1039-00003 · Torchlight Mining Corp · State Coordination

letter-to-nevada-dep.docx DOCUMENT Antitrust

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CALDERWOOD & HARKNESS LLP Attorneys at Law

February 5, 2025

Via Electronic Mail and U.S. Mail

Ricardo Fuentes, Deputy Attorney General Nevada Attorney General's Office 100 North Carson Street Carson City, Nevada 89701

Re: Status Update and Consent Decree Summary — Bonanza Creek Gold Mine, Lander County, Nevada; United States of America and State of Montana v. Torchlight Mining Corp. et al., Civil Action No. 9:24-cv-00087-DWM, U.S. District Court for the District of Montana, Missoula Division

Dear Mr. Fuentes:

1. Purpose of This Letter

Calderwood & Harkness LLP ("C&H") serves as lead outside counsel to Torchlight Mining Corp. ("TMC") and its U.S. subsidiaries in the above-referenced matter (C&H Matter No. 1039-00003). We write to provide the State of Nevada, Division of Environmental Protection ("NV DEP"), and the Nevada Attorney General's Office with a comprehensive status update regarding the substantially final consent decree that has been negotiated with the United States Department of Justice ("DOJ"), the United States Environmental Protection Agency ("EPA"), and the co-plaintiff states in the captioned enforcement action.

As you are aware, Nevada is a co-plaintiff in this action with respect to the Bonanza Creek Gold Mine facility ("Bonanza Creek" or the "Facility") located in Lander County, Nevada. The Facility is operated by Bonanza Creek Mining, LLC ("BCM"), a wholly owned subsidiary of Torchlight Mining (U.S.) Inc. ("TM(US)"), which is in turn wholly owned by TMC. The purpose of this letter is to summarize the material terms of the consent decree as they specifically relate to the Bonanza Creek facility, and to address certain coordination issues pertinent to Nevada's interests as a co-plaintiff.

The consent decree text was substantially finalized on February 3, 2025, following in-person negotiations with DOJ and EPA counsel in Washington, D.C. We are pleased to report that the parties have reached agreement on all material terms, and we anticipate that the decree will be lodged with the Court later this month.

We wish to acknowledge your role as lead state counsel for Nevada in this matter and to express our sincere appreciation for the constructive participation of your office and NV DEP throughout the settlement process. Nevada's input has been instrumental in shaping the remedial and supplemental environmental project provisions that directly affect Lander County and surrounding communities.

Finally, we wish to note that sagebrush Law Group, PLLC, led by partner Denise Quartaro, serves as TMC's Nevada-licensed local counsel and is coordinating directly with your office on state-specific matters. Ms. Quartaro's contact information is provided at the conclusion of this letter, and she remains available to address any questions or concerns you or your colleagues may have regarding Nevada-specific issues arising under the consent decree.

2. Background — The Enforcement Action

On January 18, 2024, the DOJ, on behalf of the EPA, filed a complaint in the United States District Court for the District of Montana, Missoula Division (Civil Action No. 9:24-cv-00087-DWM), before the Honorable Donald W. Molloy, Senior Judge, sitting by designation. The complaint alleged violations of the Clean Water Act ("CWA"), the Resource Conservation and Recovery Act ("RCRA"), and the Migratory Bird Treaty Act ("MBTA") at four Torchlight-operated or formerly operated facilities located across the states of Montana, Nevada, and West Virginia.

The named defendants in the action are: (1) Torchlight Mining Corp.; (2) Torchlight Mining (U.S.) Inc.; (3) Torchlight Specialty Chemicals, Inc.; (4) Ridgecrest Mine Holdings, LLC; and (5) Bonanza Creek Mining, LLC. The complaint seeks injunctive relief, civil penalties, and remediation of environmental contamination at each of the four affected facilities.

Nevada intervened as a co-plaintiff with respect to the Bonanza Creek Mine facility, asserting parallel state environmental claims and participating in the enforcement action alongside the United States and the State of Montana.

The procedural history of the matter is summarized below:

• March 5, 2024: TMC and all named defendant subsidiaries filed their respective answers to the complaint, raising various affirmative defenses while preserving all rights and objections.

• April 22, 2024: The parties executed a Tolling Agreement, which tolls the applicable statutes of limitations for all claims asserted in the complaint through December 31, 2025. The Tolling Agreement was filed with the Court and approved by order dated April 25, 2024.

• May 15, 2024: The Court ordered the parties to participate in mediation before Magistrate Judge Clara Finnegan. The mediation session was conducted on that date and continued on an informal basis through the summer months.

• July 30, 2024: The parties reached an agreement in principle on the fundamental framework of a consent decree, including the scope of remedial obligations, the general magnitude of civil penalties, and the inclusion of supplemental environmental projects.

• October 21, 2024: C&H was formally engaged by TMC as lead outside counsel for the consent decree negotiations and related matters, replacing TMC's prior environmental counsel of record.

Following C&H's engagement, the parties entered into an intensive period of drafting and negotiation, the timeline for which is summarized as follows:

• November 8, 2024: DOJ circulated its first complete draft of the consent decree to the defendants and co-plaintiff states.

• December 16, 2024: TMC, through C&H, submitted its comprehensive redline of the DOJ draft, incorporating comments from all defendants and addressing remediation scope, financial assurance mechanisms, payment schedules, and supplemental environmental project terms.

• January 14, 2025: DOJ and EPA circulated their counter-redline, reflecting partial acceptance of TMC's proposed revisions and raising additional issues with respect to stipulated penalty provisions and independent monitoring requirements.

• January 24, 2025: TMC submitted its second redline addressing the remaining open issues and proposing compromise language on contested provisions.

• February 3, 2025: Following in-person negotiations among counsel for all parties in Washington, D.C., the parties reached agreement on a substantially final text of the consent decree.

The consent decree, as substantially finalized, addresses remediation obligations, civil penalties, supplemental environmental projects, financial assurance requirements, independent monitoring, and dispute resolution mechanisms applicable to all four affected facilities. The following section summarizes the terms as they specifically relate to the Bonanza Creek Mine.

3. Summary of Consent Decree Terms — Bonanza Creek Mine

3.1. Facility Description

The Bonanza Creek Gold Mine is an open-pit heap-leach gold mining operation located at County Road 447, Mile Marker 12, Lander County, Nevada 89820, in an unincorporated area approximately 28 miles south of Battle Mountain, Nevada. The Facility is owned and operated by Bonanza Creek Mining, LLC, a Nevada limited liability company (Nevada Secretary of State Entity No. E0518294731), which is wholly owned by Torchlight Mining (U.S.) Inc.

The mine footprint encompasses approximately 5,600 acres, with the total controlled property area extending to approximately 12,400 acres. Bonanza Creek has been operational since 2001, and active mining operations are ongoing at the site. The Facility's operations include open-pit mining, heap-leach processing using cyanide solution, ore processing, and associated waste management activities.

For purposes of EPA regulatory jurisdiction, the Bonanza Creek Mine is subject to both RCRA Corrective Action requirements and CWA enforcement. The Facility falls within the jurisdiction of EPA Region 9, which has been the lead EPA region for enforcement purposes throughout the pendency of the action.

3.2. Alleged Violations at Bonanza Creek

The complaint alleges the following categories of violations at the Bonanza Creek facility:

Clean Water Act § 301 — Unpermitted Discharges. The government alleges that BCM discharged process solution from the heap-leach pad to an ephemeral tributary of the Reese River through a torn liner without authorization under a National Pollutant Discharge Elimination System ("NPDES") permit or other applicable CWA permit. Three documented releases have been identified:

(i) March 17, 2022;

(ii) August 9, 2022; and

(iii) January 22, 2023.

Each of these releases resulted in the migration of process solution containing elevated concentrations of weak acid dissociable ("WAD") cyanide and mercury into the ephemeral drainage.

RCRA § 3004 — Hazardous Waste Management. The government alleges that BCM managed spent heap-leach ore in a manner inconsistent with applicable RCRA requirements for the handling and disposal of hazardous waste, including failures in characterization, containment, and reporting.

Migratory Bird Treaty Act. The government alleges that 17 documented avian mortalities occurred in solution ponds at the Bonanza Creek facility between 2021 and 2023, in violation of the MBTA's prohibition on the taking of migratory birds.

Principal Contaminants. The principal contaminants of concern at the Bonanza Creek facility include:

• WAD cyanide, measured at 0.62 mg/L in the heap-leach pad underdrain, as compared to the applicable discharge limit of 0.022 mg/L;

• Mercury, measured at an average concentration of 12.4 µg/L, as compared to the applicable water-quality criterion of 0.77 µg/L; and

• Selenium, detected at elevated concentrations in pit-lake water.

The EPA Project Coordinator assigned to the Bonanza Creek facility is Jennifer Whitfield of EPA Region 9.

3.3. Remediation Obligations

The consent decree imposes comprehensive remediation obligations on BCM (and, through the corporate guarantee and financial assurance provisions, on TMC and TM(US)) with respect to the Bonanza Creek facility. The estimated remediation cost, in nominal terms, is $63.2 million over a 20-year period, as calculated by Pinnacle Creek Environmental, LLC ("Pinnacle Creek"), TMC's environmental remediation consultant. The Pinnacle Creek engagement is led by Dr. Astrid Bergmann, P.E. The net present value of the estimated remediation cost, discounted at a 3% annual rate, is approximately $47.1 million (calculated as $63.2M × 0.7454 ≈ $47.1M).

The key remedial actions required under the consent decree for the Bonanza Creek facility include the following:

(a) Liner Repair and Containment at the Heap-Leach Pad. BCM is required to undertake comprehensive liner repair and containment measures to address the documented process-solution releases and to prevent future releases of cyanide- and mercury-bearing process solution from the heap-leach pad. The scope of this work is detailed in the Bonanza Creek Liner Repair and Containment Plan — Scope of Work, a copy of which is enclosed with this letter.

(b) Management of Spent Heap-Leach Ore. BCM is required to implement a spent heap-leach ore management program in compliance with applicable RCRA requirements, including proper characterization, containment, treatment, and disposal of spent ore materials.

(c) Cyanide and Mercury Treatment in Process Solution. BCM is required to install and operate enhanced treatment systems for cyanide destruction and mercury removal in process solution circulated through the heap-leach operation.

(d) Pit-Lake Water Management. BCM is required to develop and implement a pit-lake water management plan addressing selenium contamination and other water-quality concerns in the pit lake.

(e) Avian Deterrent Systems for Solution Ponds. BCM is required to install, maintain, and operate avian deterrent systems at all open solution ponds at the Facility, including netting, hazing systems, and monitoring protocols designed to prevent further avian mortalities.

The deadline to commence the liner repair and containment work is June 14, 2026, which is 12 months after the Effective Date of the consent decree (as defined in Section 3.4 below). The Bonanza Creek Liner Repair and Containment Plan — Scope of Work specifically addresses the three documented process-solution releases and the cyanide and mercury contamination associated therewith.

3.4. Civil Penalty — Bonanza Creek Allocation

The total civil penalty imposed under the consent decree across all four affected facilities is $31.5 million. The civil penalty allocated to the Bonanza Creek site is $7.9 million.

The payment schedule for the combined civil penalty is as follows:

The Effective Date of the consent decree is defined as the date that is 30 days after the date of entry of the decree by the Court. Assuming entry on or about May 15, 2025, the Effective Date would be June 14, 2025, and the first civil penalty installment would be due on July 14, 2025.

3.5. Supplemental Environmental Project — Battle Mountain

As part of the consent decree, TMC has committed to undertaking three supplemental environmental projects ("SEPs") with a combined budget of $12.0 million. The SEP applicable to Nevada is the Battle Mountain Community Drinking Water Improvement Project, which has a dedicated budget of $3.5 million.

The scope of the Battle Mountain SEP encompasses the upgrade of the municipal water treatment facility in Battle Mountain, Lander County, Nevada. The project is designed to provide direct environmental and public health benefits to the community most proximate to the Bonanza Creek facility. A detailed description of the SEP scope and budget is enclosed with this letter (SEP Description and Budget — Battle Mountain Community Drinking Water Improvement Project, dated January 28, 2025).

The three SEPs committed to under the consent decree are as follows:

• Flint Creek SEP (Montana): $5,500,000

• Battle Mountain Community Drinking Water Improvement Project (Nevada): $3,500,000

• Institute Air Quality SEP (West Virginia): $3,000,000

• Total SEP commitment: $12,000,000

3.6. Financial Assurance

The consent decree requires TMC and its subsidiaries to establish and maintain financial assurance in the total amount of $245.0 million, covering remediation obligations at all four affected facilities. The financial assurance is structured as follows:

(a) Surety Bond: 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). The annual premium for the surety bond is 1.85%, or approximately $3,052,500 per year.

(b) Remediation Trust Fund: A remediation trust fund in the amount of $80.0 million, to be established and held by Larchfield Trust Company, N.A. (Trust Agreement No. LTC-REM-2025-1177). The designated trustee is David Henshaw of Larchfield Trust Company, N.A.

The deadline to establish the remediation trust fund and post the surety bond and all other required financial assurance instruments is September 12, 2025, which is 90 days after the Effective Date of the consent decree.

3.7. Independent Monitor

The consent decree provides for the appointment of a court-appointed independent environmental monitor. The parties have agreed that Verdant Analytics, Inc. (Dr. Kamal Osei, Senior Managing Director; Portland, Oregon) shall serve as the independent monitor. Verdant Analytics will be responsible for conducting quarterly compliance audits at each of the four affected facilities and for preparing annual public reports summarizing the defendants' compliance with the consent decree's remedial and operational requirements.

The estimated cost of the independent monitor engagement is $4.8 million over a five-year period, or approximately $960,000 per year. These costs will be borne by the defendants as provided in the consent decree.

3.8. Stipulated Penalties

The consent decree contains stipulated penalty provisions applicable to any violation of the decree's requirements. The stipulated penalties are structured on a tiered, escalating basis as follows:

• Days 1–30 of noncompliance: $1,500 per day per violation

• Days 31–60 of noncompliance: $3,000 per day per violation

• Day 61 and thereafter: $5,500 per day per violation

These stipulated penalties are in addition to any other remedies available to the plaintiffs under applicable law.

3.9. Other Key Structural Provisions

Force Majeure. The consent decree contains a force majeure provision consistent with standard EPA consent decree practice. Under this provision, a defendant may assert a force majeure defense to a claimed violation of the decree if the violation was caused by circumstances beyond the defendant's control. The claiming party must provide written notice to EPA within 15 days of the event or circumstances giving rise to the force majeure claim. Disputes regarding the applicability of the force majeure defense are resolved under the consent decree's dispute resolution provision.

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

(i) Informal Negotiation: The parties shall first attempt to resolve any dispute through informal negotiation for a period of 30 days following written notice of the dispute.

(ii) Formal EPA Decision: If the dispute is not resolved through informal negotiation, EPA shall issue a formal written decision within 30 days, setting forth its position on the dispute and the factual and legal basis therefor.

(iii) Judicial Review: Any party aggrieved by EPA's formal decision may petition the Court for judicial review within 30 days of the date of EPA's decision. The Court's review shall be conducted on the administrative record, supplemented as appropriate.

Termination. The consent decree may be terminated on a site-by-site basis upon certification of completion by EPA and the independent monitor. No site may be terminated from the decree sooner than five years after the completion of all remedial construction at the relevant site. Termination is subject to Court approval and public notice.

4. Key Upcoming Dates and Milestones

For your convenience, we summarize below the key upcoming dates and milestones in connection with the consent decree:

We note that several of the dates identified above as "target" dates are subject to adjustment based on the Court's schedule and the progress of the public comment process. We will keep your office apprised of any changes to these dates as they become known.

5. Request for State Permit Coordination

We respectfully request that NV DEP and the Nevada Attorney General's Office coordinate with TMC — acting through its Nevada local counsel, sagebrush Law Group, PLLC, and its lead partner Denise Quartaro — regarding parallel state environmental permit obligations that may be affected by or relate to the consent decree's remedial action requirements at the Bonanza Creek facility.

We have identified the following specific areas in which coordination between the state and TMC will be necessary or beneficial:

(a) Nevada Water Pollution Control Permits. The consent decree's remediation obligations at Bonanza Creek, including liner repair, process-solution treatment, and pit-lake water management, may implicate or require modifications to Nevada water pollution control permits currently held by BCM. We request the opportunity to coordinate with NV DEP to ensure that all state permitting actions are aligned with the federal consent decree's requirements and timelines.

(b) State Mining Reclamation Permits. The remedial actions required under the consent decree — particularly with respect to the management of spent heap-leach ore and the closure and containment of the heap-leach pad — may necessitate modifications to BCM's existing state mining reclamation permits. We request NV DEP's guidance on the process and timeline for any such modifications.

(c) Alignment of State Permit Schedules with Federal Consent Decree Milestones. To the extent that state permit applications, modifications, or renewals are required in connection with the consent decree's remedial actions, we request coordination to ensure that state permit schedules are aligned with the federal milestones set forth in the decree. Any misalignment between federal and state deadlines could create compliance risks for BCM, and we wish to avoid such risks through proactive coordination.

(d) State-Specific Reporting and Monitoring Requirements. The consent decree establishes a detailed sampling and monitoring plan for the Bonanza Creek facility, including quarterly compliance audits by the independent monitor. We request coordination with NV DEP to identify any state-specific reporting or monitoring requirements that may overlap with or supplement the federal consent decree's monitoring provisions, with a view toward eliminating duplication and ensuring comprehensive environmental oversight.

C&H is currently preparing a separate memorandum on state permit coordination and parallel state compliance obligations, which we anticipate will be finalized and transmitted to your office on or about February 8, 2025. That memorandum will address each of the foregoing topics in greater detail and will include specific recommendations for coordinating state and federal permitting and compliance activities.

In the meantime, we would welcome the opportunity to arrange a call or in-person meeting among Mr. Fuentes, Ms. Quartaro, and C&H attorneys to discuss coordination logistics and any preliminary questions or concerns your office may have regarding these matters.

6. Nevada's Joinder as Co-Plaintiff

As noted above, signature pages and joinder documents for Nevada's participation as a co-plaintiff in the consent decree are being circulated separately to your office. The target date for execution of the Nevada signature pages and joinder is February 14, 2025, in advance of the anticipated lodging of the consent decree with the Court on or about February 19, 2025.

We respectfully request that Mr. Fuentes confirm the authorized signatory for the State of Nevada and advise us of any additional documentation or approvals that the Nevada Attorney General's Office may require before execution of the joinder. If there are internal review or approval procedures within your office that may affect the timeline for execution, we would appreciate early notice so that we can coordinate with DOJ counsel regarding any necessary adjustments to the lodging schedule.

Draft signature pages and the form of joinder are enclosed with this letter for your review and comment.

7. Confidentiality and Privilege Reservation

We wish to note that certain portions of the consent decree and the underlying negotiation materials remain subject to the terms of the confidentiality agreement executed by the parties on February 3, 2025, in connection with the final negotiation session. The information contained in this letter is shared with your office in the context of Nevada's co-plaintiff relationship and is intended to facilitate Nevada's review and execution of the consent decree.

TMC expressly reserves all applicable attorney-client privilege and work product protections with respect to the communications, analyses, and internal deliberations underlying the negotiation and preparation of the consent decree and related documents. Nothing in this letter or the enclosed materials shall be construed as a waiver of any such privilege or protection.

We further note that, upon lodging with the Court, the consent decree will become a public document and will be subject to a 30-day public comment period as required by 28 C.F.R. § 50.7. Until that time, we ask that the enclosed materials be treated as confidential and shared only with those individuals within the Nevada Attorney General's Office and NV DEP who have a need to review them in connection with the settlement process.

8. Closing

We appreciate the Nevada Attorney General's Office's and NV DEP's continued cooperation in this matter. We are committed to maintaining a constructive and transparent working relationship with your office throughout the implementation of the consent decree and the remediation of the Bonanza Creek facility.

Should you require additional information regarding any aspect of the consent decree, the remediation obligations, the supplemental environmental project, the financial assurance requirements, or the state permit coordination issues discussed in this letter, please do not hesitate to contact the undersigned directly. For Nevada-specific matters, including questions regarding state permitting and local coordination, you may also contact Denise Quartaro at sagebrush Law Group, PLLC, 3960 Howard Hughes Parkway, Suite 500, Las Vegas, Nevada 89169.

We look forward to working with you and your colleagues as this matter moves toward resolution and the commencement of remedial activities at Bonanza Creek.

Respectfully submitted,

CALDERWOOD & HARKNESS LLP

By: ________

Harrison Wexford, Partner C&H Matter No. 1039-00003

cc:

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

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

Denise Quartaro, sagebrush Law Group, PLLC (Nevada local counsel)

Philip Orenstein, Lead DOJ Trial Attorney, Environmental Enforcement Section, Environment and Natural Resources Division, U.S. Department of Justice

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

Jennifer Whitfield, EPA Project Coordinator (Bonanza Creek), EPA Region 9

Enclosures:

1. Consent Decree — Substantially Final Agreed Text (dated February 3, 2025) (redacted as appropriate)

2. Draft State Co-Plaintiff Signature Pages and Joinder for Nevada

3. Bonanza Creek Liner Repair and Containment Plan — Scope of Work (dated February 14, 2025)

4. SEP Description and Budget — Battle Mountain Community Drinking Water Improvement Project (dated January 28, 2025)

Installment	Percentage	Amount	Due Date
First	25%	$7,875,000	July 14, 2025 (30 days after Effective Date)
Second	25%	$7,875,000	June 14, 2026 (12 months after Effective Date)
Third	25%	$7,875,000	June 14, 2027 (24 months after Effective Date)
Fourth	25%	$7,875,000	June 14, 2028 (36 months after Effective Date)
Date	Milestone
February 14, 2025	Nevada co-plaintiff signature pages and joinder due
February 19, 2025 (target)	Consent decree lodged with U.S. District Court; 30-day public comment period commences
March 21, 2025	Public comment period closes
April 7, 2025	DOJ files motion for entry of consent decree with response to public comments
April 28, 2025 (target)	Court hearing on motion for entry of consent decree
May 15, 2025 (target)	Expected entry of consent decree
June 14, 2025	Effective Date (30 days after entry, per decree § IV)
July 14, 2025	First civil penalty installment due ($7,875,000)
September 12, 2025	Deadline to establish remediation trust fund and post financial assurance
June 14, 2026	Deadline to commence Bonanza Creek liner repair and containment

CALDERWOOD & HARKNESS LLP Attorneys at Law
February 5, 2025
Via Electronic Mail and U.S. Mail
Ricardo Fuentes, Deputy Attorney General Nevada Attorney General's Office 100 North Carson Street Carson City, Nevada 89701
Re: Status Update and Consent Decree Summary — Bonanza Creek Gold Mine, Lander County, Nevada; United States of America and State of Montana v. Torchlight Mining Corp. et al., Civil Action No. 9:24-cv-00087-DWM, U.S. District Court for the District of Montana, Missoula Division
Dear Mr. Fuentes:
1. Purpose of This Letter
Calderwood & Harkness LLP ("C&H") serves as lead outside counsel to Torchlight Mining Corp. ("TMC") and its U.S. subsidiaries in the above-referenced matter (C&H Matter No. 1039-00003). We write to provide the State of Nevada, Division of Environmental Protection ("NV DEP"), and the Nevada Attorney General's Office with a comprehensive status update regarding the substantially final consent decree that has been negotiated with the United States Department of Justice ("DOJ"), the United States Environmental Protection Agency ("EPA"), and the co-plaintiff states in the captioned enforcement action.
As you are aware, Nevada is a co-plaintiff in this action with respect to the Bonanza Creek Gold Mine facility ("Bonanza Creek" or the "Facility") located in Lander County, Nevada. The Facility is operated by Bonanza Creek Mining, LLC ("BCM"), a wholly owned subsidiary of Torchlight Mining (U.S.) Inc. ("TM(US)"), which is in turn wholly owned by TMC. The purpose of this letter is to summarize the material terms of the consent decree as they specifically relate to the Bonanza Creek facility, and to address certain coordination issues pertinent to Nevada's interests as a co-plaintiff.
The consent decree text was substantially finalized on February 3, 2025, following in-person negotiations with DOJ and EPA counsel in Washington, D.C. We are pleased to report that the parties have reached agreement on all material terms, and we anticipate that the decree will be lodged with the Court later this month.
We wish to acknowledge your role as lead state counsel for Nevada in this matter and to express our sincere appreciation for the constructive participation of your office and NV DEP throughout the settlement process. Nevada's input has been instrumental in shaping the remedial and supplemental environmental project provisions that directly affect Lander County and surrounding communities.
Finally, we wish to note that sagebrush Law Group, PLLC, led by partner Denise Quartaro, serves as TMC's Nevada-licensed local counsel and is coordinating directly with your office on state-specific matters. Ms. Quartaro's contact information is provided at the conclusion of this letter, and she remains available to address any questions or concerns you or your colleagues may have regarding Nevada-specific issues arising under the consent decree.
2. Background — The Enforcement Action
On January 18, 2024, the DOJ, on behalf of the EPA, filed a complaint in the United States District Court for the District of Montana, Missoula Division (Civil Action No. 9:24-cv-00087-DWM), before the Honorable Donald W. Molloy, Senior Judge, sitting by designation. The complaint alleged violations of the Clean Water Act ("CWA"), the Resource Conservation and Recovery Act ("RCRA"), and the Migratory Bird Treaty Act ("MBTA") at four Torchlight-operated or formerly operated facilities located across the states of Montana, Nevada, and West Virginia.
The named defendants in the action are: (1) Torchlight Mining Corp.; (2) Torchlight Mining (U.S.) Inc.; (3) Torchlight Specialty Chemicals, Inc.; (4) Ridgecrest Mine Holdings, LLC; and (5) Bonanza Creek Mining, LLC. The complaint seeks injunctive relief, civil penalties, and remediation of environmental contamination at each of the four affected facilities.
Nevada intervened as a co-plaintiff with respect to the Bonanza Creek Mine facility, asserting parallel state environmental claims and participating in the enforcement action alongside the United States and the State of Montana.
The procedural history of the matter is summarized below:
• March 5, 2024: TMC and all named defendant subsidiaries filed their respective answers to the complaint, raising various affirmative defenses while preserving all rights and objections.
• April 22, 2024: The parties executed a Tolling Agreement, which tolls the applicable statutes of limitations for all claims asserted in the complaint through December 31, 2025. The Tolling Agreement was filed with the Court and approved by order dated April 25, 2024.
• May 15, 2024: The Court ordered the parties to participate in mediation before Magistrate Judge Clara Finnegan. The mediation session was conducted on that date and continued on an informal basis through the summer months.
• July 30, 2024: The parties reached an agreement in principle on the fundamental framework of a consent decree, including the scope of remedial obligations, the general magnitude of civil penalties, and the inclusion of supplemental environmental projects.
• October 21, 2024: C&H was formally engaged by TMC as lead outside counsel for the consent decree negotiations and related matters, replacing TMC's prior environmental counsel of record.
Following C&H's engagement, the parties entered into an intensive period of drafting and negotiation, the timeline for which is summarized as follows:
• November 8, 2024: DOJ circulated its first complete draft of the consent decree to the defendants and co-plaintiff states.
• December 16, 2024: TMC, through C&H, submitted its comprehensive redline of the DOJ draft, incorporating comments from all defendants and addressing remediation scope, financial assurance mechanisms, payment schedules, and supplemental environmental project terms.
• January 14, 2025: DOJ and EPA circulated their counter-redline, reflecting partial acceptance of TMC's proposed revisions and raising additional issues with respect to stipulated penalty provisions and independent monitoring requirements.
• January 24, 2025: TMC submitted its second redline addressing the remaining open issues and proposing compromise language on contested provisions.
• February 3, 2025: Following in-person negotiations among counsel for all parties in Washington, D.C., the parties reached agreement on a substantially final text of the consent decree.
The consent decree, as substantially finalized, addresses remediation obligations, civil penalties, supplemental environmental projects, financial assurance requirements, independent monitoring, and dispute resolution mechanisms applicable to all four affected facilities. The following section summarizes the terms as they specifically relate to the Bonanza Creek Mine.
3. Summary of Consent Decree Terms — Bonanza Creek Mine
3.1. Facility Description
The Bonanza Creek Gold Mine is an open-pit heap-leach gold mining operation located at County Road 447, Mile Marker 12, Lander County, Nevada 89820, in an unincorporated area approximately 28 miles south of Battle Mountain, Nevada. The Facility is owned and operated by Bonanza Creek Mining, LLC, a Nevada limited liability company (Nevada Secretary of State Entity No. E0518294731), which is wholly owned by Torchlight Mining (U.S.) Inc.
The mine footprint encompasses approximately 5,600 acres, with the total controlled property area extending to approximately 12,400 acres. Bonanza Creek has been operational since 2001, and active mining operations are ongoing at the site. The Facility's operations include open-pit mining, heap-leach processing using cyanide solution, ore processing, and associated waste management activities.
For purposes of EPA regulatory jurisdiction, the Bonanza Creek Mine is subject to both RCRA Corrective Action requirements and CWA enforcement. The Facility falls within the jurisdiction of EPA Region 9, which has been the lead EPA region for enforcement purposes throughout the pendency of the action.
3.2. Alleged Violations at Bonanza Creek
The complaint alleges the following categories of violations at the Bonanza Creek facility:
Clean Water Act § 301 — Unpermitted Discharges. The government alleges that BCM discharged process solution from the heap-leach pad to an ephemeral tributary of the Reese River through a torn liner without authorization under a National Pollutant Discharge Elimination System ("NPDES") permit or other applicable CWA permit. Three documented releases have been identified:
(i) March 17, 2022;
(ii) August 9, 2022; and
(iii) January 22, 2023.
Each of these releases resulted in the migration of process solution containing elevated concentrations of weak acid dissociable ("WAD") cyanide and mercury into the ephemeral drainage.
RCRA § 3004 — Hazardous Waste Management. The government alleges that BCM managed spent heap-leach ore in a manner inconsistent with applicable RCRA requirements for the handling and disposal of hazardous waste, including failures in characterization, containment, and reporting.
Migratory Bird Treaty Act. The government alleges that 17 documented avian mortalities occurred in solution ponds at the Bonanza Creek facility between 2021 and 2023, in violation of the MBTA's prohibition on the taking of migratory birds.
Principal Contaminants. The principal contaminants of concern at the Bonanza Creek facility include:
• WAD cyanide, measured at 0.62 mg/L in the heap-leach pad underdrain, as compared to the applicable discharge limit of 0.022 mg/L;
• Mercury, measured at an average concentration of 12.4 µg/L, as compared to the applicable water-quality criterion of 0.77 µg/L; and
• Selenium, detected at elevated concentrations in pit-lake water.
The EPA Project Coordinator assigned to the Bonanza Creek facility is Jennifer Whitfield of EPA Region 9.
3.3. Remediation Obligations
The consent decree imposes comprehensive remediation obligations on BCM (and, through the corporate guarantee and financial assurance provisions, on TMC and TM(US)) with respect to the Bonanza Creek facility. The estimated remediation cost, in nominal terms, is $63.2 million over a 20-year period, as calculated by Pinnacle Creek Environmental, LLC ("Pinnacle Creek"), TMC's environmental remediation consultant. The Pinnacle Creek engagement is led by Dr. Astrid Bergmann, P.E. The net present value of the estimated remediation cost, discounted at a 3% annual rate, is approximately $47.1 million (calculated as $63.2M × 0.7454 ≈ $47.1M).
The key remedial actions required under the consent decree for the Bonanza Creek facility include the following:
(a) Liner Repair and Containment at the Heap-Leach Pad. BCM is required to undertake comprehensive liner repair and containment measures to address the documented process-solution releases and to prevent future releases of cyanide- and mercury-bearing process solution from the heap-leach pad. The scope of this work is detailed in the Bonanza Creek Liner Repair and Containment Plan — Scope of Work, a copy of which is enclosed with this letter.
(b) Management of Spent Heap-Leach Ore. BCM is required to implement a spent heap-leach ore management program in compliance with applicable RCRA requirements, including proper characterization, containment, treatment, and disposal of spent ore materials.
(c) Cyanide and Mercury Treatment in Process Solution. BCM is required to install and operate enhanced treatment systems for cyanide destruction and mercury removal in process solution circulated through the heap-leach operation.
(d) Pit-Lake Water Management. BCM is required to develop and implement a pit-lake water management plan addressing selenium contamination and other water-quality concerns in the pit lake.
(e) Avian Deterrent Systems for Solution Ponds. BCM is required to install, maintain, and operate avian deterrent systems at all open solution ponds at the Facility, including netting, hazing systems, and monitoring protocols designed to prevent further avian mortalities.
The deadline to commence the liner repair and containment work is June 14, 2026, which is 12 months after the Effective Date of the consent decree (as defined in Section 3.4 below). The Bonanza Creek Liner Repair and Containment Plan — Scope of Work specifically addresses the three documented process-solution releases and the cyanide and mercury contamination associated therewith.
3.4. Civil Penalty — Bonanza Creek Allocation
The total civil penalty imposed under the consent decree across all four affected facilities is $31.5 million. The civil penalty allocated to the Bonanza Creek site is $7.9 million.
The payment schedule for the combined civil penalty is as follows:
The Effective Date of the consent decree is defined as the date that is 30 days after the date of entry of the decree by the Court. Assuming entry on or about May 15, 2025, the Effective Date would be June 14, 2025, and the first civil penalty installment would be due on July 14, 2025.
3.5. Supplemental Environmental Project — Battle Mountain
As part of the consent decree, TMC has committed to undertaking three supplemental environmental projects ("SEPs") with a combined budget of $12.0 million. The SEP applicable to Nevada is the Battle Mountain Community Drinking Water Improvement Project, which has a dedicated budget of $3.5 million.
The scope of the Battle Mountain SEP encompasses the upgrade of the municipal water treatment facility in Battle Mountain, Lander County, Nevada. The project is designed to provide direct environmental and public health benefits to the community most proximate to the Bonanza Creek facility. A detailed description of the SEP scope and budget is enclosed with this letter (SEP Description and Budget — Battle Mountain Community Drinking Water Improvement Project, dated January 28, 2025).
The three SEPs committed to under the consent decree are as follows:
• Flint Creek SEP (Montana): $5,500,000
• Battle Mountain Community Drinking Water Improvement Project (Nevada): $3,500,000
• Institute Air Quality SEP (West Virginia): $3,000,000
• Total SEP commitment: $12,000,000
3.6. Financial Assurance
The consent decree requires TMC and its subsidiaries to establish and maintain financial assurance in the total amount of $245.0 million, covering remediation obligations at all four affected facilities. The financial assurance is structured as follows:
(a) Surety Bond: 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). The annual premium for the surety bond is 1.85%, or approximately $3,052,500 per year.
(b) Remediation Trust Fund: A remediation trust fund in the amount of $80.0 million, to be established and held by Larchfield Trust Company, N.A. (Trust Agreement No. LTC-REM-2025-1177). The designated trustee is David Henshaw of Larchfield Trust Company, N.A.
The deadline to establish the remediation trust fund and post the surety bond and all other required financial assurance instruments is September 12, 2025, which is 90 days after the Effective Date of the consent decree.
3.7. Independent Monitor
The consent decree provides for the appointment of a court-appointed independent environmental monitor. The parties have agreed that Verdant Analytics, Inc. (Dr. Kamal Osei, Senior Managing Director; Portland, Oregon) shall serve as the independent monitor. Verdant Analytics will be responsible for conducting quarterly compliance audits at each of the four affected facilities and for preparing annual public reports summarizing the defendants' compliance with the consent decree's remedial and operational requirements.
The estimated cost of the independent monitor engagement is $4.8 million over a five-year period, or approximately $960,000 per year. These costs will be borne by the defendants as provided in the consent decree.
3.8. Stipulated Penalties
The consent decree contains stipulated penalty provisions applicable to any violation of the decree's requirements. The stipulated penalties are structured on a tiered, escalating basis as follows:
• Days 1–30 of noncompliance: $1,500 per day per violation
• Days 31–60 of noncompliance: $3,000 per day per violation
• Day 61 and thereafter: $5,500 per day per violation
These stipulated penalties are in addition to any other remedies available to the plaintiffs under applicable law.
3.9. Other Key Structural Provisions
Force Majeure. The consent decree contains a force majeure provision consistent with standard EPA consent decree practice. Under this provision, a defendant may assert a force majeure defense to a claimed violation of the decree if the violation was caused by circumstances beyond the defendant's control. The claiming party must provide written notice to EPA within 15 days of the event or circumstances giving rise to the force majeure claim. Disputes regarding the applicability of the force majeure defense are resolved under the consent decree's dispute resolution provision.
Dispute Resolution. The consent decree establishes a three-tier dispute resolution mechanism:
(i) Informal Negotiation: The parties shall first attempt to resolve any dispute through informal negotiation for a period of 30 days following written notice of the dispute.
(ii) Formal EPA Decision: If the dispute is not resolved through informal negotiation, EPA shall issue a formal written decision within 30 days, setting forth its position on the dispute and the factual and legal basis therefor.
(iii) Judicial Review: Any party aggrieved by EPA's formal decision may petition the Court for judicial review within 30 days of the date of EPA's decision. The Court's review shall be conducted on the administrative record, supplemented as appropriate.
Termination. The consent decree may be terminated on a site-by-site basis upon certification of completion by EPA and the independent monitor. No site may be terminated from the decree sooner than five years after the completion of all remedial construction at the relevant site. Termination is subject to Court approval and public notice.
4. Key Upcoming Dates and Milestones
For your convenience, we summarize below the key upcoming dates and milestones in connection with the consent decree:
We note that several of the dates identified above as "target" dates are subject to adjustment based on the Court's schedule and the progress of the public comment process. We will keep your office apprised of any changes to these dates as they become known.
5. Request for State Permit Coordination
We respectfully request that NV DEP and the Nevada Attorney General's Office coordinate with TMC — acting through its Nevada local counsel, sagebrush Law Group, PLLC, and its lead partner Denise Quartaro — regarding parallel state environmental permit obligations that may be affected by or relate to the consent decree's remedial action requirements at the Bonanza Creek facility.
We have identified the following specific areas in which coordination between the state and TMC will be necessary or beneficial:
(a) Nevada Water Pollution Control Permits. The consent decree's remediation obligations at Bonanza Creek, including liner repair, process-solution treatment, and pit-lake water management, may implicate or require modifications to Nevada water pollution control permits currently held by BCM. We request the opportunity to coordinate with NV DEP to ensure that all state permitting actions are aligned with the federal consent decree's requirements and timelines.
(b) State Mining Reclamation Permits. The remedial actions required under the consent decree — particularly with respect to the management of spent heap-leach ore and the closure and containment of the heap-leach pad — may necessitate modifications to BCM's existing state mining reclamation permits. We request NV DEP's guidance on the process and timeline for any such modifications.
(c) Alignment of State Permit Schedules with Federal Consent Decree Milestones. To the extent that state permit applications, modifications, or renewals are required in connection with the consent decree's remedial actions, we request coordination to ensure that state permit schedules are aligned with the federal milestones set forth in the decree. Any misalignment between federal and state deadlines could create compliance risks for BCM, and we wish to avoid such risks through proactive coordination.
(d) State-Specific Reporting and Monitoring Requirements. The consent decree establishes a detailed sampling and monitoring plan for the Bonanza Creek facility, including quarterly compliance audits by the independent monitor. We request coordination with NV DEP to identify any state-specific reporting or monitoring requirements that may overlap with or supplement the federal consent decree's monitoring provisions, with a view toward eliminating duplication and ensuring comprehensive environmental oversight.
C&H is currently preparing a separate memorandum on state permit coordination and parallel state compliance obligations, which we anticipate will be finalized and transmitted to your office on or about February 8, 2025. That memorandum will address each of the foregoing topics in greater detail and will include specific recommendations for coordinating state and federal permitting and compliance activities.
In the meantime, we would welcome the opportunity to arrange a call or in-person meeting among Mr. Fuentes, Ms. Quartaro, and C&H attorneys to discuss coordination logistics and any preliminary questions or concerns your office may have regarding these matters.
6. Nevada's Joinder as Co-Plaintiff
As noted above, signature pages and joinder documents for Nevada's participation as a co-plaintiff in the consent decree are being circulated separately to your office. The target date for execution of the Nevada signature pages and joinder is February 14, 2025, in advance of the anticipated lodging of the consent decree with the Court on or about February 19, 2025.
We respectfully request that Mr. Fuentes confirm the authorized signatory for the State of Nevada and advise us of any additional documentation or approvals that the Nevada Attorney General's Office may require before execution of the joinder. If there are internal review or approval procedures within your office that may affect the timeline for execution, we would appreciate early notice so that we can coordinate with DOJ counsel regarding any necessary adjustments to the lodging schedule.
Draft signature pages and the form of joinder are enclosed with this letter for your review and comment.
7. Confidentiality and Privilege Reservation
We wish to note that certain portions of the consent decree and the underlying negotiation materials remain subject to the terms of the confidentiality agreement executed by the parties on February 3, 2025, in connection with the final negotiation session. The information contained in this letter is shared with your office in the context of Nevada's co-plaintiff relationship and is intended to facilitate Nevada's review and execution of the consent decree.
TMC expressly reserves all applicable attorney-client privilege and work product protections with respect to the communications, analyses, and internal deliberations underlying the negotiation and preparation of the consent decree and related documents. Nothing in this letter or the enclosed materials shall be construed as a waiver of any such privilege or protection.
We further note that, upon lodging with the Court, the consent decree will become a public document and will be subject to a 30-day public comment period as required by 28 C.F.R. § 50.7. Until that time, we ask that the enclosed materials be treated as confidential and shared only with those individuals within the Nevada Attorney General's Office and NV DEP who have a need to review them in connection with the settlement process.
8. Closing
We appreciate the Nevada Attorney General's Office's and NV DEP's continued cooperation in this matter. We are committed to maintaining a constructive and transparent working relationship with your office throughout the implementation of the consent decree and the remediation of the Bonanza Creek facility.
Should you require additional information regarding any aspect of the consent decree, the remediation obligations, the supplemental environmental project, the financial assurance requirements, or the state permit coordination issues discussed in this letter, please do not hesitate to contact the undersigned directly. For Nevada-specific matters, including questions regarding state permitting and local coordination, you may also contact Denise Quartaro at sagebrush Law Group, PLLC, 3960 Howard Hughes Parkway, Suite 500, Las Vegas, Nevada 89169.
We look forward to working with you and your colleagues as this matter moves toward resolution and the commencement of remedial activities at Bonanza Creek.
Respectfully submitted,
CALDERWOOD & HARKNESS LLP
By: ________
Harrison Wexford, Partner C&H Matter No. 1039-00003
cc:
Miriam Soo-Hwan Park, General Counsel, Torchlight Mining Corp.
Gareth Linford, Vice President, Environmental Health & Safety, Torchlight Mining Corp.
Denise Quartaro, sagebrush Law Group, PLLC (Nevada local counsel)
Philip Orenstein, Lead DOJ Trial Attorney, Environmental Enforcement Section, Environment and Natural Resources Division, U.S. Department of Justice
Margaret Coulson, Lead EPA Case Attorney, Office of Enforcement and Compliance Assurance, U.S. Environmental Protection Agency
Jennifer Whitfield, EPA Project Coordinator (Bonanza Creek), EPA Region 9
Enclosures:
1. Consent Decree — Substantially Final Agreed Text (dated February 3, 2025) (redacted as appropriate)
2. Draft State Co-Plaintiff Signature Pages and Joinder for Nevada
3. Bonanza Creek Liner Repair and Containment Plan — Scope of Work (dated February 14, 2025)
4. SEP Description and Budget — Battle Mountain Community Drinking Water Improvement Project (dated January 28, 2025)
Installment | Percentage | Amount | Due Date
First | 25% | $7,875,000 | July 14, 2025 (30 days after Effective Date)
Second | 25% | $7,875,000 | June 14, 2026 (12 months after Effective Date)
Third | 25% | $7,875,000 | June 14, 2027 (24 months after Effective Date)
Fourth | 25% | $7,875,000 | June 14, 2028 (36 months after Effective Date)
Date | Milestone
February 14, 2025 | Nevada co-plaintiff signature pages and joinder due
February 19, 2025 (target) | Consent decree lodged with U.S. District Court; 30-day public comment period commences
March 21, 2025 | Public comment period closes
April 7, 2025 | DOJ files motion for entry of consent decree with response to public comments
April 28, 2025 (target) | Court hearing on motion for entry of consent decree
May 15, 2025 (target) | Expected entry of consent decree
June 14, 2025 | Effective Date (30 days after entry, per decree § IV)
July 14, 2025 | First civil penalty installment due ($7,875,000)
September 12, 2025 | Deadline to establish remediation trust fund and post financial assurance
June 14, 2026 | Deadline to commence Bonanza Creek liner repair and containment

CALDERWOOD & HARKNESS LLP Attorneys at Law

CALDERWOOD & HARKNESS LLP

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