PRIVILEGED AND CONFIDENTIAL — ATTORNEY WORK PRODUCT

CALDERWOOD & HARKNESS LLP 900 Third Avenue, 28th Floor New York, NY 10022 Tel: (212) 554-7000 | Fax: (212) 554-7001
PRIVILEGED AND CONFIDENTIAL — ATTORNEY WORK PRODUCT
INTERNAL CLOSING MEMORANDUM
July 16, 2024
Prepared by:
Derek Okonkwo, Lead Associate, Mergers & Acquisitions Tiffany Rosenthal, Working Associate, Mergers & Acquisitions
Reviewed by:
Beatrice Holloway, Responsible Partner, Mergers & Acquisitions James Prentice, Billing Partner, Mergers & Acquisitions
Re: Closing of $45,000,000 Cash Tender Offer by Torchlight Mining Corp. for All Outstanding Common Shares of Ridgeline Cobalt Inc. and Subsequent Short-Form Merger under DGCL § 253
Client: Torchlight Mining Corp.
Client Matter No.: 1039-00004
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I. EXECUTIVE SUMMARY
On July 16, 2024, Torchlight Mining Corp. ("Torchlight" or "TMC"), a corporation organized under the laws of the Province of British Columbia, Canada, and listed on the New York Stock Exchange (NYSE: TMC) and the Toronto Stock Exchange (TSX: TMC.TO), closed its $45,000,000 all-cash tender offer (the "Offer") for all 18,000,000 outstanding shares of common stock, par value $0.001 per share (the "Shares"), of Ridgeline Cobalt Inc. ("Ridgeline" or "RCI"), a corporation organized under the laws of the State of Delaware and listed on NYSE American (ticker: RCI), at a price of $2.50 per Share (the "Offer Price"). Torchlight is a diversified mining and chemicals company with operations across North America and significant exposure to critical minerals supply chains, including cobalt, nickel, and lithium.
As of the extended expiration date of the Offer (12:00 midnight, Eastern Time, on July 10, 2024), a total of 16,740,000 Shares (representing approximately 93.0% of the 18,000,000 Shares outstanding) had been validly tendered and not withdrawn. This result comfortably satisfied the minimum tender condition set forth in the Offer-to-Purchase Agreement, which required that at least 11,500,001 Shares (constituting a majority of the 23,000,000 Shares calculated on a fully diluted basis, inclusive of 18,000,000 common shares outstanding, 3,900,000 shares underlying senior secured convertible notes, and 1,100,000 shares underlying outstanding options and warrants) be validly tendered and not withdrawn prior to the expiration of the Offer.
Torchlight accepted all validly tendered Shares for payment on July 16, 2024. Simultaneously, and pursuant to the terms of the Offer-to-Purchase Agreement, Torchlight effected a short-form merger (the "Merger") under Section 253 of the Delaware General Corporation Law ("DGCL"), merging Ridgeline with and into Torchlight, with Torchlight continuing as the surviving entity. As a result of the Merger, Ridgeline ceased to exist as a separate legal entity, and each remaining Share not tendered in the Offer and not owned by Torchlight was converted into the right to receive $2.50 per Share in cash, without interest thereon, subject to applicable withholding taxes.
The Offer Price of $2.50 per Share represented a premium of approximately 38.89% over the undisturbed closing price of $1.80 per Share on March 13, 2024 (the last full trading day prior to the public announcement of the Offer), and a premium of approximately 45.35% over the 30-day volume-weighted average price ("VWAP") of $1.72 per Share for the period ending March 13, 2024. The aggregate consideration paid by Torchlight for all outstanding Shares was $45,000,000.
Calderwood & Harkness LLP ("Calderwood & Harkness" or the "Firm") served as legal counsel to Torchlight throughout all phases of the transaction, including structuring, negotiation, regulatory approvals, SEC filings, documentation of the tender offer and related agreements, satisfaction of closing conditions, execution of the closing, and effectuation of the short-form merger. The Firm's involvement began with the execution of an engagement letter on March 12, 2024, and continued through and including the closing date and the preparation of this memorandum.
This Closing Memorandum (this "Memorandum") has been prepared for the Firm's internal records and for the benefit of the client. It catalogs all material closing deliverables, executed transaction documents, funds flows, regulatory clearances, and post-closing obligations arising from the transaction. Copies of all executed documents and other deliverables referenced herein are maintained in the Firm's document management system and have been provided (or will be provided) to Patricia Edevane, General Counsel of Torchlight Mining Corp., as the designated client contact for post-closing matters.
II. PARTIES AND ADVISORS
A. Torchlight Mining Corp. (Acquirer / Client)
Full Legal Name: Torchlight Mining Corp.
Entity Type: Corporation organized and existing under the Business Corporations Act (British Columbia), Canada
Headquarters: 1200 – 885 West Georgia Street, Vancouver, BC V6C 3E8, Canada
Stock Exchange Listings: New York Stock Exchange (NYSE: TMC); Toronto Stock Exchange (TSX: TMC.TO); Torchlight is a "foreign private issuer" as defined under Rule 3b-4 of the Securities Exchange Act of 1934, as amended (the "Exchange Act"), and files annual reports on Form 20-F and current reports on Form 6-K with the U.S. Securities and Exchange Commission (the "SEC").
Employer Identification Number (EIN): 98-0743218
Delaware Registered Agent: Capitol Registered Agents, Inc., 850 New Burton Road, Suite 201, Dover, DE 19904 (for purposes of registration as a foreign corporation in the State of Delaware)
Key Officers and Contacts:
Torchlight is a diversified mining and chemicals company with primary operations in Ontario, British Columbia, and Quebec, Canada, and is currently developing a battery-grade cobalt sulfate refinery in Sudbury, Ontario, which is expected to be commissioned in Q1 2025. The acquisition of Ridgeline and its cobalt-focused mining assets is a key element of Torchlight's vertical integration strategy.
B. Ridgeline Cobalt Inc. (Target)
Full Legal Name: Ridgeline Cobalt Inc.
Entity Type: Corporation organized and existing under the General Corporation Law of the State of Delaware
Headquarters: 44 Lakeshore Drive, Suite 300, Marquette, MI 49855
Stock Exchange Listing: NYSE American (ticker: RCI)
Employer Identification Number (EIN): 83-2196504
Delaware Registered Agent: National Corporate Filing Services, Inc., 1209 Orange Street, Wilmington, DE 19801
Key Officers and Contacts:
Special Committee of the Board of Directors:
The Ridgeline Board of Directors formed a Special Committee on March 18, 2024, consisting of three independent directors, to evaluate the Offer and make a recommendation to the full Board and to Ridgeline's shareholders. The members of the Special Committee were:
The Special Committee, after receiving advice from Galbraith Haver & Steele LLP (as legal counsel) and Whitfield Partners LLC (as financial advisor), and after receiving the fairness opinion of Whitfield Partners LLC, recommended that Ridgeline shareholders tender their Shares in the Offer. This recommendation was reflected in Ridgeline's Schedule 14D-9 filed with the SEC on April 5, 2024, and remained in effect without modification through the closing of the Offer.
Following the closing of the Offer and the effectuation of the short-form merger on July 16, 2024, Ridgeline ceased to exist as a separate legal entity.
C. Other Key Parties
Pinnacle Venture Resources Fund II, LP (Significant Shareholder / Noteholder)
Address: 75 Ashbury Asset Advisors, Suite 1400, Boston, MA 02109
General Partner: Pinnacle Venture Resources GP II, LLC
Principal: Theodore "Ted" Vanderhoek, Managing Partner
EIN: 84-3317629
Pinnacle was the largest single shareholder of Ridgeline, holding 3,600,000 Shares (representing 20.0% of the Shares outstanding). In addition, Pinnacle held $7,800,000 in aggregate principal amount of 6.5% senior secured convertible notes of Ridgeline issued under an indenture dated June 30, 2022. Pinnacle entered into a Tender & Support Agreement with Torchlight on April 8, 2024, pursuant to which Pinnacle committed to tender all of its Shares and consented to repayment in full of the convertible notes (plus accrued and unpaid interest) at closing. The convertible notes were repaid in full at closing in the aggregate amount of $8,075,014 (consisting of $7,800,000 in principal and $275,014 in accrued interest).
Clearmont National Bank, N.A. (Escrow Agent)
Address: 300 Delaware Avenue, Suite 700, Wilmington, DE 19801
Clearmont was appointed as escrow agent under the Escrow Agreement dated July 16, 2024, and holds the $9,000,000 indemnification escrow in Escrow Account No. 4410-7832-001.
Hargrove Depositary Services, Inc. (Depositary / Paying Agent)
Address: 55 Water Street, New York, NY 10041
Hargrove was appointed as depositary and paying agent for the tender offer, responsible for receiving tenders of Shares, distributing the Letters of Transmittal, certifying final tender results, and distributing the Offer Price to tendering shareholders and to holders of Shares converted in the Merger.
Dominion Transfer & Trust Co. (Transfer Agent for RCI)
Address: 1100 Centre Street, Suite 600, Wilmington, DE 19805
Dominion served as the transfer agent and registrar for Ridgeline's common stock and coordinated with Hargrove Depositary Services in connection with the distribution of the Letters of Transmittal and the processing of tendered Shares.
Meridian Commercial Bank, N.A. (Revolver Agent / Lender)
Address: 383 Madison Avenue, New York, NY 10179
Meridian serves as administrative agent and a lender under Torchlight's existing C$500,000,000 revolving credit facility (dated September 15, 2022; maturing September 15, 2027). Torchlight drew C$40,000,000 (approximately US$29,200,000 at a spot exchange rate of C$1.00 = US$0.73) under the revolving credit facility to partially fund the Offer consideration and related transaction costs.
D. Advisors
1. Acquirer's Counsel — Calderwood & Harkness LLP
Address: 900 Third Avenue, 28th Floor, New York, NY 10022
Key Personnel:
Calderwood & Harkness served as legal counsel to Torchlight in connection with all aspects of the transaction, including structuring, negotiation, preparation of the Schedule TO and related SEC filings, preparation of the Offer-to-Purchase Agreement and ancillary agreements, HSR Act and Investment Canada Act filings, closing mechanics, and the short-form merger.
2. Target's Counsel — Galbraith Haver & Steele LLP
Address: One Liberty Plaza, 52nd Floor, New York, NY 10006
Key Personnel:
Galbraith Haver & Steele served as legal counsel to Ridgeline and its Special Committee in connection with the evaluation of the Offer, the negotiation of the Offer-to-Purchase Agreement, the preparation of the Schedule 14D-9, and related matters. Target counsel fees are subject to reimbursement by Torchlight at closing, capped at $350,000.
3. Acquirer's Financial Advisor — Blackford Ames Securities LLC
Address: 200 Park Avenue, Suite 4400, New York, NY 10166
Key Personnel: Richard Capewell, Managing Director
Blackford Ames served as financial advisor to Torchlight and delivered a fairness opinion to the Torchlight Board of Directors confirming that the Offer Price of $2.50 per Share was fair, from a financial point of view, to Torchlight. The advisory fee was $562,500 (1.25% of the aggregate consideration of $45,000,000), payable at closing.
4. Target's Financial Advisor — Whitfield Partners LLC
Address: 161 North Clark Street, Suite 2800, Chicago, IL 60601
Key Personnel: Joanna Whitfield, Managing Director
Whitfield Partners served as financial advisor to the Ridgeline Special Committee and delivered a fairness opinion confirming that the Offer Price of $2.50 per Share was fair, from a financial point of view, to the holders of Ridgeline common stock (other than Torchlight and its affiliates). The advisory fee was $675,000 (1.5% of the aggregate consideration of $45,000,000), payable by Ridgeline and reimbursed by Torchlight at closing.
5. Acquirer's Auditor — Fessenden & Co., CPA
Address: 800 – 1055 Dunsmuir Street, Vancouver, BC V7X 1L3
Key Personnel: Christine Maheux, Lead Engagement Partner
6. Target's Auditor — Aldgate Pryor LLP, CPA
Address: 211 West Fort Street, Suite 500, Detroit, MI 48226
Key Personnel: Dennis Pryor, Lead Engagement Partner
7. R&W Insurance Broker — Cartwright Insurance Group Ltd.
Address: 120 Broadway, Suite 3510, New York, NY 10271
Cartwright placed the representations and warranties insurance policy with Northern Shield Specialty Insurance Co. on behalf of the transaction parties.
8. R&W Insurer — Northern Shield Specialty Insurance Co.
Domicile: State of Connecticut
Northern Shield issued the representations and warranties insurance policy (Policy No. NSW-RWI-2024-05117) in connection with the transaction.
III. TRANSACTION TIMELINE
The following table sets forth a complete chronological summary of the material dates, events, and milestones in connection with the Offer and the Merger. All dates referenced below are in 2024 unless otherwise specified.
IV. CLOSING DELIVERABLES CHECKLIST
This Section IV sets forth a comprehensive checklist of all closing deliverables in connection with the Offer and the Merger, organized by category. The status of each deliverable is indicated. Copies of all documents referenced below are maintained in the Firm's document management system and are appended to this Memorandum as the exhibits referenced in Section XI.
A. Transaction Agreements (Executed Documents)
1. Offer-to-Purchase Agreement (Execution Version)
Date: May 2, 2024
Parties: Torchlight Mining Corp. and Ridgeline Cobalt Inc.
Signatories: Henrik Aldermann (Chief Executive Officer, Torchlight Mining Corp.) and Gordon McTavish (Chief Executive Officer, Ridgeline Cobalt Inc.)
Summary: The Offer-to-Purchase Agreement is the definitive transaction agreement governing the Offer and sets forth the complete terms and conditions thereof. Key terms include:
•  Offer Price: $2.50 per Share in cash, without interest thereon, for all 18,000,000 outstanding Shares of Ridgeline common stock (par value $0.001 per share), representing aggregate consideration of $45,000,000.
•  Minimum Tender Condition: At least 11,500,001 Shares (constituting a majority of the 23,000,000 Shares calculated on a fully diluted basis) must be validly tendered and not withdrawn prior to the expiration of the Offer. Fully diluted share count includes 18,000,000 common shares outstanding, 3,900,000 shares underlying the 6.5% senior secured convertible notes, and 1,100,000 shares underlying outstanding options and warrants.
•  Regulatory Conditions: Receipt of HSR Act clearance (or expiration or early termination of the HSR waiting period) and clearance under the Investment Canada Act.
•  Representations and Warranties: Comprehensive representations and warranties made by each of Torchlight and Ridgeline covering, among other things, organization and authority, capitalization, financial statements, absence of undisclosed liabilities, compliance with laws, environmental matters (including mining claims, mineral leases, and permits), material contracts, employee benefit plans, tax matters, intellectual property, insurance, and absence of material adverse effect.
•  Non-Solicitation Covenants: Ridgeline agreed not to solicit, initiate, or knowingly encourage any alternative acquisition proposal, subject to a fiduciary out permitting the Ridgeline Board (acting on the recommendation of the Special Committee) to engage in discussions with, and provide information to, a third party making an unsolicited bona fide written acquisition proposal that the Special Committee determines in good faith, after consultation with its financial advisor and outside legal counsel, constitutes or is reasonably likely to lead to a Superior Proposal (as defined therein).
•  Indemnification Provisions: The former shareholders of Ridgeline agreed to indemnify Torchlight for breaches of representations, warranties, and covenants, subject to the following limitations:
(a) General Cap: $9,000,000 (20% of the aggregate consideration of $45,000,000);
(b) Tipping Basket: $450,000 — claims are recoverable from the first dollar once aggregate indemnifiable losses exceed the tipping basket amount;
(c) De Minimis Threshold: $25,000 per individual claim — individual claims below this threshold are disregarded for purposes of calculating whether the tipping basket has been exceeded;
(d) Fundamental Representations Cap: $45,000,000 (100% of aggregate consideration) for breaches of Fundamental Representations (defined to include representations regarding organization and authority, capitalization, and title to assets);
(e) Survival: General representations and warranties survive for a period of 18 months following closing (expiring January 16, 2026); Fundamental Representations survive for a period of 36 months following closing (expiring July 16, 2027); tax representations survive until 60 days after the expiration of the applicable statute of limitations.
•  Termination Fee: $1,575,000 (3.5% of aggregate consideration), payable by Ridgeline to Torchlight in the event of certain termination events, including a change in the Board recommendation or entry into a definitive agreement with respect to a Superior Proposal.
•  Reverse Termination Fee: $2,250,000 (5.0% of aggregate consideration), payable by Torchlight to Ridgeline in the event of certain termination events attributable to Torchlight's failure to consummate the Offer, including failure to obtain financing.
•  Convertible Note Treatment: The 6.5% senior secured convertible notes held by Pinnacle Venture Resources Fund II, LP ($7,800,000 aggregate principal amount, plus accrued interest) to be repaid in full at closing in accordance with the terms of the Tender & Support Agreement.
•  Short-Form Merger: Following consummation of the Offer, if Torchlight owns at least 90% of the outstanding Shares, Torchlight will effect a short-form merger under DGCL § 253, merging Ridgeline with and into Torchlight, with each remaining Share converted into the right to receive the Offer Price.
•  Governing Law: State of Delaware.
Status: Executed — original on file. (See Exhibit A.)
2. Tender & Support Agreement
Date: April 8, 2024
Parties: Torchlight Mining Corp. and Pinnacle Venture Resources Fund II, LP
Signatories: Nils Brenner (Senior Vice President, Corporate Development, Torchlight Mining Corp.) and Theodore "Ted" Vanderhoek (Managing Partner, Pinnacle Venture Resources GP II, LLC, in its capacity as general partner of Pinnacle Venture Resources Fund II, LP)
Summary: Pursuant to the Tender & Support Agreement, Pinnacle committed to validly tender (and not withdraw) all 3,600,000 Shares owned by Pinnacle (representing 20.0% of the Shares outstanding) in the Offer and consented to the repayment in full at closing of the $7,800,000 in aggregate principal amount of 6.5% senior secured convertible notes (plus accrued and unpaid interest of $275,014, for a total payoff amount of $8,075,014) held by Pinnacle. The Tender & Support Agreement further provides for:
•  Voting covenants requiring Pinnacle to vote its Shares (to the extent any stockholder vote is required) in favor of the Offer and the Merger and against any alternative transaction;
•  Transfer restrictions prohibiting Pinnacle from selling, transferring, pledging, or otherwise disposing of any of its Shares during the pendency of the Offer;
•  Non-solicitation covenants restricting Pinnacle from soliciting or encouraging any alternative acquisition proposal;
•  Governing Law: State of Delaware.
Status: Executed — original on file; tendering of all 3,600,000 Shares confirmed by Hargrove Depositary Services, Inc. (See Exhibit B.)
3. Escrow Agreement
Date: July 16, 2024
Parties: Torchlight Mining Corp., the Shareholder Representative (as defined therein), and Clearmont National Bank, N.A. (as escrow agent)
Summary: Pursuant to the Escrow Agreement, Torchlight deposited $9,000,000 (representing 20% of the aggregate Offer consideration) into an indemnification escrow account (Escrow Account No. 4410-7832-001) at Clearmont National Bank, N.A. The key terms of the Escrow Agreement include:
•  Escrow Amount: $9,000,000;
•  Escrow Period: 18 months from closing, expiring on January 16, 2026;
•  Purpose: The escrowed funds serve as the primary source of recovery for indemnification claims by Torchlight under the indemnification provisions of the Offer-to-Purchase Agreement, including claims for breaches of representations, warranties, and covenants by Ridgeline and its former shareholders;
•  Tipping Basket and De Minimis: The Escrow Agreement incorporates by reference the indemnification thresholds set forth in the Offer-to-Purchase Agreement, including the $450,000 tipping basket (recoverable from the first dollar once exceeded) and the $25,000 de minimis per-claim threshold;
•  Claim Procedures: The Escrow Agreement sets forth detailed procedures for the submission of indemnification claims by Torchlight, the response procedures available to the Shareholder Representative, and the resolution of disputed claims, including provisions for binding arbitration of unresolved disputes;
•  Release Schedule: Any funds remaining in the escrow account upon expiration of the escrow period (January 16, 2026), net of any pending or unresolved claims, will be released to the former shareholders of Ridgeline through the Shareholder Representative;
•  Investment Provisions: Escrowed funds are to be invested in short-term U.S. Treasury obligations or money market funds investing exclusively in such obligations, as directed by the Shareholder Representative, with investment earnings to be reported for tax purposes as income of the former shareholders;
•  Escrow Agent Compensation: Clearmont's fees as escrow agent are payable by Torchlight as a transaction cost;
•  Governing Law: State of Delaware.
Status: Executed — original on file; escrow funded (see Section V, Wire No. 2). (See Exhibit C.)
B. Officers' Certificates
4. Officer's Certificate — Satisfaction of Conditions to Closing (Torchlight)
Date: July 16, 2024
Signatories: Henrik Aldermann (Chief Executive Officer, Torchlight Mining Corp.) and Marguerite Soo-Chan (Chief Financial Officer, Torchlight Mining Corp.)
Summary: The Officer's Certificate certifies, as of the closing date, the following:
(i) A total of 16,740,000 Shares have been validly tendered and not withdrawn as of the extended expiration date of the Offer, representing approximately 93.0% of the 18,000,000 Shares outstanding, which exceeds the minimum tender condition of 11,500,001 Shares;
(ii) Early termination of the initial waiting period under the HSR Act was granted by the FTC on April 18, 2024 (Transaction No. 20241387), and all applicable waiting periods have expired or been terminated without any action to restrain, enjoin, or prohibit the transaction;
(iii) Clearance under the Investment Canada Act was received on April 29, 2024, without conditions;
(iv) The representations and warranties of Ridgeline Cobalt Inc. set forth in the Offer-to-Purchase Agreement are true and correct in all material respects as of the closing date (except to the extent such representations and warranties speak specifically as of an earlier date, in which case they are true and correct in all material respects as of such earlier date);
(v) No "Material Adverse Effect" (as defined in the Offer-to-Purchase Agreement) has occurred with respect to Ridgeline since the date of the Offer-to-Purchase Agreement.
Status: Executed — original on file. (See Exhibit D.)
5. Ridgeline Officer's Certificate / Bring-Down Certificate
Date: July 16, 2024
Signatories: Gordon McTavish (Chief Executive Officer, Ridgeline Cobalt Inc.) and Elaine Bricker (Chief Financial Officer, Ridgeline Cobalt Inc.)
Summary: The Ridgeline Officer's Certificate certifies, as of the closing date, the following: (i) the representations and warranties of Ridgeline set forth in the Offer-to-Purchase Agreement are true and correct in all material respects as of the closing date; (ii) Ridgeline has complied in all material respects with all of its covenants and obligations under the Offer-to-Purchase Agreement required to be performed or complied with on or before the closing date; (iii) no Material Adverse Effect has occurred with respect to Ridgeline; and (iv) there is no pending or, to the knowledge of Ridgeline's officers, threatened litigation or governmental proceeding that would prevent, enjoin, or materially delay the consummation of the Offer or the Merger.
Status: Executed — original on file. (See Exhibit E.)
C. Corporate Filings
6. Certificate of Merger (Short-Form Merger under DGCL § 253)
Filing Date: July 16, 2024
Filed with: Secretary of State of the State of Delaware
Summary: The Certificate of Merger was filed on the closing date to effect the short-form merger of Ridgeline Cobalt Inc. (a Delaware corporation) with and into Torchlight Mining Corp. (a British Columbia corporation registered as a foreign corporation in the State of Delaware) under Section 253 of the DGCL. The Certificate of Merger states that, as of the closing date, Torchlight owns 16,740,000 of 18,000,000 Shares outstanding (approximately 93.0%), satisfying the 90% ownership threshold required under DGCL § 253. Pursuant to the Certificate of Merger, each remaining Share of Ridgeline common stock (par value $0.001 per share) not owned by Torchlight is converted into the right to receive $2.50 per Share in cash, without interest thereon. Upon effectiveness of the Certificate of Merger, Ridgeline ceased to exist as a separate legal entity, and all of its assets, liabilities, rights, and obligations were assumed by Torchlight as the surviving corporation.
Status: Filed — file-stamped copy received from the Delaware Secretary of State. (See Exhibit F.)
D. Good Standing and Existence Certificates
7. Ridgeline Certificate of Good Standing — Delaware Secretary of State
Certificate of Good Standing issued by the Secretary of State of the State of Delaware confirming that Ridgeline Cobalt Inc. was in good standing under the laws of the State of Delaware as of a date within five (5) business days of the closing date.
Status: Received. (See Exhibit N.)
8. Ridgeline Certificate of Good Standing / Authority — Michigan Department of Licensing and Regulatory Affairs (LARA)
Certificate of Good Standing (or Certificate of Authority, as applicable) issued by the Michigan Department of Licensing and Regulatory Affairs confirming that Ridgeline Cobalt Inc. was authorized to transact business in the State of Michigan and was in good standing as of a date within five (5) business days of the closing date. Ridgeline's principal offices and the Iron Lake Project mineral leases are located in Michigan.
Status: Received. (See Exhibit N.)
9. Torchlight Certificate of Status — British Columbia Registrar of Companies
Certificate of Status issued by the Registrar of Companies for the Province of British Columbia confirming that Torchlight Mining Corp. is in good standing under the Business Corporations Act (British Columbia).
Status: Received. (See Exhibit N.)
10. Torchlight Certificate of Good Standing — Delaware Secretary of State (as Registered Foreign Corporation)
Certificate of Good Standing issued by the Secretary of State of the State of Delaware confirming that Torchlight Mining Corp. is qualified as a foreign corporation and in good standing in the State of Delaware.
Status: Received. (See Exhibit N.)
E. Regulatory Clearances
11. HSR Act Early Termination Notification
Transaction Number: 20241387
Filing Date: March 21, 2024
Filing Fee: $111,000 (Tier 1, based on the $45,000,000 transaction value)
Outcome: Early termination of the initial 30-day waiting period was granted by the FTC on April 18, 2024. No second request was issued by either the FTC or the DOJ. No conditions, consent decrees, or other requirements were imposed.
Status: Confirmed — copy on file. (See Exhibit G.)
12. Investment Canada Act Clearance
Filing Date: March 25, 2024
Clearance Date: April 29, 2024
Outcome: Notification reviewed by ISED. Clearance was granted without conditions. The transaction was reviewed under the notification provisions of the Investment Canada Act (rather than the net benefit review standard applicable to larger transactions) given that the transaction value did not exceed the applicable review threshold for WTO investors.
Status: Confirmed — copy on file. (See Exhibit H.)
F. Financial Advisor Deliverables
13. Blackford Ames Securities LLC Fairness Opinion
Fairness opinion delivered by Blackford Ames Securities LLC to the Torchlight Board of Directors, opining that, as of the date of such opinion and based upon and subject to the assumptions, qualifications, and limitations set forth therein, the Offer Price of $2.50 per Share to be paid by Torchlight was fair, from a financial point of view, to Torchlight. The fairness opinion was rendered in connection with the Torchlight Board's evaluation and approval of the transaction.
Advisory Fee: $562,500 (1.25% of the aggregate consideration of $45,000,000), payable at closing.
Status: Delivered; advisory fee paid at closing (see Section V, Wire No. 4). (See Exhibit Q.)
14. Whitfield Partners LLC Fairness Opinion
Fairness opinion delivered by Whitfield Partners LLC to the Ridgeline Special Committee, opining that, as of the date of such opinion and based upon and subject to the assumptions, qualifications, and limitations set forth therein, the Offer Price of $2.50 per Share to be received by the holders of Ridgeline common stock (other than Torchlight and its affiliates) was fair, from a financial point of view, to such holders.
Advisory Fee: $675,000 (1.5% of the aggregate consideration of $45,000,000), payable by Ridgeline and reimbursed by Torchlight at closing.
Status: Delivered; advisory fee reimbursement funded at closing (see Section V, Wire No. 5). (See Exhibit Q.)
G. Insurance
15. Representations & Warranties Insurance Policy
Insurer: Northern Shield Specialty Insurance Co. (domiciled in Connecticut)
Policy Number: NSW-RWI-2024-05117
Policy Limit: $9,000,000
Retention: $9,000,000 (equal to the indemnification escrow amount; the R&W insurance policy attaches in excess of the retention, meaning that the escrowed funds must be exhausted before the policy responds)
Policy Term: Three (3) years from the closing date (expiring on or about July 16, 2027)
Premium: $315,000 (representing a rate of 3.5% of the $9,000,000 policy limit)
Premium Split: 50/50 — Torchlight: $157,500; former Ridgeline shareholders (funded from the indemnification escrow): $157,500
Broker: Cartwright Insurance Group Ltd., 120 Broadway, Suite 3510, New York, NY 10271
Coverage Summary: The R&W insurance policy provides coverage to Torchlight for losses arising from breaches of representations and warranties made by Ridgeline in the Offer-to-Purchase Agreement, subject to the terms, conditions, and exclusions set forth in the policy. The policy is intended to serve as a supplemental source of recovery in addition to the indemnification escrow, providing coverage in excess of the $9,000,000 retention.
Status: Bound — policy confirmation received. (See Exhibit I.)
H. Depositary and Transfer Agent Materials
16. Depositary Agreement with Hargrove Depositary Services, Inc.
Address: 55 Water Street, New York, NY 10041
Hargrove was appointed as depositary and paying agent for the Offer pursuant to the Depositary Agreement. In such capacity, Hargrove was responsible for receiving tenders of Shares (in both certificated and book-entry form), processing Letters of Transmittal and Notices of Guaranteed Delivery, holding tendered Shares pending acceptance for payment, distributing the Offer Price to tendering shareholders, and certifying the final tender results as of the expiration date.
Fees: $18,500
Status: Executed — original on file. (See Section V, Wire No. 8 for payment.)
17. Letter of Transmittal
The Letter of Transmittal was prepared and distributed to holders of Ridgeline common stock through Dominion Transfer & Trust Co. (as transfer agent for RCI) and Hargrove Depositary Services, Inc. (as depositary). The Letter of Transmittal provided the mechanism by which holders of Shares tendered their Shares in the Offer. Copies of the Letter of Transmittal were included as an exhibit to the Schedule TO filed with the SEC.
Status: Distributed; tender results confirmed — 16,740,000 Shares validly tendered and not withdrawn.
18. Final Certification of Tender Results
Certified by: Hargrove Depositary Services, Inc.
Date: As of July 10, 2024 (the extended expiration date of the Offer)
Results: 16,740,000 Shares validly tendered and not withdrawn out of 18,000,000 Shares outstanding, representing approximately 93.0% of the Shares outstanding. The certified results confirmed that the minimum tender condition of 11,500,001 Shares had been satisfied.
Status: Received — on file. (See Exhibit L.)
I. Financing Confirmations
19. Revolver Draw Confirmation — Meridian Commercial Bank, N.A.
Confirmation of draw of C$40,000,000 (approximately US$29,200,000 at a spot exchange rate of C$1.00 = US$0.73) under Torchlight's existing C$500,000,000 revolving credit facility. The revolving credit facility was entered into on September 15, 2022, between Torchlight Mining Corp. (as borrower) and a syndicate of lenders led by Meridian Commercial Bank, N.A. (as administrative agent), and matures on September 15, 2027. The draw was funded to Torchlight's designated accounts prior to the closing date and was used to partially finance the aggregate Offer consideration and related transaction costs.
Status: Confirmed; funds received by Torchlight prior to closing. (See Exhibit J.)
20. Torchlight Treasury Certification
Certification by Marguerite Soo-Chan (Chief Financial Officer, Torchlight Mining Corp.) that the balance of the aggregate Offer consideration and transaction costs not funded by the revolving credit facility draw (Wire No. 19 above) was funded from Torchlight's cash on hand and general corporate funds.
Status: Confirmed.
J. Miscellaneous Closing Documents
21. SEC Schedule TO Filing
Accession Number: 0001193125-24-072841
Filing Date: March 14, 2024
Filed by: Torchlight Mining Corp.
The Schedule TO was filed with the SEC in connection with the commencement of the Offer and included the Offer to Purchase, the Letter of Transmittal, and related exhibits. Amendments to the Schedule TO were filed as required to reflect changes in the terms or conditions of the Offer and to extend the expiration date.
Status: Filed — all amendments current and on file.
22. Ridgeline Schedule 14D-9 Filing
Accession Number: 0001193125-24-088234
Filing Date: April 5, 2024
Filed by: Ridgeline Cobalt Inc.
The Schedule 14D-9 was filed with the SEC by Ridgeline and contained the recommendation of the Ridgeline Board of Directors (acting on the recommendation of the Special Committee) that Ridgeline shareholders tender their Shares in the Offer. The Schedule 14D-9 was prepared by Galbraith Haver & Steele LLP on behalf of Ridgeline.
Status: Filed — on file.
23. Bring-Down Due Diligence Request Letter
Date: July 8, 2024
From: Derek Okonkwo (Calderwood & Harkness LLP)
To: Martin Galbraith and Rebecca Tsang (Galbraith Haver & Steele LLP)
Summary: The Bring-Down Due Diligence Request Letter was sent on behalf of Torchlight to request updated information from Ridgeline and its counsel in advance of closing. The letter specifically requested the following:
(a) Updated disclosure schedules to the Offer-to-Purchase Agreement;
(b) Officer certificates from Ridgeline (the bring-down certificate described in Item 5 above);
(c) Good standing certificates for Ridgeline from the Delaware Secretary of State and the Michigan Department of Licensing and Regulatory Affairs;
(d) Confirmation that no Material Adverse Effect has occurred;
(e) Confirmation that no litigation or governmental proceedings are pending or, to the knowledge of Ridgeline's officers, threatened;
(f) Confirmation that there have been no changes to, or encumbrances on, Ridgeline's mining claims (Ontario Mining Claims 4271883–4271947, comprising 65 claims related to the Hawk Ridge Project in the Timiskaming District, Ontario, Canada) or mineral leases (Michigan DEQ Lease Nos. ML-2021-0334 and ML-2021-0335, relating to the Iron Lake Project in Baraga County, Michigan).
Responses to the Bring-Down Due Diligence Request Letter were received from Galbraith Haver & Steele LLP on July 12, 2024. All responses were reviewed by Calderwood & Harkness and deemed satisfactory. No material changes, adverse developments, or outstanding issues were identified.
Status: Responses received by July 12, 2024; satisfactory. (See Exhibit P.)
24. Convertible Note Payoff Letter — Pinnacle Venture Resources Fund II, LP
Summary: The Convertible Note Payoff Letter confirms the total payoff amount required to satisfy in full the 6.5% senior secured convertible notes held by Pinnacle Venture Resources Fund II, LP. The payoff amount is calculated as follows:
•  Principal: $7,800,000
•  Accrued and unpaid interest: $275,014 (calculated at a rate of 6.5% per annum on $7,800,000 in principal from December 31, 2023 (the last interest payment date) through July 16, 2024 (the closing date), a period of 198 days, calculated on the basis of a 360-day year)
•  Total Payoff Amount: $8,075,014
The convertible notes were issued under an indenture dated June 30, 2022. The Payoff Letter includes wire transfer instructions for payment to Pinnacle's designated account and a commitment to deliver a release and satisfaction of any security interests or liens upon receipt of payment.
Status: Received; payoff wire executed on July 16, 2024 (see Section V, Wire No. 3). (See Exhibit K.)
25. Ridgeline Board Resolutions
Resolutions of the Board of Directors of Ridgeline Cobalt Inc. approving the closing of the Offer and the Merger and authorizing Ridgeline's officers to execute and deliver all closing documents, instruments, and certificates required in connection therewith.
Status: Certified copies on file. (See Exhibit O.)
26. Torchlight Board Resolutions
Resolutions of the Board of Directors of Torchlight Mining Corp. approving the closing of the Offer, the acceptance of all validly tendered Shares for payment, and the effectuation of the short-form merger under DGCL § 253, and authorizing Torchlight's officers to execute and deliver all closing documents, instruments, and certificates, to file the Certificate of Merger with the Delaware Secretary of State, and to take all other actions required in connection with the consummation of the transaction.
Status: Certified copies on file. (See Exhibit O.)
V. FUNDS FLOW SUMMARY
The following table sets forth all wire transfers executed on or about the closing date (July 16, 2024) in connection with the Offer and the Merger. All wires were initiated by Torchlight Mining Corp. unless otherwise noted.
Source of Funds:
(a) Revolving Credit Facility Draw: C$40,000,000 (approximately US$29,200,000 at a spot exchange rate of C$1.00 = US$0.73) drawn under Torchlight's existing C$500,000,000 revolving credit facility with Meridian Commercial Bank, N.A. (as administrative agent) (dated September 15, 2022; maturing September 15, 2027). Funds were received by Torchlight prior to the closing date and converted to U.S. dollars at the applicable spot rate.
(b) Torchlight Treasury Cash: The balance of the aggregate consideration and transaction costs not funded by the revolving credit facility draw was funded from Torchlight's cash on hand and general corporate funds.
Wire Verification: All wire instructions were confirmed and reconciled by Marguerite Soo-Chan (Chief Financial Officer, Torchlight Mining Corp.) and Derek Okonkwo (Lead Associate, Calderwood & Harkness LLP) prior to execution. Wire transfer confirmations from Torchlight's banking institution were obtained for each of the wires listed above and are maintained on file. (See Exhibit M.)
VI. SATISFACTION OF CONDITIONS TO CLOSING
This Section sets forth the conditions to the closing of the Offer as specified in the Offer-to-Purchase Agreement and the manner in which each condition was satisfied.
A. Minimum Tender Condition
The Offer-to-Purchase Agreement provided that Torchlight was not obligated to accept for payment, or to pay for, any Shares tendered in the Offer unless, as of the expiration date of the Offer, the number of Shares validly tendered and not withdrawn, together with any Shares then owned by Torchlight and its affiliates, represented at least a majority of the Shares outstanding on a fully diluted basis. The minimum tender condition was calculated as follows:
•  Common shares outstanding: 18,000,000
•  Shares underlying 6.5% senior secured convertible notes: 3,900,000
•  Shares underlying outstanding options and warrants: 1,100,000
•  Total fully diluted shares: 23,000,000
•  Minimum tender condition: 11,500,001 Shares (majority of 23,000,000 fully diluted shares)
Result: As certified by Hargrove Depositary Services, Inc. as of the extended expiration date (July 10, 2024), a total of 16,740,000 Shares were validly tendered and not withdrawn, representing approximately 93.0% of the 18,000,000 Shares outstanding. This result exceeded the minimum tender condition of 11,500,001 Shares by a substantial margin.
Among the Shares tendered, Pinnacle Venture Resources Fund II, LP tendered all 3,600,000 of its Shares (representing 20.0% of the Shares outstanding) in accordance with its obligations under the Tender & Support Agreement dated April 8, 2024.
Status: Satisfied.
B. Regulatory Conditions
1. Hart-Scott-Rodino Antitrust Improvements Act of 1976
The Offer-to-Purchase Agreement conditioned the closing of the Offer on the expiration or termination of the applicable waiting period under the HSR Act. The HSR Act notification was filed on March 21, 2024 (Transaction No. 20241387), and early termination of the initial 30-day waiting period was granted by the FTC on April 18, 2024. No second request was issued, and no conditions, consent decrees, or other requirements were imposed.
Status: Satisfied.
2. Investment Canada Act
The Offer-to-Purchase Agreement conditioned the closing of the Offer on receipt of clearance or a determination that no review is required under the Investment Canada Act. A notification was filed with ISED on March 25, 2024, and clearance was received on April 29, 2024. No conditions were imposed on the transaction.
Status: Satisfied.
C. Representations and Warranties Bring-Down
The Offer-to-Purchase Agreement conditioned the closing of the Offer on the representations and warranties of Ridgeline being true and correct in all material respects as of the closing date (except to the extent such representations and warranties speak specifically as of an earlier date). The Ridgeline Officer's Certificate / Bring-Down Certificate (Item 5) dated July 16, 2024, executed by Gordon McTavish (CEO) and Elaine Bricker (CFO), confirms that all of Ridgeline's representations and warranties are true and correct in all material respects as of the closing date and that no Material Adverse Effect has occurred with respect to Ridgeline since the date of the Offer-to-Purchase Agreement.
Status: Satisfied.
D. No Injunction / No Legal Impediment
The Offer-to-Purchase Agreement conditioned the closing of the Offer on the absence of any court order, preliminary or permanent injunction, temporary restraining order, or other order or decree of any court or governmental authority of competent jurisdiction that prevents, enjoins, or prohibits the consummation of the Offer or the Merger. As of the closing date, no such order, injunction, or governmental action was in effect or had been threatened.
Status: Satisfied.
E. Board Recommendation
The Offer-to-Purchase Agreement conditioned the closing of the Offer on the recommendation of the Ridgeline Board of Directors (acting on the recommendation of the Special Committee) in favor of the Offer remaining in effect without change, withdrawal, or modification. The Special Committee (Samuel Kerensky, Chair; Priya Natarajan; Claudette Duval), after consultation with Galbraith Haver & Steele LLP (as legal counsel) and Whitfield Partners LLC (as financial advisor), recommended that Ridgeline shareholders tender their Shares in the Offer. This recommendation was publicly disclosed in the Schedule 14D-9 filed on April 5, 2024, and remained in effect without modification through the closing date. No competing acquisition proposal or superior proposal was received by Ridgeline during the pendency of the Offer.
Status: Satisfied.
VII. SHORT-FORM MERGER
Following Torchlight's acceptance for payment of all 16,740,000 validly tendered Shares on July 16, 2024, Torchlight owned 16,740,000 of the 18,000,000 Shares outstanding, representing approximately 93.0% of the total outstanding Shares. This ownership level exceeded the 90% threshold required under Section 253 of the DGCL for the effectuation of a short-form merger without a stockholder vote of the target company's shareholders.
Accordingly, and in accordance with the terms of the Offer-to-Purchase Agreement, Torchlight caused a Certificate of Merger to be filed with the Secretary of State of the State of Delaware on July 16, 2024, effecting the merger of Ridgeline Cobalt Inc. (a Delaware corporation) with and into Torchlight Mining Corp. (a British Columbia corporation registered as a foreign corporation in Delaware), with Torchlight continuing as the surviving entity. The Merger was effective upon the filing of the Certificate of Merger with the Delaware Secretary of State.
Pursuant to the terms of the Certificate of Merger:
•  Each Share of Ridgeline common stock (par value $0.001 per share) not owned by Torchlight or Ridgeline as of the effective time of the Merger was converted into the right to receive $2.50 per Share in cash, without interest thereon, subject to applicable withholding taxes.
•  Each Share owned by Torchlight as of the effective time of the Merger (i.e., the 16,740,000 Shares tendered in the Offer) was cancelled and ceased to be outstanding.
•  Ridgeline Cobalt Inc. ceased to exist as a separate legal entity.
•  All assets, liabilities, rights, privileges, powers, and franchises of Ridgeline vested in Torchlight as the surviving entity, and all debts, liabilities, and obligations of Ridgeline became the debts, liabilities, and obligations of Torchlight, in each case in accordance with DGCL § 259.
No stockholder vote of Ridgeline's shareholders was required for the Merger under DGCL § 253, nor was any stockholder vote of Torchlight's shareholders required under applicable law or the rules of the NYSE or TSX. The remaining 1,260,000 Shares not tendered in the Offer (representing approximately 7.0% of the Shares outstanding) were converted into the right to receive $2.50 per Share in the Merger, for aggregate consideration of $3,150,000, to be paid by the depositary (Hargrove Depositary Services, Inc.) upon surrender of the applicable share certificates or book-entry positions. The aggregate consideration for the remaining Shares was included in the $45,000,000 deposited with the depositary on the closing date (see Section V, Wire No. 1).
The file-stamped copy of the Certificate of Merger was received from the Delaware Secretary of State and is maintained on file. (See Exhibit F.)
VIII. POST-CLOSING OBLIGATIONS AND ACTION ITEMS
The following post-closing obligations and action items have been identified in connection with the Offer and the Merger. Calderwood & Harkness will continue to advise Torchlight with respect to these matters as requested.
A. Escrow Monitoring
The indemnification escrow of $9,000,000 is held at Clearmont National Bank, N.A. (Escrow Account No. 4410-7832-001) pursuant to the Escrow Agreement dated July 16, 2024. The escrow period is 18 months, expiring on January 16, 2026.
Calderwood & Harkness will calendar the escrow expiration date and will monitor for any indemnification claims submitted by Torchlight or objections raised by the Shareholder Representative during the escrow period. The key parameters governing the use of the escrowed funds are as follows:
•  Tipping Basket: $450,000 — individual and aggregate indemnifiable losses must exceed $450,000 before any claims may be asserted against the escrow, at which point claims are recoverable from the first dollar (i.e., not merely the excess over $450,000).
•  De Minimis Per-Claim Threshold: $25,000 — individual claims with losses below $25,000 are disregarded for purposes of calculating whether the tipping basket has been exceeded and are not recoverable from the escrow.
•  General Cap: $9,000,000 (20% of aggregate consideration) for breaches of general representations and warranties.
•  Fundamental Representations Cap: $45,000,000 (100% of aggregate consideration) for breaches of Fundamental Representations, which survive for 36 months through July 16, 2027.
Upon expiration of the 18-month escrow period on January 16, 2026, any funds remaining in the escrow account, net of any pending or unresolved claims, will be released to the former Ridgeline shareholders through the Shareholder Representative in accordance with the terms of the Escrow Agreement.
B. R&W Insurance Policy Administration
The representations and warranties insurance policy issued by Northern Shield Specialty Insurance Co. (Policy No. NSW-RWI-2024-05117) provides $9,000,000 in coverage in excess of the $9,000,000 retention (equal to the indemnification escrow amount). The policy has a three-year term, expiring on or about July 16, 2027.
Calderwood & Harkness will coordinate with Cartwright Insurance Group Ltd. (the broker) and Patricia Edevane (General Counsel, Torchlight) regarding the administration of the R&W insurance policy, including the timely submission of any claims, compliance with notice requirements, and any disputes with the insurer.
C. SEC Deregistration (Form 15)
Following the closing of the Offer and the Merger, Ridgeline's obligations to file reports under the Exchange Act should be terminated. Torchlight (as successor to Ridgeline) should file SEC Form 15 (Certification and Notice of Termination of Registration under Section 12(g) of the Securities Exchange Act of 1934 or Notice of Suspension of Duty to File Reports under Section 15(d) of the Securities Exchange Act of 1934) for Ridgeline Cobalt Inc. to terminate Ridgeline's reporting obligations.
Target Filing Deadline: Promptly following the closing date; target filing within 10 business days (i.e., on or before July 30, 2024).
Calderwood & Harkness will prepare and file Form 15 on behalf of Torchlight.
D. NYSE American Delisting
Torchlight should submit an application to NYSE American for the delisting and removal from listing of Ridgeline's common stock (ticker: RCI). In addition:
•  Form 25: Torchlight should file Form 25 (Notification of Removal from Listing and/or Registration under Section 12(b) of the Securities Exchange Act of 1934) with the SEC to effectuate the delisting.
•  Share Certificate Cancellation: Torchlight should coordinate with Dominion Transfer & Trust Co. (transfer agent for RCI) to cancel all outstanding share certificates and book-entry positions for Ridgeline common stock, and to ensure that all former holders of Shares who have not yet surrendered their certificates are provided with appropriate instructions for receiving the Merger consideration.
Calderwood & Harkness will coordinate the NYSE American delisting application, the Form 25 filing, and the share cancellation process.
E. Convertible Note Indenture Discharge
Following the full payoff of the 6.5% senior secured convertible notes held by Pinnacle Venture Resources Fund II, LP ($8,075,014, as set forth in the Convertible Note Payoff Letter), Torchlight should confirm the satisfaction and discharge of the indenture dated June 30, 2022, under which the convertible notes were issued. This includes:
•  Obtaining a written acknowledgment of satisfaction and discharge from Pinnacle (or its designated indenture trustee, if any);
•  Confirming the release of all security interests, liens, pledges, and encumbrances securing the convertible notes, including the filing of UCC-3 termination statements (if applicable) and the release of any mortgages or deeds of trust on Ridgeline's assets;
•  Updating Ridgeline's (now Torchlight's) records to reflect the discharge of the indenture and the termination of all related obligations.
F. Mining Claim and Lease Transfers
The transaction involves the transfer of Ridgeline's mining assets to Torchlight (as successor entity) by operation of law through the Merger. However, administrative steps may be required to update ownership records with the relevant governmental authorities:
1. Ontario Mining Claims — Hawk Ridge Project
Ontario Mining Claims 4271883 through 4271947 (65 claims) are located in the Timiskaming District, Ontario, Canada, and constitute the Hawk Ridge Project. Torchlight should confirm the transfer of these mining claims into the name of Torchlight Mining Corp. or its designated subsidiary and coordinate with the Ontario Ministry of Mines (Mining Lands Administration System) to update the claim records accordingly. This may require the filing of transfer applications, evidence of the Merger, and payment of applicable fees.
2. Michigan Mineral Leases — Iron Lake Project
Michigan DEQ Lease Nos. ML-2021-0334 and ML-2021-0335 (collectively, the "Iron Lake Leases") are mineral leases for the Iron Lake Project located in Baraga County, Michigan. Torchlight should confirm that the Merger effects an assignment or continuation of the Iron Lake Leases by operation of law and coordinate with the Michigan Department of Environment, Great Lakes, and Energy (EGLE) (successor to the Michigan DEQ) to update the lessee of record. If the lease terms require consent to assignment, Torchlight should obtain such consent promptly.
G. Tax Filings and Section 338 Election
Torchlight should evaluate, in consultation with its tax advisors and Fessenden & Co., CPA (Torchlight's auditor), whether to make an election under Section 338 of the Internal Revenue Code of 1986, as amended (the "Code"), in connection with the acquisition of Ridgeline. A Section 338 election, if made, would treat the transaction as a deemed asset acquisition for U.S. federal income tax purposes rather than a stock acquisition, which may result in a step-up in the tax basis of Ridgeline's assets.
•  Filing Deadline: If elected, the Section 338 election must be filed on IRS Form 8023 (Elections Under Section 338 for Corporations Making Qualified Stock Purchases) within 8½ months of the acquisition date, i.e., on or before approximately March 31, 2025.
•  Cross-Border Considerations: Torchlight and its tax advisors should evaluate the U.S./Canadian cross-border tax implications of the transaction, including any tax treaty benefits, foreign tax credit considerations, withholding tax obligations, and the treatment of the Ontario mining claims and Michigan mineral leases for Canadian and U.S. tax purposes, respectively.
H. Employee and Benefits Matters
Torchlight should address the transition of Ridgeline employees (to the extent retained) to Torchlight benefit plans in accordance with the terms of the Offer-to-Purchase Agreement. The Offer-to-Purchase Agreement contains customary provisions regarding the treatment of target company employees, including:
•  Recognition of prior service with Ridgeline for purposes of eligibility, vesting, and benefit accrual under Torchlight's employee benefit plans;
•  Assumption or replacement of Ridgeline's employee benefit plans, including any 401(k) plan, health and welfare plans, and equity-based compensation arrangements;
•  Compliance with the WARN Act and any applicable state plant closing or layoff notification statutes, to the extent any employee terminations are contemplated.
I. Integration Matters
Operational integration of Ridgeline's assets and operations into Torchlight will be coordinated by Nils Brenner (Senior Vice President, Corporate Development, Torchlight) and former Ridgeline management (including Gordon McTavish, to the extent retained in a transitional capacity). Key integration priorities include:
•  Cobalt Feedstock Supply: Torchlight's battery-grade cobalt sulfate refinery in Sudbury, Ontario (commissioning expected Q1 2025) is designed to utilize cobalt feedstock from the Hawk Ridge Project (Ontario Mining Claims 4271883–4271947). Integration of Ridgeline's exploration and development activities at Hawk Ridge with the Sudbury refinery's feedstock requirements is a primary strategic objective of the transaction.
•  Iron Lake Project: Continuation and advancement of exploration and permitting activities at the Iron Lake Project (Michigan DEQ Lease Nos. ML-2021-0334 and ML-2021-0335) in Baraga County, Michigan.
•  Systems and Reporting: Integration of Ridgeline's financial reporting, accounting systems, and internal controls into Torchlight's consolidated reporting framework, in coordination with Fessenden & Co., CPA.
•  Environmental and Permitting: Confirmation that all environmental permits, licenses, and authorizations held by Ridgeline remain valid and in full force and effect following the Merger, and that no additional permits or approvals are required as a result of the change in ownership.
J. Document Retention
All executed closing documents, officer certificates, regulatory clearances, correspondence, and related materials generated in connection with the Offer and the Merger are to be maintained in Calderwood & Harkness's document management system in accordance with the Firm's document retention policies. Copies of all executed documents and deliverables have been provided (or will be provided promptly) to Patricia Edevane (General Counsel, Torchlight Mining Corp.) for Torchlight's internal records.
The Firm will maintain the complete closing binder (including all exhibits and appendices referenced in this Memorandum) for a minimum period of seven (7) years from the closing date, or such longer period as may be required by applicable law or regulation.
IX. FEE SUMMARY
The following table summarizes the fees and costs incurred by Torchlight Mining Corp. in connection with the Offer and the Merger, including legal fees, financial advisory fees, insurance premiums, regulatory filing fees, and depositary fees.
The Calderwood & Harkness fee estimate of $480,000 to $540,000 is based on hours incurred through the closing date and estimated post-closing work (including SEC deregistration, NYSE American delisting, and related matters). The final fee amount will be set forth in the Firm's final invoice and is subject to review by James Prentice (Billing Partner).
X. KEY CONTACT LIST
The following table sets forth the key contacts for all parties and advisors involved in the transaction, with reference to their respective roles in post-closing matters.
XI. EXHIBIT / APPENDIX INDEX
The following exhibits and appendices are appended to this Closing Memorandum and are incorporated herein by reference. Each exhibit contains the document or materials referenced in the corresponding section of this Memorandum. Original executed documents are maintained in the Firm's document management system, and copies have been provided to the client.
— End of Closing Memorandum —
PRIVILEGED AND CONFIDENTIAL — ATTORNEY WORK PRODUCT
This Closing Memorandum has been prepared by Calderwood & Harkness LLP for the sole use of Torchlight Mining Corp. and is protected by the attorney-client privilege and the work product doctrine. This document should not be disclosed to any third party