1039-00003 · Torchlight Mining Corp · State Coordination

letter-to-montana-deq.docx DOCUMENT Antitrust

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CALDERWOOD & HARKNESS LLP Counselors at Law Seven World Trade Center 250 Greenwich Street, 38th Floor New York, New York 10007

Telephone: (212) 558-4000 Facsimile: (212) 558-3588 www.calderwoodharkness.com

February 5, 2025

Matter No. 1039-00003

VIA ELECTRONIC MAIL AND U.S. MAIL

Annika Hedstrom, Esq. Assistant Attorney General Environmental Bureau Montana Attorney General's Office 215 North Sanders Street Helena, Montana 59601

Re: *United States of America and State of Montana v. Torchlight Mining Corp., et al.*, Civil Action No. 9:24-cv-00087-DWM — Status Update and Consent Decree Summary Regarding Montana Facilities (Ridgecrest Mine and Gallatin Chemical Works)

Dear Ms. Hedstrom:

I. Introduction and Purpose of Letter

I write in my capacity as a partner at Calderwood & Harkness LLP ("C&H") and lead outside counsel to Torchlight Mining Corp. ("TMC"), including its U.S. subsidiaries Torchlight Mining (U.S.) Inc., Torchlight Specialty Chemicals, Inc., and Ridgecrest Mine Holdings, LLC (collectively, the "TMC Parties" or "Defendants"). C&H serves as lead outside counsel to the TMC Parties in connection with the multi-site environmental compliance matter and consent decree negotiation that is the subject of the above-referenced civil action. C&H was retained to replace TMC's prior environmental counsel, Whitfield, Palmer & Goss LLP, effective October 21, 2024, and has since assumed responsibility for all aspects of consent decree negotiations, regulatory coordination, and related litigation management in this matter.

In addition, I wish to acknowledge the continuing role of Holcroft, Dane & Weiss LLP ("HDW"), with Russell Dane as lead partner, which serves as TMC's Montana-licensed local counsel. HDW coordinates closely with C&H on all matters involving Montana state regulatory obligations, state court proceedings, and communications with the Montana Attorney General's Office and the Montana Department of Environmental Quality ("MT DEQ"). Mr. Dane and his team have been integral participants in the negotiation process and will continue to serve as the TMC Parties' primary point of contact for matters arising under Montana state law.

The purpose of this letter is threefold. First, I write to provide the State of Montana, in its capacity as co-plaintiff and intervenor, with a comprehensive summary of the substantially final consent decree terms as agreed upon by the parties on February 3, 2025, specifically as those terms relate to the two Montana facilities — the Ridgecrest Copper-Molybdenum Mine located in Granite County, Montana, and the Gallatin Chemical Works located in Gallatin County, Montana. Second, I write to request the State of Montana's confirmation of its readiness to execute the joinder and co-plaintiff signature pages in advance of the anticipated lodging of the consent decree with the Court. Third, I write to request coordination between C&H, HDW, the Montana Attorney General's Office, and MT DEQ regarding parallel state permit requirements that will operate alongside the federal consent decree obligations.

The consent decree text was substantially finalized following an in-person negotiation session conducted on February 3, 2025, at the offices of the U.S. Department of Justice, Environment and Natural Resources Division ("ENRD"), in Washington, D.C. Subject to the State of Montana's review and comment and the completion of certain ministerial matters, the consent decree is expected to be lodged with the United States District Court for the District of Montana, Missoula Division (the Honorable Donald W. Molloy presiding) on or about February 19, 2025. A copy of the substantially final consent decree text, dated February 3, 2025, is enclosed with this letter for the State's review and consideration.

II. Case Background

On January 18, 2024, the United States of America, acting through the U.S. Department of Justice on behalf of the U.S. Environmental Protection Agency ("EPA"), filed a civil enforcement 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., et al., Civil Action No. 9:24-cv-00087-DWM. The complaint was assigned to the Honorable Donald W. Molloy, United States District Judge. The lead government attorneys in this matter are Philip Orenstein, Trial Attorney, DOJ ENRD; Margaret Coulson, Lead Case Attorney, EPA Office of Enforcement and Compliance Assurance ("OECA"); and Katherine Rowe-Halpern, Supervising Attorney, DOJ ENRD.

The plaintiffs in the action are the United States of America (represented by DOJ ENRD and EPA) and co-plaintiffs and intervenors the State of Montana (through MT DEQ and the Montana Attorney General's Office), the State of Nevada, and the State of West Virginia. The defendants named in the complaint are Torchlight Mining Corp., Torchlight Mining (U.S.) Inc., Torchlight Specialty Chemicals, Inc., Ridgecrest Mine Holdings, LLC, and Bonanza Creek Mining, LLC.

The TMC Parties filed their answer to the complaint on March 5, 2024. On April 22, 2024, the parties entered into a tolling agreement suspending the running of applicable statutes of limitations during the pendency of settlement negotiations. The Court subsequently referred the matter to court-ordered mediation before United States Magistrate Judge Clara Finnegan, and the initial mediation session was held on May 15, 2024. Following extensive mediation sessions and direct party-to-party negotiations over the ensuing months, the parties reached an agreement in principle on a consent decree framework on July 30, 2024. Since that date, the parties have engaged in intensive drafting and negotiation of the specific consent decree provisions, culminating in the substantially final agreed text of February 3, 2025.

The civil action encompasses alleged environmental violations at four facilities located across three states: (1) the Ridgecrest Copper-Molybdenum Mine in Granite County, Montana; (2) the Gallatin Chemical Works in Gallatin County, Montana; (3) the Bonanza Creek Mine in Humboldt County, Nevada; and (4) the Kanawha Bend Chemical Facility in Putnam County, West Virginia. While the consent decree addresses all four facilities, this letter focuses exclusively on the two Montana facilities — Ridgecrest and Gallatin — which are of primary interest to the State of Montana in its capacity as co-plaintiff and intervenor.

III. Summary of Consent Decree — Overall Structure

The consent decree, as substantially finalized on February 3, 2025, resolves the alleged violations of the Clean Water Act ("CWA"), 33 U.S.C. §§ 1251 et seq.; the Resource Conservation and Recovery Act ("RCRA"), 42 U.S.C. §§ 6901 et seq.; and the Comprehensive Environmental Response, Compensation, and Liability Act ("CERCLA"), 42 U.S.C. §§ 9601 et seq., at all four facilities identified in the complaint. The consent decree establishes a comprehensive framework of remediation obligations, civil penalties, cost reimbursements, supplemental environmental projects, financial assurance requirements, and independent monitoring provisions. The key financial and structural terms of the consent decree, in the aggregate across all four facilities, are summarized below.

A. Total Estimated Obligations

The grand total estimated obligation of the TMC Parties under the consent decree is approximately $409.9 million (nominal dollars), comprising the following principal components:

1. Total Remediation Costs (All Sites): Approximately $343.5 million (nominal), which represents an estimated net present value of $245.1 million using a 3% discount rate. This figure encompasses remediation, corrective action, and long-term monitoring obligations across all four facilities over periods ranging from 15 to 30 years.

2. Civil Penalties (All Sites): $31.5 million, allocated among the four facilities and payable in accordance with the schedule set forth in the consent decree.

3. EPA Past-Costs Reimbursement (CERCLA § 107): $18.1 million, reflecting reimbursement to the United States for past response costs incurred by EPA. Of this total, $14.3 million is attributable to EPA removal actions conducted at the Ridgecrest site between January 2021 and May 2023, and $3.8 million is attributable to EPA response activities at the Kanawha Bend facility.

4. Supplemental Environmental Projects ("SEPs"): $12.0 million, allocated among multiple projects designed to provide environmental and public health benefits in the communities affected by the facilities at issue.

5. Independent Monitor Costs (Five-Year Estimate): Approximately $4.8 million, representing an estimated annual cost of approximately $960,000 per year over the initial five-year monitoring term.

B. Financial Assurance

The consent decree requires the TMC Parties to establish and maintain financial assurance in the aggregate amount of $245.0 million, structured as follows:

• Surety Bond: $165.0 million, to be issued by Ironbark Surety of America, Inc. (Bond No. ISA-ENV-2025-08934). The annual premium for the bond is 1.85%, equivalent to approximately $3.0525 million per year.

• Remediation Trust Fund: $80.0 million initial deposit, to be held by Larchfield Trust Company, N.A. (Trust Agreement No. LTC-REM-2025-1177; trust officer: David Henshaw). The trust fund will be administered in accordance with the terms of the trust agreement and will be available for draw-down by EPA or the applicable state agency in the event of a default by the TMC Parties.

The financial assurance package is required to cover all four facilities, including both Montana sites.

C. Independent Environmental Monitor

The consent decree provides for the appointment of a court-ordered independent environmental monitor, Verdant Analytics, Inc. (Dr. Kamal Osei, Senior Managing Director), with its principal office at 1550 NW Couch Street, Suite 400, Portland, Oregon 97209. Verdant Analytics will perform quarterly compliance audits and prepare annual public reports covering all four facilities, including the Ridgecrest and Gallatin sites. The monitor's authority, access, and reporting obligations are set forth in detail in the consent decree.

D. Effective Date and Timeline

The consent decree establishes an Effective Date defined as thirty (30) days after the date of entry of the decree by the Court (per Consent Decree § IV). Based on the current schedule, the parties anticipate the following timeline:

• Lodging with the Court: On or about February 19, 2025

• Public Comment Period (30 days): Approximately February 19, 2025 through March 21, 2025

• Target Court Entry Date: May 15, 2025

• Target Effective Date: June 14, 2025

IV. Ridgecrest Copper-Molybdenum Mine — Site-Specific Terms

A. Site Description

The Ridgecrest Copper-Molybdenum Mine (the "Ridgecrest Site" or "Ridgecrest") is located at 14200 Ridgecrest Mine Road, Drummond, Granite County, Montana 59832. The site is operated by Torchlight Mining (U.S.) Inc. Real property and mineral rights at the site are held by Ridgecrest Mine Holdings, LLC, a Montana limited liability company registered with the Montana Secretary of State (ID: E1042738).

The Ridgecrest Site encompasses an area of approximately 3,200 acres constituting the mine footprint, with an additional approximately 5,500 acres of controlled buffer property, for a total controlled property area of approximately 8,700 acres. The facility is an open-pit copper-molybdenum mine that has been operational since 1978. Active mining operations ceased on December 31, 2019, and the site is currently in the closure and reclamation phase.

With respect to federal regulatory status, the Ridgecrest Site has been proposed for listing on the National Priorities List ("NPL") under CERCLA. The site is currently being addressed under an Administrative Order on Consent ("AOC"), Docket No. CERCLA-08-2022-0039, executed on September 15, 2022, between EPA Region 8 and the TMC Parties. EPA Region 8 serves as the lead federal regulatory office for the Ridgecrest Site, with Dr. Samuel Tesfaye serving as the EPA Project Coordinator.

B. Alleged Violations

The complaint alleges the following violations at the Ridgecrest Site:

1. CWA § 301 (33 U.S.C. § 1311): Unpermitted discharges of acid mine drainage ("AMD") from the mine site to surface waters, including Flint Creek and its tributaries, without authorization under the facility's MPDES permit or any other applicable National Pollutant Discharge Elimination System permit.

2. RCRA § 3004 (42 U.S.C. § 6924): Mismanagement of hazardous waste generated from the solvent-extraction/electrowinning ("SX/EW") circuit at the Ridgecrest processing facility, including failure to properly characterize, store, and dispose of spent organic solvents and electrowinning cell residues in accordance with applicable RCRA regulations.

3. CERCLA § 107 (42 U.S.C. § 9607): Cost recovery by the United States for EPA removal actions conducted at the Ridgecrest Site from January 2021 through May 2023, totaling $14.3 million.

C. Principal Contaminants

The principal contaminants of concern at the Ridgecrest Site, as documented in EPA's site investigation reports and the TMC Parties' own environmental assessments, include the following:

• Acid Mine Drainage: AMD discharges from the mine pit, waste rock dumps, and tailings impoundment contain elevated concentrations of dissolved metals and sulfate. Key constituent concentrations measured in AMD discharges include:

• Dissolved copper: average concentration of 47 mg/L, compared to the Montana chronic aquatic life surface-water quality standard of 0.0087 mg/L — representing exceedances of the applicable standard by approximately three orders of magnitude.

• Molybdenum: average concentration of 1.2 mg/L.

• Selenium: average concentration of 0.082 mg/L.

• Sulfate: average concentration of 3,400 mg/L.

• Tailings Impoundment Seepage: The Ridgecrest tailings impoundment, encompassing approximately 425 acres, has exhibited documented seepage of contaminated water to Flint Creek, resulting in degradation of surface-water quality and potential impacts to aquatic life and downstream beneficial uses.

D. Negotiated Remediation Cost

The parties engaged in extensive technical negotiations regarding the estimated cost of remediation at the Ridgecrest Site. The respective estimates, as prepared by the parties' environmental consultants, and the negotiated outcome are summarized as follows:

• TMC's Initial Estimate: $187.5 million over a 30-year remediation period, with a net present value of $127.4 million at a 3% discount rate. This estimate was prepared by Pinnacle Creek Environmental, LLC (Dr. Astrid Bergmann, P.E., principal-in-charge), TMC's independent environmental consulting firm.

• EPA's Estimate: $224.0 million over a 30-year remediation period. This estimate was developed with the support of the government's technical expert, Cascade Geosciences, Inc. (Dr. Patricia Voss, principal investigator).

• Negotiated Remediation Cost Under Consent Decree: $198.6 million over a 30-year remediation period, with a net present value of $134.9 million at a 3% discount rate.

The negotiated amount represents a compromise between the parties' respective cost estimates and reflects, among other factors, agreements reached regarding the scope and sequencing of remedial activities, the selection of specific treatment technologies, and the application of performance-based cost adjustments over the life of the remediation program.

E. Remediation Schedule and Key Milestones

The consent decree establishes the following principal milestones for the Ridgecrest Site remediation:

1. Submission of Ridgecrest Remedial Action Work Plan: No later than December 14, 2025 (six months following the target Effective Date).

2. Commencement of Ridgecrest Remedy Construction: No later than June 14, 2027 (two years following the target Effective Date).

3. End of 30-Year Remediation Obligation: June 14, 2055.

The remediation activities to be performed at the Ridgecrest Site include, but are not limited to, the following principal components:

• Design, construction, and operation of acid mine drainage treatment systems, including both active and passive treatment technologies, to address AMD discharges from the mine pit, waste rock dumps, and tailings impoundment;

• Stabilization and long-term management of the 425-acre tailings impoundment, including installation of engineered cover systems, seepage interception and collection systems, and groundwater monitoring networks;

• Restoration of water quality in Flint Creek to levels meeting applicable Montana surface-water quality standards, including implementation of in-stream and riparian restoration measures.

The consent decree establishes detailed performance standards and completion criteria for each component of the Ridgecrest remediation. Termination of the consent decree with respect to the Ridgecrest Site is not available until a minimum of five (5) years after completion of all remedial construction activities and demonstration that applicable performance standards have been achieved and maintained.

F. Civil Penalty — Ridgecrest

The consent decree imposes a civil penalty of $14.2 million with respect to the Ridgecrest Site. This represents the largest single-site civil penalty of the four facilities addressed in the consent decree. The penalty is payable according to the following schedule:

• Twenty-five percent (25%) of the penalty amount ($3,550,000) due within thirty (30) days of the Effective Date;

• The remaining seventy-five percent (75%) ($10,650,000) payable in three equal annual installments of $3,550,000 each, due on the first, second, and third anniversaries of the Effective Date.

G. EPA Past-Costs Reimbursement — Ridgecrest

The consent decree requires the TMC Parties to reimburse the United States $14.3 million for EPA removal actions conducted at the Ridgecrest Site between January 2021 and May 2023. These removal actions were undertaken by EPA Region 8 pursuant to CERCLA § 104 and addressed, among other conditions, the emergency stabilization of AMD discharges to Flint Creek and the containment of contaminated seepage from the tailings impoundment.

H. Supplemental Environmental Project — Flint Creek Watershed Restoration

The consent decree requires the TMC Parties to fund and implement a Supplemental Environmental Project in the amount of $5.5 million, designated as the Flint Creek Watershed Restoration Project. The SEP will encompass the following activities:

• Stream-bank stabilization along approximately 12 miles of Flint Creek downstream of the Ridgecrest Site;

• Riparian replanting and restoration of native vegetation communities along the Flint Creek corridor;

• Design and construction of fish-passage improvements to restore connectivity for native fish species, including bull trout and westslope cutthroat trout.

The Flint Creek Watershed Restoration Project is located entirely within the State of Montana and is expected to provide significant environmental benefits to the affected communities and ecosystems in Granite County and the broader Flint Creek drainage. The consent decree sets forth specific milestones for the design, implementation, and completion of the SEP, as well as reporting requirements to EPA and the State of Montana.

V. Gallatin Chemical Works — Site-Specific Terms

A. Site Description

The Gallatin Chemical Works (the "Gallatin Site" or "Gallatin") is located at 8800 Industrial Park Lane, Belgrade, Gallatin County, Montana 59714. The facility is operated by Torchlight Specialty Chemicals, Inc., a Delaware corporation (EIN: 47-3819204) and a wholly owned subsidiary of Torchlight Mining (U.S.) Inc.

The Gallatin Site encompasses approximately 145 acres and is engaged in the manufacture of specialty chemicals, including flotation reagents, sodium xanthate, and dithiophosphate collectors used in mineral processing operations. The facility has been in continuous operation since 1993 and is currently active. Under the federal RCRA program, the Gallatin Site is designated as a RCRA Corrective Action facility under Permit No. MTD098712456. EPA Region 8 serves as the lead federal regulatory office for the Gallatin Site.

B. Alleged Violations

The complaint alleges the following violations at the Gallatin Site:

1. RCRA §§ 3004 and 3005 (42 U.S.C. §§ 6924, 6925): Operation of an unpermitted hazardous-waste storage unit at the Gallatin facility and failure to perform corrective action at three identified solid waste management units ("SWMUs") as required under the facility's RCRA permit and applicable regulations.

2. CWA § 301 (33 U.S.C. § 1311): Exceedances of effluent limitations established under the facility's Montana Pollutant Discharge Elimination System ("MPDES") permit for carbon disulfide (CS₂) and total suspended solids ("TSS") on fourteen (14) occasions during the period from January 2021 through June 2024.

C. Principal Contaminants

The principal contaminants of concern at the Gallatin Site, as identified through EPA inspections, facility investigations, and the RCRA corrective action process, include the following:

• Carbon Disulfide (CS₂) in Groundwater: CS₂ has been detected in groundwater beneath and downgradient of the Gallatin facility at a maximum concentration of 890 µg/L, compared to the federal Maximum Contaminant Level ("MCL") of 10 µg/L — representing exceedances of the MCL by approximately two orders of magnitude.

• Xanthate Decomposition Products: Byproducts of xanthate manufacturing and decomposition have been identified in soil and groundwater at several locations across the site.

• Volatile Organic Compounds (VOCs): VOCs, including toluene and xylene, have been detected in subsurface soils in the vicinity of storage and handling areas at the Gallatin facility.

• Solid Waste Management Units: Three SWMUs requiring investigation and corrective action have been identified at the site.

D. Remediation Cost

The estimated remediation cost for the Gallatin Site under the consent decree is $42.8 million over a 15-year corrective action period, with a net present value of approximately $34.1 million at a 3% discount rate. This estimate was prepared by Pinnacle Creek Environmental, LLC, TMC's independent environmental consultant, and was substantially accepted by EPA following technical negotiations.

E. Remediation Schedule and Key Milestones

The consent decree establishes the following principal milestones for the Gallatin Site corrective action program:

1. Submission of Gallatin Corrective Measures Study ("CMS"): No later than June 14, 2026 (one year following the target Effective Date).

2. Implementation of Corrective Action: Following EPA approval of the CMS, the TMC Parties will be required to implement corrective action measures addressing all three SWMUs, the CS₂ groundwater plume, and VOC contamination in subsurface soils.

The consent decree sets forth detailed performance standards and completion criteria for the Gallatin corrective action, including groundwater remediation objectives designed to achieve compliance with applicable MCLs and Montana groundwater quality standards within the specified 15-year timeframe. The specific corrective measures to be implemented will be selected through the CMS process, subject to EPA and MT DEQ review and approval.

F. Civil Penalty — Gallatin

The consent decree imposes a civil penalty of $5.8 million with respect to the Gallatin Site. The penalty is payable according to the same quarterly installment structure applicable to the overall civil penalty of $31.5 million — that is, twenty-five percent (25%) of the site-specific penalty amount due within thirty (30) days of the Effective Date, with the remaining seventy-five percent (75%) payable in three equal annual installments on the first, second, and third anniversaries of the Effective Date.

VI. Stipulated Penalties and Enforcement Provisions

The consent decree contains stipulated penalty provisions applicable to both Montana facilities, as well as the Nevada and West Virginia sites. The stipulated penalties are structured on a per-violation, per-day basis 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) of noncompliance;

• $5,500 per day per violation for each day of noncompliance beyond sixty (60) days.

Stipulated penalties are payable to the United States and, where applicable, to the co-plaintiff states, in accordance with the allocation provisions set forth in the consent decree. Stipulated penalties accrue automatically upon the occurrence of a violation and are in addition to any other remedies available to the plaintiffs under the decree or applicable law.

Force Majeure. The consent decree includes a standard EPA force majeure provision. In the event that the TMC Parties are unable to comply with any requirement of the decree due to circumstances constituting force majeure, the TMC Parties must provide written notice to EPA within fifteen (15) days of the date upon which the TMC Parties first knew or should have known of the event or condition giving rise to the force majeure claim. The notice must describe the anticipated duration of the noncompliance, the cause or causes of the noncompliance, and the measures taken or to be taken to minimize the delay or impact. Any dispute regarding the applicability of the force majeure provision is to be resolved in accordance with the dispute resolution procedures set forth in the consent decree.

Dispute Resolution. The consent decree establishes a three-tier dispute resolution mechanism:

1. Informal Negotiation: The parties will attempt to resolve any dispute through informal negotiations for a period of thirty (30) days following written notice of the dispute.

2. Formal EPA Decision: If the dispute is not resolved through informal negotiation, EPA will issue a formal written decision within thirty (30) days of the conclusion of the informal negotiation period.

3. Judicial Review: If the TMC Parties disagree with EPA's formal decision, the TMC Parties may petition the Court for judicial review within thirty (30) days of receipt of EPA's decision. The standard of review applicable to the Court's evaluation of EPA's decision is set forth in the consent decree.

VII. Financial Assurance Applicable to Montana Sites

As noted in Section III above, the consent decree requires the TMC Parties to establish and maintain financial assurance in the total amount of $245.0 million. This financial assurance package covers all four facilities addressed in the consent decree, including both Montana sites. The financial assurance is structured as follows:

• Surety Bond: $165.0 million, to be issued by Ironbark Surety of America, Inc. (Bond No. ISA-ENV-2025-08934). The annual premium for the bond is 1.85% of the face amount, or approximately $3,052,500 per year. The bond will remain in effect for the duration of the consent decree obligations, subject to annual renewals and adjustments as provided in the decree.

• Remediation Trust Fund: $80.0 million initial deposit, to be held by Larchfield Trust Company, N.A. (Trust Agreement No. LTC-REM-2025-1177). The trust officer for the remediation trust fund is David Henshaw. The trust fund will be administered and invested in accordance with the trust agreement and will be available for draw-down by EPA or the applicable state co-plaintiff in the event of a default by the TMC Parties in the performance of their remediation obligations.

The deadline for the TMC Parties to establish the remediation trust fund and post the required financial assurance is September 12, 2025, which is ninety (90) days following the target Effective Date. Failure to timely establish the required financial assurance constitutes a violation of the consent decree and is subject to the stipulated penalty provisions described in Section VI above.

VIII. Independent Monitor

As described in Section III above, the consent decree provides for the appointment of Verdant Analytics, Inc. as the court-ordered independent environmental monitor for all four facilities, including the Ridgecrest and Gallatin sites. The appointment is made pursuant to the consent decree provisions authorizing the Court to designate an independent auditor to oversee the TMC Parties' compliance with their obligations under the decree.

Dr. Kamal Osei, Senior Managing Director of Verdant Analytics, will serve as the principal monitor. Verdant Analytics' principal office is located at 1550 NW Couch Street, Suite 400, Portland, Oregon 97209. The monitor's responsibilities include, but are not limited to:

• Conducting quarterly compliance audits at each of the four facilities, including on-site inspections, review of monitoring data, and assessment of progress toward achieving remediation milestones and performance standards;

• Preparing and submitting annual public reports summarizing the TMC Parties' compliance status at each facility, including a detailed assessment of remediation progress, identification of any instances of noncompliance, and recommendations for corrective measures;

• Reporting to the Court, EPA, and the co-plaintiff states, including the State of Montana, on all matters within the monitor's purview as set forth in the consent decree.

The estimated cost of the independent monitor over the initial five-year monitoring period is approximately $4.8 million, representing an estimated annual cost of approximately $960,000. These costs are borne by the TMC Parties in accordance with the consent decree.

IX. State of Montana as Co-Plaintiff — Joinder and Signature

The TMC Parties acknowledge and confirm the State of Montana's role as a co-plaintiff and intervenor in this action with respect to the Ridgecrest and Gallatin facilities. The State of Montana's participation in the consent decree is essential to ensure the effective coordination of federal and state regulatory authorities and the comprehensive resolution of the environmental violations alleged in the complaint.

We understand that the State of Montana co-plaintiff signature pages and joinder documents are currently being prepared for execution by the Montana Attorney General's Office. The target execution date for the State's joinder is February 14, 2025, which would allow sufficient time for inclusion of the executed joinder with the consent decree package prior to lodging with the Court on or about February 19, 2025.

Accordingly, we respectfully request that Ms. Hedstrom confirm the Montana Attorney General's Office's readiness to execute the joinder and to provide any comments the State may have on the substantially final consent decree text at the earliest practicable date. We recognize the importance of ensuring that the State's interests and concerns are fully reflected in the final decree, and we remain prepared to address any questions or proposed revisions that the State may wish to raise.

As noted above, a copy of the substantially final consent decree text, dated February 3, 2025, is enclosed with this letter for the State's review. We ask that the State direct any comments or questions regarding the decree text to the undersigned at C&H or to Russell Dane at HDW.

X. Request for Coordination on State Permit Requirements

The TMC Parties acknowledge that the federal consent decree operates alongside, and does not supersede, state environmental regulatory requirements applicable to the Ridgecrest and Gallatin facilities. The consent decree itself contains express reservations preserving the authority of the State of Montana and its agencies to enforce applicable state environmental laws and regulations independently of the federal decree.

In light of the substantial remediation and corrective action obligations imposed by the consent decree, the TMC Parties anticipate that coordination with the Montana Department of Environmental Quality will be necessary and beneficial with respect to the following state permits and regulatory requirements:

1. MPDES Permits: Montana Pollutant Discharge Elimination System permits applicable to both the Ridgecrest and Gallatin facilities will likely require review, modification, or reissuance in connection with the implementation of consent decree remediation activities. The installation and operation of new acid mine drainage treatment systems at Ridgecrest, in particular, may necessitate amendments to the facility's MPDES permit to incorporate revised effluent limitations and monitoring requirements. Similarly, the Gallatin facility's MPDES permit may require modification to reflect corrective action measures addressing CS₂ and TSS exceedances.

2. Hard Rock Mining Reclamation Permits: The Ridgecrest Site is subject to permitting under Montana's Metal Mine Reclamation Act, Title 82, Chapter 4, Part 3, MCA. The consent decree remediation activities, including tailings impoundment stabilization and mine closure measures, will need to be coordinated with the applicable state reclamation permit requirements administered by MT DEQ's Hard Rock Mining Bureau.

3. State RCRA-Authorized Permit Obligations: The Gallatin facility operates under RCRA Permit No. MTD098712456, issued by MT DEQ pursuant to Montana's authorization under RCRA § 3006. The corrective action measures to be implemented under the consent decree will need to be coordinated with the corrective action requirements of the state-issued RCRA permit, and the permit may require modification to reflect the corrective measures selected through the CMS process.

4. State Water Quality Certifications and Other Environmental Permits: The remediation activities contemplated by the consent decree may require state water quality certifications under Section 401 of the Clean Water Act, as well as other state environmental permits, including but not limited to stormwater discharge permits, land application permits, and air quality permits associated with remediation construction activities.

To facilitate coordination on these matters, the TMC Parties note that Holcroft, Dane & Weiss LLP (Russell Dane, lead partner; 45 North Last Chance Gulch, Suite 600, Helena, Montana 59601) serves as TMC's Montana-licensed local counsel and will be the primary point of contact for all state permit coordination activities. Mr. Dane and his team are thoroughly familiar with Montana's environmental regulatory framework and have been actively engaged with MT DEQ on permitting matters throughout the pendency of this matter.

We respectfully propose that C&H, HDW, the Montana Attorney General's Office, and MT DEQ schedule a meeting or conference call at the earliest mutually convenient date to discuss the coordination of federal and state compliance obligations and timelines. Early coordination will be critical to ensuring that the TMC Parties are positioned to meet the consent decree milestones while simultaneously satisfying all applicable state regulatory requirements. We are available to meet in person in Helena at the offices of the Montana Attorney General or MT DEQ, or to participate by telephone or videoconference, at the State's preference.

XI. Confidentiality and Privilege Reservation

The TMC Parties respectfully note that certain information exchanged between the parties during the course of consent decree negotiations is subject to confidentiality protections established by agreement of the parties and by applicable rules governing settlement communications. Nothing in this letter or the enclosed consent decree text is intended to waive or diminish those protections.

The TMC Parties expressly reserve all attorney-client privilege and work-product protections applicable to this correspondence, the enclosed materials, and all related communications between C&H, HDW, and the TMC Parties. The disclosure of the enclosed consent decree text to the Montana Attorney General's Office in its capacity as counsel for the co-plaintiff State of Montana is made in furtherance of the common interest of the parties in finalizing and lodging the consent decree and does not constitute a waiver of any applicable privilege or protection.

We respectfully request that the enclosed substantially final consent decree text, dated February 3, 2025, be treated as confidential by the Montana Attorney General's Office and MT DEQ until such time as the consent decree is formally lodged with the Court and the public comment period commences. We understand that upon lodging, the decree will become a public document and will be available for public inspection and comment in accordance with applicable law.

XII. Closing

The TMC Parties wish to express their sincere appreciation for the State of Montana's constructive and professional engagement throughout the consent decree negotiation process. The State's participation has been instrumental in achieving a resolution that addresses the environmental conditions at the Ridgecrest and Gallatin facilities in a manner that is protective of human health, the environment, and the interests of the affected communities in Montana.

Should you have any questions regarding the matters discussed in this letter, or should you wish to schedule a coordination meeting among the relevant parties, please do not hesitate to contact the undersigned at the address and contact information below, or to contact Russell Dane at Holcroft, Dane & Weiss LLP at the following:

Harrison Wexford Partner, Calderwood & Harkness LLP Seven World Trade Center 250 Greenwich Street, 38th Floor New York, New York 10007 Telephone: (212) 558-4127

Email: hwexford@calderwoodharkness.com

Russell Dane Partner, Holcroft, Dane & Weiss LLP 45 North Last Chance Gulch, Suite 600 Helena, Montana 59601 Telephone: (406) 442-8900

Email: rdane@hdwlaw.com

In addition, TMC's General Counsel, Miriam Soo-Hwan Park, and TMC's Vice President of Environmental Health & Safety, Gareth Linford, are also available for discussions and consultations as needed. Ms. Park and Mr. Linford have been closely involved in the consent decree negotiations and are authorized to discuss both legal and technical aspects of the TMC Parties' compliance obligations on behalf of the company.

We look forward to the State of Montana's review of the enclosed consent decree text and to continuing our collaborative efforts to bring this matter to a successful resolution.

Respectfully submitted,

CALDERWOOD & HARKNESS LLP

By: ________

Harrison Wexford Partner Calderwood & Harkness LLP Seven World Trade Center 250 Greenwich Street, 38th Floor New York, New York 10007 Telephone: (212) 558-4127 Facsimile: (212) 558-3591

Email: hwexford@calderwoodharkness.com

Enclosure: Consent Decree — Substantially Final Agreed Text (dated February 3, 2025)

cc (via electronic mail):

Philip Orenstein, Trial Attorney, U.S. Department of Justice, Environment and Natural Resources Division (Lead DOJ Trial Attorney)

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

Katherine Rowe-Halpern, Supervising Attorney, U.S. Department of Justice, Environment and Natural Resources Division

Miriam Soo-Hwan Park, General Counsel, Torchlight Mining Corp.

Gareth Linford, Vice President, Environmental Health & Safety, Torchlight Mining Corp.

Russell Dane, Partner, Holcroft, Dane & Weiss LLP (Montana local counsel)

Dr. Astrid Bergmann, P.E., Principal, Pinnacle Creek Environmental, LLC (environmental consultant)

CALDERWOOD & HARKNESS LLP Counselors at Law Seven World Trade Center 250 Greenwich Street, 38th Floor New York, New York 10007
Telephone: (212) 558-4000 Facsimile: (212) 558-3588 www.calderwoodharkness.com
February 5, 2025
Matter No. 1039-00003
VIA ELECTRONIC MAIL AND U.S. MAIL
Annika Hedstrom, Esq. Assistant Attorney General Environmental Bureau Montana Attorney General's Office 215 North Sanders Street Helena, Montana 59601
Re: *United States of America and State of Montana v. Torchlight Mining Corp., et al.*, Civil Action No. 9:24-cv-00087-DWM — Status Update and Consent Decree Summary Regarding Montana Facilities (Ridgecrest Mine and Gallatin Chemical Works)
Dear Ms. Hedstrom:
I. Introduction and Purpose of Letter
I write in my capacity as a partner at Calderwood & Harkness LLP ("C&H") and lead outside counsel to Torchlight Mining Corp. ("TMC"), including its U.S. subsidiaries Torchlight Mining (U.S.) Inc., Torchlight Specialty Chemicals, Inc., and Ridgecrest Mine Holdings, LLC (collectively, the "TMC Parties" or "Defendants"). C&H serves as lead outside counsel to the TMC Parties in connection with the multi-site environmental compliance matter and consent decree negotiation that is the subject of the above-referenced civil action. C&H was retained to replace TMC's prior environmental counsel, Whitfield, Palmer & Goss LLP, effective October 21, 2024, and has since assumed responsibility for all aspects of consent decree negotiations, regulatory coordination, and related litigation management in this matter.
In addition, I wish to acknowledge the continuing role of Holcroft, Dane & Weiss LLP ("HDW"), with Russell Dane as lead partner, which serves as TMC's Montana-licensed local counsel. HDW coordinates closely with C&H on all matters involving Montana state regulatory obligations, state court proceedings, and communications with the Montana Attorney General's Office and the Montana Department of Environmental Quality ("MT DEQ"). Mr. Dane and his team have been integral participants in the negotiation process and will continue to serve as the TMC Parties' primary point of contact for matters arising under Montana state law.
The purpose of this letter is threefold. First, I write to provide the State of Montana, in its capacity as co-plaintiff and intervenor, with a comprehensive summary of the substantially final consent decree terms as agreed upon by the parties on February 3, 2025, specifically as those terms relate to the two Montana facilities — the Ridgecrest Copper-Molybdenum Mine located in Granite County, Montana, and the Gallatin Chemical Works located in Gallatin County, Montana. Second, I write to request the State of Montana's confirmation of its readiness to execute the joinder and co-plaintiff signature pages in advance of the anticipated lodging of the consent decree with the Court. Third, I write to request coordination between C&H, HDW, the Montana Attorney General's Office, and MT DEQ regarding parallel state permit requirements that will operate alongside the federal consent decree obligations.
The consent decree text was substantially finalized following an in-person negotiation session conducted on February 3, 2025, at the offices of the U.S. Department of Justice, Environment and Natural Resources Division ("ENRD"), in Washington, D.C. Subject to the State of Montana's review and comment and the completion of certain ministerial matters, the consent decree is expected to be lodged with the United States District Court for the District of Montana, Missoula Division (the Honorable Donald W. Molloy presiding) on or about February 19, 2025. A copy of the substantially final consent decree text, dated February 3, 2025, is enclosed with this letter for the State's review and consideration.
II. Case Background
On January 18, 2024, the United States of America, acting through the U.S. Department of Justice on behalf of the U.S. Environmental Protection Agency ("EPA"), filed a civil enforcement 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., et al., Civil Action No. 9:24-cv-00087-DWM. The complaint was assigned to the Honorable Donald W. Molloy, United States District Judge. The lead government attorneys in this matter are Philip Orenstein, Trial Attorney, DOJ ENRD; Margaret Coulson, Lead Case Attorney, EPA Office of Enforcement and Compliance Assurance ("OECA"); and Katherine Rowe-Halpern, Supervising Attorney, DOJ ENRD.
The plaintiffs in the action are the United States of America (represented by DOJ ENRD and EPA) and co-plaintiffs and intervenors the State of Montana (through MT DEQ and the Montana Attorney General's Office), the State of Nevada, and the State of West Virginia. The defendants named in the complaint are Torchlight Mining Corp., Torchlight Mining (U.S.) Inc., Torchlight Specialty Chemicals, Inc., Ridgecrest Mine Holdings, LLC, and Bonanza Creek Mining, LLC.
The TMC Parties filed their answer to the complaint on March 5, 2024. On April 22, 2024, the parties entered into a tolling agreement suspending the running of applicable statutes of limitations during the pendency of settlement negotiations. The Court subsequently referred the matter to court-ordered mediation before United States Magistrate Judge Clara Finnegan, and the initial mediation session was held on May 15, 2024. Following extensive mediation sessions and direct party-to-party negotiations over the ensuing months, the parties reached an agreement in principle on a consent decree framework on July 30, 2024. Since that date, the parties have engaged in intensive drafting and negotiation of the specific consent decree provisions, culminating in the substantially final agreed text of February 3, 2025.
The civil action encompasses alleged environmental violations at four facilities located across three states: (1) the Ridgecrest Copper-Molybdenum Mine in Granite County, Montana; (2) the Gallatin Chemical Works in Gallatin County, Montana; (3) the Bonanza Creek Mine in Humboldt County, Nevada; and (4) the Kanawha Bend Chemical Facility in Putnam County, West Virginia. While the consent decree addresses all four facilities, this letter focuses exclusively on the two Montana facilities — Ridgecrest and Gallatin — which are of primary interest to the State of Montana in its capacity as co-plaintiff and intervenor.
III. Summary of Consent Decree — Overall Structure
The consent decree, as substantially finalized on February 3, 2025, resolves the alleged violations of the Clean Water Act ("CWA"), 33 U.S.C. §§ 1251 et seq.; the Resource Conservation and Recovery Act ("RCRA"), 42 U.S.C. §§ 6901 et seq.; and the Comprehensive Environmental Response, Compensation, and Liability Act ("CERCLA"), 42 U.S.C. §§ 9601 et seq., at all four facilities identified in the complaint. The consent decree establishes a comprehensive framework of remediation obligations, civil penalties, cost reimbursements, supplemental environmental projects, financial assurance requirements, and independent monitoring provisions. The key financial and structural terms of the consent decree, in the aggregate across all four facilities, are summarized below.
A. Total Estimated Obligations
The grand total estimated obligation of the TMC Parties under the consent decree is approximately $409.9 million (nominal dollars), comprising the following principal components:
1. Total Remediation Costs (All Sites): Approximately $343.5 million (nominal), which represents an estimated net present value of $245.1 million using a 3% discount rate. This figure encompasses remediation, corrective action, and long-term monitoring obligations across all four facilities over periods ranging from 15 to 30 years.
2. Civil Penalties (All Sites): $31.5 million, allocated among the four facilities and payable in accordance with the schedule set forth in the consent decree.
3. EPA Past-Costs Reimbursement (CERCLA § 107): $18.1 million, reflecting reimbursement to the United States for past response costs incurred by EPA. Of this total, $14.3 million is attributable to EPA removal actions conducted at the Ridgecrest site between January 2021 and May 2023, and $3.8 million is attributable to EPA response activities at the Kanawha Bend facility.
4. Supplemental Environmental Projects ("SEPs"): $12.0 million, allocated among multiple projects designed to provide environmental and public health benefits in the communities affected by the facilities at issue.
5. Independent Monitor Costs (Five-Year Estimate): Approximately $4.8 million, representing an estimated annual cost of approximately $960,000 per year over the initial five-year monitoring term.
B. Financial Assurance
The consent decree requires the TMC Parties to establish and maintain financial assurance in the aggregate amount of $245.0 million, structured as follows:
• Surety Bond: $165.0 million, to be issued by Ironbark Surety of America, Inc. (Bond No. ISA-ENV-2025-08934). The annual premium for the bond is 1.85%, equivalent to approximately $3.0525 million per year.
• Remediation Trust Fund: $80.0 million initial deposit, to be held by Larchfield Trust Company, N.A. (Trust Agreement No. LTC-REM-2025-1177; trust officer: David Henshaw). The trust fund will be administered in accordance with the terms of the trust agreement and will be available for draw-down by EPA or the applicable state agency in the event of a default by the TMC Parties.
The financial assurance package is required to cover all four facilities, including both Montana sites.
C. Independent Environmental Monitor
The consent decree provides for the appointment of a court-ordered independent environmental monitor, Verdant Analytics, Inc. (Dr. Kamal Osei, Senior Managing Director), with its principal office at 1550 NW Couch Street, Suite 400, Portland, Oregon 97209. Verdant Analytics will perform quarterly compliance audits and prepare annual public reports covering all four facilities, including the Ridgecrest and Gallatin sites. The monitor's authority, access, and reporting obligations are set forth in detail in the consent decree.
D. Effective Date and Timeline
The consent decree establishes an Effective Date defined as thirty (30) days after the date of entry of the decree by the Court (per Consent Decree § IV). Based on the current schedule, the parties anticipate the following timeline:
• Lodging with the Court: On or about February 19, 2025
• Public Comment Period (30 days): Approximately February 19, 2025 through March 21, 2025
• Target Court Entry Date: May 15, 2025
• Target Effective Date: June 14, 2025
IV. Ridgecrest Copper-Molybdenum Mine — Site-Specific Terms
A. Site Description
The Ridgecrest Copper-Molybdenum Mine (the "Ridgecrest Site" or "Ridgecrest") is located at 14200 Ridgecrest Mine Road, Drummond, Granite County, Montana 59832. The site is operated by Torchlight Mining (U.S.) Inc. Real property and mineral rights at the site are held by Ridgecrest Mine Holdings, LLC, a Montana limited liability company registered with the Montana Secretary of State (ID: E1042738).
The Ridgecrest Site encompasses an area of approximately 3,200 acres constituting the mine footprint, with an additional approximately 5,500 acres of controlled buffer property, for a total controlled property area of approximately 8,700 acres. The facility is an open-pit copper-molybdenum mine that has been operational since 1978. Active mining operations ceased on December 31, 2019, and the site is currently in the closure and reclamation phase.
With respect to federal regulatory status, the Ridgecrest Site has been proposed for listing on the National Priorities List ("NPL") under CERCLA. The site is currently being addressed under an Administrative Order on Consent ("AOC"), Docket No. CERCLA-08-2022-0039, executed on September 15, 2022, between EPA Region 8 and the TMC Parties. EPA Region 8 serves as the lead federal regulatory office for the Ridgecrest Site, with Dr. Samuel Tesfaye serving as the EPA Project Coordinator.
B. Alleged Violations
The complaint alleges the following violations at the Ridgecrest Site:
1. CWA § 301 (33 U.S.C. § 1311): Unpermitted discharges of acid mine drainage ("AMD") from the mine site to surface waters, including Flint Creek and its tributaries, without authorization under the facility's MPDES permit or any other applicable National Pollutant Discharge Elimination System permit.
2. RCRA § 3004 (42 U.S.C. § 6924): Mismanagement of hazardous waste generated from the solvent-extraction/electrowinning ("SX/EW") circuit at the Ridgecrest processing facility, including failure to properly characterize, store, and dispose of spent organic solvents and electrowinning cell residues in accordance with applicable RCRA regulations.
3. CERCLA § 107 (42 U.S.C. § 9607): Cost recovery by the United States for EPA removal actions conducted at the Ridgecrest Site from January 2021 through May 2023, totaling $14.3 million.
C. Principal Contaminants
The principal contaminants of concern at the Ridgecrest Site, as documented in EPA's site investigation reports and the TMC Parties' own environmental assessments, include the following:
• Acid Mine Drainage: AMD discharges from the mine pit, waste rock dumps, and tailings impoundment contain elevated concentrations of dissolved metals and sulfate. Key constituent concentrations measured in AMD discharges include:
• Dissolved copper: average concentration of 47 mg/L, compared to the Montana chronic aquatic life surface-water quality standard of 0.0087 mg/L — representing exceedances of the applicable standard by approximately three orders of magnitude.
• Molybdenum: average concentration of 1.2 mg/L.
• Selenium: average concentration of 0.082 mg/L.
• Sulfate: average concentration of 3,400 mg/L.
• Tailings Impoundment Seepage: The Ridgecrest tailings impoundment, encompassing approximately 425 acres, has exhibited documented seepage of contaminated water to Flint Creek, resulting in degradation of surface-water quality and potential impacts to aquatic life and downstream beneficial uses.
D. Negotiated Remediation Cost
The parties engaged in extensive technical negotiations regarding the estimated cost of remediation at the Ridgecrest Site. The respective estimates, as prepared by the parties' environmental consultants, and the negotiated outcome are summarized as follows:
• TMC's Initial Estimate: $187.5 million over a 30-year remediation period, with a net present value of $127.4 million at a 3% discount rate. This estimate was prepared by Pinnacle Creek Environmental, LLC (Dr. Astrid Bergmann, P.E., principal-in-charge), TMC's independent environmental consulting firm.
• EPA's Estimate: $224.0 million over a 30-year remediation period. This estimate was developed with the support of the government's technical expert, Cascade Geosciences, Inc. (Dr. Patricia Voss, principal investigator).
• Negotiated Remediation Cost Under Consent Decree: $198.6 million over a 30-year remediation period, with a net present value of $134.9 million at a 3% discount rate.
The negotiated amount represents a compromise between the parties' respective cost estimates and reflects, among other factors, agreements reached regarding the scope and sequencing of remedial activities, the selection of specific treatment technologies, and the application of performance-based cost adjustments over the life of the remediation program.
E. Remediation Schedule and Key Milestones
The consent decree establishes the following principal milestones for the Ridgecrest Site remediation:
1. Submission of Ridgecrest Remedial Action Work Plan: No later than December 14, 2025 (six months following the target Effective Date).
2. Commencement of Ridgecrest Remedy Construction: No later than June 14, 2027 (two years following the target Effective Date).
3. End of 30-Year Remediation Obligation: June 14, 2055.
The remediation activities to be performed at the Ridgecrest Site include, but are not limited to, the following principal components:
• Design, construction, and operation of acid mine drainage treatment systems, including both active and passive treatment technologies, to address AMD discharges from the mine pit, waste rock dumps, and tailings impoundment;
• Stabilization and long-term management of the 425-acre tailings impoundment, including installation of engineered cover systems, seepage interception and collection systems, and groundwater monitoring networks;
• Restoration of water quality in Flint Creek to levels meeting applicable Montana surface-water quality standards, including implementation of in-stream and riparian restoration measures.
The consent decree establishes detailed performance standards and completion criteria for each component of the Ridgecrest remediation. Termination of the consent decree with respect to the Ridgecrest Site is not available until a minimum of five (5) years after completion of all remedial construction activities and demonstration that applicable performance standards have been achieved and maintained.
F. Civil Penalty — Ridgecrest
The consent decree imposes a civil penalty of $14.2 million with respect to the Ridgecrest Site. This represents the largest single-site civil penalty of the four facilities addressed in the consent decree. The penalty is payable according to the following schedule:
• Twenty-five percent (25%) of the penalty amount ($3,550,000) due within thirty (30) days of the Effective Date;
• The remaining seventy-five percent (75%) ($10,650,000) payable in three equal annual installments of $3,550,000 each, due on the first, second, and third anniversaries of the Effective Date.
G. EPA Past-Costs Reimbursement — Ridgecrest
The consent decree requires the TMC Parties to reimburse the United States $14.3 million for EPA removal actions conducted at the Ridgecrest Site between January 2021 and May 2023. These removal actions were undertaken by EPA Region 8 pursuant to CERCLA § 104 and addressed, among other conditions, the emergency stabilization of AMD discharges to Flint Creek and the containment of contaminated seepage from the tailings impoundment.
H. Supplemental Environmental Project — Flint Creek Watershed Restoration
The consent decree requires the TMC Parties to fund and implement a Supplemental Environmental Project in the amount of $5.5 million, designated as the Flint Creek Watershed Restoration Project. The SEP will encompass the following activities:
• Stream-bank stabilization along approximately 12 miles of Flint Creek downstream of the Ridgecrest Site;
• Riparian replanting and restoration of native vegetation communities along the Flint Creek corridor;
• Design and construction of fish-passage improvements to restore connectivity for native fish species, including bull trout and westslope cutthroat trout.
The Flint Creek Watershed Restoration Project is located entirely within the State of Montana and is expected to provide significant environmental benefits to the affected communities and ecosystems in Granite County and the broader Flint Creek drainage. The consent decree sets forth specific milestones for the design, implementation, and completion of the SEP, as well as reporting requirements to EPA and the State of Montana.
V. Gallatin Chemical Works — Site-Specific Terms
A. Site Description
The Gallatin Chemical Works (the "Gallatin Site" or "Gallatin") is located at 8800 Industrial Park Lane, Belgrade, Gallatin County, Montana 59714. The facility is operated by Torchlight Specialty Chemicals, Inc., a Delaware corporation (EIN: 47-3819204) and a wholly owned subsidiary of Torchlight Mining (U.S.) Inc.
The Gallatin Site encompasses approximately 145 acres and is engaged in the manufacture of specialty chemicals, including flotation reagents, sodium xanthate, and dithiophosphate collectors used in mineral processing operations. The facility has been in continuous operation since 1993 and is currently active. Under the federal RCRA program, the Gallatin Site is designated as a RCRA Corrective Action facility under Permit No. MTD098712456. EPA Region 8 serves as the lead federal regulatory office for the Gallatin Site.
B. Alleged Violations
The complaint alleges the following violations at the Gallatin Site:
1. RCRA §§ 3004 and 3005 (42 U.S.C. §§ 6924, 6925): Operation of an unpermitted hazardous-waste storage unit at the Gallatin facility and failure to perform corrective action at three identified solid waste management units ("SWMUs") as required under the facility's RCRA permit and applicable regulations.
2. CWA § 301 (33 U.S.C. § 1311): Exceedances of effluent limitations established under the facility's Montana Pollutant Discharge Elimination System ("MPDES") permit for carbon disulfide (CS₂) and total suspended solids ("TSS") on fourteen (14) occasions during the period from January 2021 through June 2024.
C. Principal Contaminants
The principal contaminants of concern at the Gallatin Site, as identified through EPA inspections, facility investigations, and the RCRA corrective action process, include the following:
• Carbon Disulfide (CS₂) in Groundwater: CS₂ has been detected in groundwater beneath and downgradient of the Gallatin facility at a maximum concentration of 890 µg/L, compared to the federal Maximum Contaminant Level ("MCL") of 10 µg/L — representing exceedances of the MCL by approximately two orders of magnitude.
• Xanthate Decomposition Products: Byproducts of xanthate manufacturing and decomposition have been identified in soil and groundwater at several locations across the site.
• Volatile Organic Compounds (VOCs): VOCs, including toluene and xylene, have been detected in subsurface soils in the vicinity of storage and handling areas at the Gallatin facility.
• Solid Waste Management Units: Three SWMUs requiring investigation and corrective action have been identified at the site.
D. Remediation Cost
The estimated remediation cost for the Gallatin Site under the consent decree is $42.8 million over a 15-year corrective action period, with a net present value of approximately $34.1 million at a 3% discount rate. This estimate was prepared by Pinnacle Creek Environmental, LLC, TMC's independent environmental consultant, and was substantially accepted by EPA following technical negotiations.
E. Remediation Schedule and Key Milestones
The consent decree establishes the following principal milestones for the Gallatin Site corrective action program:
1. Submission of Gallatin Corrective Measures Study ("CMS"): No later than June 14, 2026 (one year following the target Effective Date).
2. Implementation of Corrective Action: Following EPA approval of the CMS, the TMC Parties will be required to implement corrective action measures addressing all three SWMUs, the CS₂ groundwater plume, and VOC contamination in subsurface soils.
The consent decree sets forth detailed performance standards and completion criteria for the Gallatin corrective action, including groundwater remediation objectives designed to achieve compliance with applicable MCLs and Montana groundwater quality standards within the specified 15-year timeframe. The specific corrective measures to be implemented will be selected through the CMS process, subject to EPA and MT DEQ review and approval.
F. Civil Penalty — Gallatin
The consent decree imposes a civil penalty of $5.8 million with respect to the Gallatin Site. The penalty is payable according to the same quarterly installment structure applicable to the overall civil penalty of $31.5 million — that is, twenty-five percent (25%) of the site-specific penalty amount due within thirty (30) days of the Effective Date, with the remaining seventy-five percent (75%) payable in three equal annual installments on the first, second, and third anniversaries of the Effective Date.
VI. Stipulated Penalties and Enforcement Provisions
The consent decree contains stipulated penalty provisions applicable to both Montana facilities, as well as the Nevada and West Virginia sites. The stipulated penalties are structured on a per-violation, per-day basis 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) of noncompliance;
• $5,500 per day per violation for each day of noncompliance beyond sixty (60) days.
Stipulated penalties are payable to the United States and, where applicable, to the co-plaintiff states, in accordance with the allocation provisions set forth in the consent decree. Stipulated penalties accrue automatically upon the occurrence of a violation and are in addition to any other remedies available to the plaintiffs under the decree or applicable law.
Force Majeure. The consent decree includes a standard EPA force majeure provision. In the event that the TMC Parties are unable to comply with any requirement of the decree due to circumstances constituting force majeure, the TMC Parties must provide written notice to EPA within fifteen (15) days of the date upon which the TMC Parties first knew or should have known of the event or condition giving rise to the force majeure claim. The notice must describe the anticipated duration of the noncompliance, the cause or causes of the noncompliance, and the measures taken or to be taken to minimize the delay or impact. Any dispute regarding the applicability of the force majeure provision is to be resolved in accordance with the dispute resolution procedures set forth in the consent decree.
Dispute Resolution. The consent decree establishes a three-tier dispute resolution mechanism:
1. Informal Negotiation: The parties will attempt to resolve any dispute through informal negotiations for a period of thirty (30) days following written notice of the dispute.
2. Formal EPA Decision: If the dispute is not resolved through informal negotiation, EPA will issue a formal written decision within thirty (30) days of the conclusion of the informal negotiation period.
3. Judicial Review: If the TMC Parties disagree with EPA's formal decision, the TMC Parties may petition the Court for judicial review within thirty (30) days of receipt of EPA's decision. The standard of review applicable to the Court's evaluation of EPA's decision is set forth in the consent decree.
VII. Financial Assurance Applicable to Montana Sites
As noted in Section III above, the consent decree requires the TMC Parties to establish and maintain financial assurance in the total amount of $245.0 million. This financial assurance package covers all four facilities addressed in the consent decree, including both Montana sites. The financial assurance is structured as follows:
• Surety Bond: $165.0 million, to be issued by Ironbark Surety of America, Inc. (Bond No. ISA-ENV-2025-08934). The annual premium for the bond is 1.85% of the face amount, or approximately $3,052,500 per year. The bond will remain in effect for the duration of the consent decree obligations, subject to annual renewals and adjustments as provided in the decree.
• Remediation Trust Fund: $80.0 million initial deposit, to be held by Larchfield Trust Company, N.A. (Trust Agreement No. LTC-REM-2025-1177). The trust officer for the remediation trust fund is David Henshaw. The trust fund will be administered and invested in accordance with the trust agreement and will be available for draw-down by EPA or the applicable state co-plaintiff in the event of a default by the TMC Parties in the performance of their remediation obligations.
The deadline for the TMC Parties to establish the remediation trust fund and post the required financial assurance is September 12, 2025, which is ninety (90) days following the target Effective Date. Failure to timely establish the required financial assurance constitutes a violation of the consent decree and is subject to the stipulated penalty provisions described in Section VI above.
VIII. Independent Monitor
As described in Section III above, the consent decree provides for the appointment of Verdant Analytics, Inc. as the court-ordered independent environmental monitor for all four facilities, including the Ridgecrest and Gallatin sites. The appointment is made pursuant to the consent decree provisions authorizing the Court to designate an independent auditor to oversee the TMC Parties' compliance with their obligations under the decree.
Dr. Kamal Osei, Senior Managing Director of Verdant Analytics, will serve as the principal monitor. Verdant Analytics' principal office is located at 1550 NW Couch Street, Suite 400, Portland, Oregon 97209. The monitor's responsibilities include, but are not limited to:
• Conducting quarterly compliance audits at each of the four facilities, including on-site inspections, review of monitoring data, and assessment of progress toward achieving remediation milestones and performance standards;
• Preparing and submitting annual public reports summarizing the TMC Parties' compliance status at each facility, including a detailed assessment of remediation progress, identification of any instances of noncompliance, and recommendations for corrective measures;
• Reporting to the Court, EPA, and the co-plaintiff states, including the State of Montana, on all matters within the monitor's purview as set forth in the consent decree.
The estimated cost of the independent monitor over the initial five-year monitoring period is approximately $4.8 million, representing an estimated annual cost of approximately $960,000. These costs are borne by the TMC Parties in accordance with the consent decree.
IX. State of Montana as Co-Plaintiff — Joinder and Signature
The TMC Parties acknowledge and confirm the State of Montana's role as a co-plaintiff and intervenor in this action with respect to the Ridgecrest and Gallatin facilities. The State of Montana's participation in the consent decree is essential to ensure the effective coordination of federal and state regulatory authorities and the comprehensive resolution of the environmental violations alleged in the complaint.
We understand that the State of Montana co-plaintiff signature pages and joinder documents are currently being prepared for execution by the Montana Attorney General's Office. The target execution date for the State's joinder is February 14, 2025, which would allow sufficient time for inclusion of the executed joinder with the consent decree package prior to lodging with the Court on or about February 19, 2025.
Accordingly, we respectfully request that Ms. Hedstrom confirm the Montana Attorney General's Office's readiness to execute the joinder and to provide any comments the State may have on the substantially final consent decree text at the earliest practicable date. We recognize the importance of ensuring that the State's interests and concerns are fully reflected in the final decree, and we remain prepared to address any questions or proposed revisions that the State may wish to raise.
As noted above, a copy of the substantially final consent decree text, dated February 3, 2025, is enclosed with this letter for the State's review. We ask that the State direct any comments or questions regarding the decree text to the undersigned at C&H or to Russell Dane at HDW.
X. Request for Coordination on State Permit Requirements
The TMC Parties acknowledge that the federal consent decree operates alongside, and does not supersede, state environmental regulatory requirements applicable to the Ridgecrest and Gallatin facilities. The consent decree itself contains express reservations preserving the authority of the State of Montana and its agencies to enforce applicable state environmental laws and regulations independently of the federal decree.
In light of the substantial remediation and corrective action obligations imposed by the consent decree, the TMC Parties anticipate that coordination with the Montana Department of Environmental Quality will be necessary and beneficial with respect to the following state permits and regulatory requirements:
1. MPDES Permits: Montana Pollutant Discharge Elimination System permits applicable to both the Ridgecrest and Gallatin facilities will likely require review, modification, or reissuance in connection with the implementation of consent decree remediation activities. The installation and operation of new acid mine drainage treatment systems at Ridgecrest, in particular, may necessitate amendments to the facility's MPDES permit to incorporate revised effluent limitations and monitoring requirements. Similarly, the Gallatin facility's MPDES permit may require modification to reflect corrective action measures addressing CS₂ and TSS exceedances.
2. Hard Rock Mining Reclamation Permits: The Ridgecrest Site is subject to permitting under Montana's Metal Mine Reclamation Act, Title 82, Chapter 4, Part 3, MCA. The consent decree remediation activities, including tailings impoundment stabilization and mine closure measures, will need to be coordinated with the applicable state reclamation permit requirements administered by MT DEQ's Hard Rock Mining Bureau.
3. State RCRA-Authorized Permit Obligations: The Gallatin facility operates under RCRA Permit No. MTD098712456, issued by MT DEQ pursuant to Montana's authorization under RCRA § 3006. The corrective action measures to be implemented under the consent decree will need to be coordinated with the corrective action requirements of the state-issued RCRA permit, and the permit may require modification to reflect the corrective measures selected through the CMS process.
4. State Water Quality Certifications and Other Environmental Permits: The remediation activities contemplated by the consent decree may require state water quality certifications under Section 401 of the Clean Water Act, as well as other state environmental permits, including but not limited to stormwater discharge permits, land application permits, and air quality permits associated with remediation construction activities.
To facilitate coordination on these matters, the TMC Parties note that Holcroft, Dane & Weiss LLP (Russell Dane, lead partner; 45 North Last Chance Gulch, Suite 600, Helena, Montana 59601) serves as TMC's Montana-licensed local counsel and will be the primary point of contact for all state permit coordination activities. Mr. Dane and his team are thoroughly familiar with Montana's environmental regulatory framework and have been actively engaged with MT DEQ on permitting matters throughout the pendency of this matter.
We respectfully propose that C&H, HDW, the Montana Attorney General's Office, and MT DEQ schedule a meeting or conference call at the earliest mutually convenient date to discuss the coordination of federal and state compliance obligations and timelines. Early coordination will be critical to ensuring that the TMC Parties are positioned to meet the consent decree milestones while simultaneously satisfying all applicable state regulatory requirements. We are available to meet in person in Helena at the offices of the Montana Attorney General or MT DEQ, or to participate by telephone or videoconference, at the State's preference.
XI. Confidentiality and Privilege Reservation
The TMC Parties respectfully note that certain information exchanged between the parties during the course of consent decree negotiations is subject to confidentiality protections established by agreement of the parties and by applicable rules governing settlement communications. Nothing in this letter or the enclosed consent decree text is intended to waive or diminish those protections.
The TMC Parties expressly reserve all attorney-client privilege and work-product protections applicable to this correspondence, the enclosed materials, and all related communications between C&H, HDW, and the TMC Parties. The disclosure of the enclosed consent decree text to the Montana Attorney General's Office in its capacity as counsel for the co-plaintiff State of Montana is made in furtherance of the common interest of the parties in finalizing and lodging the consent decree and does not constitute a waiver of any applicable privilege or protection.
We respectfully request that the enclosed substantially final consent decree text, dated February 3, 2025, be treated as confidential by the Montana Attorney General's Office and MT DEQ until such time as the consent decree is formally lodged with the Court and the public comment period commences. We understand that upon lodging, the decree will become a public document and will be available for public inspection and comment in accordance with applicable law.
XII. Closing
The TMC Parties wish to express their sincere appreciation for the State of Montana's constructive and professional engagement throughout the consent decree negotiation process. The State's participation has been instrumental in achieving a resolution that addresses the environmental conditions at the Ridgecrest and Gallatin facilities in a manner that is protective of human health, the environment, and the interests of the affected communities in Montana.
Should you have any questions regarding the matters discussed in this letter, or should you wish to schedule a coordination meeting among the relevant parties, please do not hesitate to contact the undersigned at the address and contact information below, or to contact Russell Dane at Holcroft, Dane & Weiss LLP at the following:
Harrison Wexford Partner, Calderwood & Harkness LLP Seven World Trade Center 250 Greenwich Street, 38th Floor New York, New York 10007 Telephone: (212) 558-4127
Email: hwexford@calderwoodharkness.com
Russell Dane Partner, Holcroft, Dane & Weiss LLP 45 North Last Chance Gulch, Suite 600 Helena, Montana 59601 Telephone: (406) 442-8900
Email: rdane@hdwlaw.com
In addition, TMC's General Counsel, Miriam Soo-Hwan Park, and TMC's Vice President of Environmental Health & Safety, Gareth Linford, are also available for discussions and consultations as needed. Ms. Park and Mr. Linford have been closely involved in the consent decree negotiations and are authorized to discuss both legal and technical aspects of the TMC Parties' compliance obligations on behalf of the company.
We look forward to the State of Montana's review of the enclosed consent decree text and to continuing our collaborative efforts to bring this matter to a successful resolution.
Respectfully submitted,
CALDERWOOD & HARKNESS LLP
By: ________
Harrison Wexford Partner Calderwood & Harkness LLP Seven World Trade Center 250 Greenwich Street, 38th Floor New York, New York 10007 Telephone: (212) 558-4127 Facsimile: (212) 558-3591
Email: hwexford@calderwoodharkness.com
Enclosure: Consent Decree — Substantially Final Agreed Text (dated February 3, 2025)
cc (via electronic mail):
Philip Orenstein, Trial Attorney, U.S. Department of Justice, Environment and Natural Resources Division (Lead DOJ Trial Attorney)
Margaret Coulson, Lead Case Attorney, U.S. Environmental Protection Agency, Office of Enforcement and Compliance Assurance (Lead EPA Case Attorney)
Katherine Rowe-Halpern, Supervising Attorney, U.S. Department of Justice, Environment and Natural Resources Division
Miriam Soo-Hwan Park, General Counsel, Torchlight Mining Corp.
Gareth Linford, Vice President, Environmental Health & Safety, Torchlight Mining Corp.
Russell Dane, Partner, Holcroft, Dane & Weiss LLP (Montana local counsel)
Dr. Astrid Bergmann, P.E., Principal, Pinnacle Creek Environmental, LLC (environmental consultant)

CALDERWOOD & HARKNESS LLP Counselors at Law Seven World Trade Center 250 Greenwich Street, 38th Floor New York, New York 10007

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