring period, or approximately $960,000 per year. The proposed monitor is Verdant Analytics, Inc. (Dr. Kamal Osei, principal).
F. Financial Assurance
The proposed consent decree requires TMC to provide total financial assurance in the amount of $245.0 million, consisting of:
• A surety bond in the amount of $165.0 million, to be issued by Ironbark Surety of America, Inc. (Bond No. ISA-ENV-2025-08934); and
• A remediation trust fund in the amount of $80.0 million, to be established with Larchfield Trust Company, N.A. (Trust Agreement No. LTC-REM-2025-1177).
G. Grand Total Estimated Obligation
The aggregate estimated financial obligation arising from the enforcement matter, encompassing remediation costs, civil penalties, past-costs reimbursement, supplemental environmental projects, and independent monitor costs, is approximately $409.9 million in nominal terms, or approximately $311.5 million on a cash-equivalent NPV basis.
H. TMC's Current Environmental Reserve
As of the third quarter of 2024, TMC's consolidated financial statements reflect an environmental reserve of C$340.0 million (approximately US$251.4 million at the prevailing exchange rate of C$1.00 = US$0.7394). On the basis of the nominal grand total estimated obligation of US$409.9 million, the estimated shortfall is approximately US$158.5 million.
I. TMC Financial Context
To provide context for the foregoing figures, TMC's key financial metrics are as follows:
• Fiscal Year 2023 Revenue: C$4.82 billion (approximately US$3.56 billion)
• Fiscal Year 2023 EBITDA: C$1.14 billion (approximately US$843 million)
• Market Capitalization (as of October 2024): approximately C$7.6 billion
• Global Workforce: approximately 11,400 employees worldwide, of which approximately 4,200 are located in the United States
V. Circumstances Giving Rise to Potential Claims Under the D&O Policy
A. Potential Director and Officer Exposure from the Enforcement Action
The government's complaint and proposed consent decree involve allegations that TMC and its subsidiaries, through the actions and decisions of their directors and officers, violated federal environmental statutes—specifically the CWA, RCRA, CERCLA, and the MBTA—at four separate facilities across three states. The nature and scope of the alleged violations, the prolonged duration over which the violations are alleged to have occurred, and the substantial financial magnitude of the resulting obligations create circumstances in which TMC's directors and officers may face individual scrutiny, claims, or proceedings.
Individual directors and officers who had responsibility for environmental compliance oversight, capital expenditure decisions relating to site maintenance and environmental controls, and the approval of public disclosures of environmental liabilities may be subject to claims or proceedings. Without limitation, the officers with specific decision-making authority relevant to these circumstances include:
• Douglas K. Prennell (Chief Executive Officer) — as the senior executive with ultimate management responsibility for TMC's operations, including oversight of environmental compliance and capital allocation decisions;
• Gareth Linford (Vice President, Environmental Health & Safety) — as the officer with direct responsibility for TMC's environmental health and safety programs, regulatory compliance, and reporting;
• Miriam Soo-Hwan Park (General Counsel) — as the officer with responsibility for advising the board and management on legal compliance obligations, regulatory matters, and disclosure obligations; and
• Carolyn Bracebridge (Chief Financial Officer) — as the officer with responsibility for financial reporting, the establishment and adequacy of environmental reserves, and certifications of TMC's periodic reports filed with applicable securities regulators.
B. Potential Securities and Disclosure-Related Claims
Given TMC's dual listing on the TSX and NYSE, the magnitude of the environmental obligations described herein (US$409.9 million in aggregate nominal obligations), and the significant shortfall between TMC's current environmental reserve (approximately US$251.4 million) and its total nominal obligations (US$409.9 million), there is a foreseeable risk that shareholders, securities regulators, or other parties may allege that TMC's directors and officers failed to timely and adequately disclose the nature and magnitude of TMC's environmental liabilities in its public filings, including its annual report on Form 20-F filed with the U.S. Securities and Exchange Commission, its annual information form and management discussion and analysis filed with Canadian securities regulators, and its quarterly interim reports.
In this regard, we note that TMC's external auditor, Ridgeline Accounting Partners LLP (engagement partner: Frances Whitmore), is currently reviewing the adequacy of TMC's environmental liability disclosures under Accounting Standards Codification ("ASC") Topic 450 (Contingencies) and International Accounting Standard 37 (Provisions, Contingent Liabilities and Contingent Assets). The outcome of this review could have implications for the potential exposure of TMC's directors and officers to securities- and disclosure-related claims.
C. Potential Derivative or Shareholder Actions
The circumstances described in this letter may give rise to shareholder derivative claims or direct shareholder actions alleging breach of fiduciary duty by TMC's directors and officers. Such claims could allege, among other things, that TMC's directors and officers failed to exercise adequate oversight of environmental compliance at the four sites (so-called Caremark claims or analogous claims under Canadian corporate law), or that they failed to ensure the adequacy of TMC's corporate reserves and public disclosures with respect to the company's environmental liabilities.
D. Regulatory Investigation or Proceedings
Although, as of the date of this letter, no separate regulatory investigation or enforcement proceeding directed at individual directors or officers of TMC has been initiated, the nature and magnitude of the violations alleged in the government's complaint—spanning multiple federal environmental statutes, four sites, and several years—create a circumstance in which such investigations or proceedings could reasonably be anticipated. We are providing this notice in recognition of that possibility and to preserve the rights of the Insured Persons under the Policy.
VI. Insurance Coverage Considerations and Related Matters
A. Meridian PLL Policy Coverage Dispute
We wish to bring to Clearwater Mutual's attention that TMC separately maintains a Pollution Legal Liability ("PLL") insurance policy with Meridian Environmental Insurance Company, Policy No. MEI-ENV-2021-04738, with a per-occurrence limit of $50.0 million, an aggregate limit of $75.0 million, and a self-insured retention ("SIR") of $5.0 million per occurrence. TMC has submitted claims under the Meridian PLL policy in connection with the enforcement matter described herein.
Meridian has denied coverage for the Ridgecrest Copper-Molybdenum Mine site, citing the pollution/known-conditions exclusion in the PLL policy, and has also denied coverage for the Kanawha Bend Chemical Plant site on the basis of late notice. The coverage disputes with Meridian are being handled separately from the D&O policy matters addressed in this letter.
For the avoidance of doubt, this notice of circumstances under the D&O Policy (Policy No. CMI-DO-2023-10221) is distinct from, and in addition to, TMC's claims under the Meridian PLL policy. The existence of the Meridian PLL policy, and the coverage disputes arising thereunder, do not affect or diminish the rights of TMC or its directors and officers under the Clearwater Mutual D&O Policy.
B. Credit Facility Implications
TMC maintains a C$750.0 million syndicated revolving credit facility with Harborstone National Bank, N.A. as administrative agent (maturity date: March 15, 2027). The credit facility contains, among other covenants, an environmental liability covenant that requires TMC's aggregate environmental liabilities not to exceed 25% of TMC's consolidated net tangible assets ("CNTA").
As of the most recent compliance certificate, TMC's CNTA is C$3.92 billion. The 25% covenant threshold is therefore C$980.0 million, and TMC's current aggregate environmental liabilities are approximately C$554.4 million, providing headroom of approximately C$425.6 million. TMC is currently in compliance with this covenant.
However, should the total nominal obligations under the consent decree (US$409.9 million, or approximately C$554.5 million at current exchange rates) be required to be recognized in full on TMC's balance sheet, or should additional environmental liabilities arise, the resulting increase in aggregate environmental liabilities could affect TMC's compliance with the covenant. A covenant breach could trigger acceleration of the credit facility, cross-default provisions in other debt instruments, and material adverse consequences for TMC's financial position and the potential exposure of TMC's directors and officers.
We raise these matters to ensure that Clearwater Mutual has a complete understanding of the financial context in which the circumstances described in this letter arise.
VII. Reservation of Rights
TMC and its directors and officers expressly reserve all rights under Policy No. CMI-DO-2023-10221, including but not limited to:
(a) all rights under Side A coverage (insuring individual directors and officers for non-indemnifiable losses);
(b) all rights under Side B coverage (reimbursing TMC for indemnification payments made to directors and officers);
(c) all rights under Side C coverage (entity coverage for securities claims), as applicable; and
(d) all other rights and benefits afforded to the Named Insured and Insured Persons under the terms and conditions of the Policy.
TMC further reserves the right to supplement, amend, or update this notice as additional facts, circumstances, or developments arise in connection with the matters described herein. This notice is not intended to be, and should not be construed as, an exhaustive or final statement of all facts and circumstances relevant to potential claims under the Policy.
TMC respectfully requests that Clearwater Mutual acknowledge receipt of this notice and confirm, in writing, that the notice has been recorded and accepted in accordance with the terms and conditions of the Policy.
VIII. Request for Confirmation and Contact Information
We respectfully request that Clearwater Mutual provide written confirmation of receipt of this notice within ten (10) business days of the date of this letter. Please confirm that this notice has been duly recorded in Clearwater Mutual's files as a notice of circumstances under Policy No. CMI-DO-2023-10221.
All communications regarding this notice and any claims arising from the circumstances described herein should be directed to the following:
Harrison Wexford Partner Calderwood & Harkness LLP One Vanderbilt Avenue, 44th Floor New York, New York 10017 Telephone: (212) 884-7244 Facsimile: (212) 884-7201
Email: hwexford@calderwoodharkness.com
Miriam Soo-Hwan Park General Counsel Torchlight Mining Corp. 1800 Bayfield Tower, 401 Bay Street Toronto, Ontario M5H 2Y4, Canada Telephone: (416) 361-8500
Email: mspark@torchlightmining.com
U.S. Contact Address: 750 Copper Ridge Boulevard, Suite 200 Helena, Montana 59601 Telephone: (406) 442-7800
IX. Confidentiality Notice
This letter and all enclosures and attachments hereto contain information that is privileged, confidential, and commercially sensitive. This letter is protected by the attorney-client privilege, the attorney work product doctrine, and such other privileges and protections as may be applicable. The transmission of this letter to Clearwater Mutual and Clearwater Mutual Services, Inc. is not intended to, and does not, constitute a waiver of any applicable privilege, protection, or immunity, including without limitation the attorney-client privilege, the work product doctrine, and any common-interest or joint-defense privilege. This letter is provided solely for the purpose of providing notice under the Policy and is not intended for any other purpose. Any unauthorized use, disclosure, distribution, or copying of this letter or the information contained herein is strictly prohibited.
We trust that the foregoing provides Clearwater Mutual with sufficient information to record this notice of circumstances. We look forward to receiving your written confirmation of receipt and stand ready to provide any additional information that may be required. Please do not hesitate to contact the undersigned with any questions or to discuss this matter further.
Very truly yours,
CALDERWOOD & HARKNESS LLP
By: ________
Harrison Wexford Partner
Direct: (212) 884-7244
Email: hwexford@calderwoodharkness.com
Enclosures: None. Copies of the DOJ complaint (Civil Action No. 9:24-cv-00087-DWM), TMC's answer, the draft consent decree, and related documents are available upon request and subject to applicable confidentiality restrictions.
cc:
Miriam Soo-Hwan Park, General Counsel, Torchlight Mining Corp. Douglas K. Prennell, Chief Executive Officer, Torchlight Mining Corp. Carolyn Bracebridge, Chief Financial Officer, Torchlight Mining Corp. Beatrice Holloway, Partner, Calderwood & Harkness LLP
Site | Nominal Remediation Cost | Duration | 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

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