PRIVILEGED AND CONFIDENTIAL — ATTORNEY WORK PRODUCT Matter Reference: C&H Matter No. 1039-00005
Dr. Strauss,
Thank you for formalizing the engagement with the executed retention letter dated March 12, 2025. We are pleased to have Pinnacle on board for this matter.
The purpose of this email is to set out the initial forensic accounting work plan and identify the priority items for the first phase of Pinnacle's forensic review. As you know, Pinnacle Forensic Advisory has been retained by Calderwood & Harkness LLP, counsel to Torchlight Mining Corp., and all work is being performed at the direction and under the supervision of counsel in connection with our firm's internal investigation into potential violations of the Foreign Corrupt Practices Act. I want to emphasize at the outset that all communications, work papers, analyses, and deliverables generated in connection with this engagement are protected by the attorney-client privilege and the work product doctrine and should be clearly marked accordingly. Please ensure that your team understands and adheres to these protocols.
**I. Background**
For purposes of orienting your team, I will briefly summarize the relevant background. Calderwood & Harkness is conducting an internal investigation on behalf of Torchlight Mining Corp. (TSX: TMC; NYSE: TRCH), a Canadian-headquartered mining company, concerning approximately $4.73 million in suspected improper payments made between 2019 and 2024 through Torchlight's West African subsidiary structure to government officials and intermediaries in the Republic of Ganara.
The relevant subsidiary structure consists of Torchlight Ganara Holdings Ltd. ("TGH"), a BVI holding company, and Torchlight Ganara Mining S.A. ("TGM"), the in-country Ganaran operating entity. The suspected payments were channeled primarily through a Mauritius-incorporated consulting firm, Crestfield Advisory Partners Ltd. ("Crestfield"), managed by Jean-Philippe Renard, under a Government Relations Advisory Agreement dated April 12, 2019. Additional suspected payments were made directly from TGM local accounts in the form of cash withdrawals and in-kind benefits.
The investigation encompasses both a DOJ preliminary inquiry and an SEC formal order of investigation (File No. HO-14892).
**II. Priority Workstreams**
I have identified four priority workstreams for Phase 1 of the forensic review, described below.
**Workstream 1: Crestfield Invoice Register and Analysis**
Pinnacle's first priority should be to construct a complete register of all invoices submitted by Crestfield Advisory Partners Ltd. to TGH from April 2019 through October 2024. Our preliminary information indicates a total of 24 invoices, totaling $3,210,000. The yearly breakdown, which should be verified against source documents, is as follows:
- 2019: $420,000 (3 invoices) - 2020: $575,000 (4 invoices) - 2021: $680,000 (5 invoices) - 2022: $610,000 (4 invoices) - 2023: $590,000 (5 invoices) - 2024 (through October): $335,000 (3 invoices); the last invoice was paid on October 31, 2024 in the amount of $115,000
For each invoice, please capture the following fields: date, amount, description of services, approving signatory, and payment date and method.
Critically, please flag which invoices were approved solely by Raymond Osei-Bonsu (former Country Manager, TGM, terminated January 8, 2025) without secondary authorization. Torchlight's Delegation of Authority Policy requires dual approval for expenditures exceeding $50,000. Our preliminary review indicates that 14 of the 24 invoices exceeded $50,000 (ranging from $55,000 to $185,000) and lacked dual approval. I will forward a copy of the Delegation of Authority Policy for your reference.
Additionally, please compare the total invoiced amounts against the contractual terms of the advisory agreement. Based on our review of the agreement, the contractual parameters are as follows:
- Monthly retainer: $15,000/month × 66 months (April 2019 – October 2024, inclusive) = $990,000 - Success fees: $100,000 per permit obtained × 5 permits = $500,000 - Expense reimbursement: capped at $25,000/quarter × 22 quarters ≈ $550,000 maximum - **Contractual maximum: approximately $2,040,000** - **Actual invoiced: $3,210,000 — an excess of $1,170,000 over the contractual maximum**
We have identified no evidence of any contract amendment authorizing payments above the contractual cap. Pinnacle should categorize the excess and identify what invoice descriptions, if any, purport to justify the overage. A copy of the Crestfield Advisory Agreement dated April 12, 2019 will be provided to you separately.
**Workstream 2: Meridian Commercial Bank Wire Transfer Records (TGH Account)**
Please obtain and analyze wire transfer records from TGH's account at Meridian Commercial Bank (BVI), Account No. 7740-2281-0056, for the period January 1, 2019 through December 31, 2024. Specifically, Pinnacle should:
- Identify all outbound transfers to Crestfield Advisory Partners Ltd. and any other recipients that may be connected to Crestfield or Jean-Philippe Renard; - Cross-reference wire transfer amounts and dates against the Crestfield invoice register to confirm payment-to-invoice matching; and - Identify any wire transfers to accounts not previously known to us or to intermediary entities.
Please note that Marlowe Asset Management Digital Forensics Inc. (Rachel Hartley, engagement lead) is separately collecting electronic data in connection with the investigation. Approximately 340 GB of financial systems data is in scope. Pinnacle should coordinate with Marlowe Asset Management on financial systems data extraction to avoid duplication and ensure completeness.
**Workstream 3: TGM GL 7450 Entries — "Community Relations Expenses"**
Please review all entries booked to GL code 7450 ("Community Relations Expenses") in TGM's general ledger for fiscal years 2019 through 2024. Our preliminary information indicates total cash withdrawals coded to GL 7450 of $890,000 over the period. These withdrawals were made from TGM's account at Regency International Bank (Ganara), Account No. GAN-4419-8837.
For each entry, please capture: date, amount, payee (if identified), description, approving authority, and supporting documentation (if any). A key question is whether the descriptions are sufficiently specific to identify actual recipients or purposes, or whether the coding is vague and potentially designed to obscure the nature of the disbursements.
Additionally, please review GL codes 7200 and 7310 for in-kind benefits (vehicle purchases, travel) totaling approximately $630,000 over the same period. Combined with GL 7450 cash withdrawals, these direct and in-kind disbursements total approximately $1,520,000.
**Workstream 4: Invoice-to-Permit Timing Correlation Analysis**
This is a critical analytical deliverable. Pinnacle should prepare a timeline correlation analysis mapping the dates and amounts of Crestfield invoices and TGM GL 7450 disbursements against the issuance dates of the five mining permits and approvals at issue:
1. Kousseri Copper-Cobalt Complex Mining License (KCC-2019-0047) — issued September 14, 2019 2. Kousseri Environmental Impact Approval (ENV-KCC-2020-113) — issued March 27, 2020 3. Dembélé Rare Earths Exploration License (DRE-2021-0092) — issued July 8, 2021 4. Dembélé Mining License Upgrade (DRE-M-2023-0018) — issued February 14, 2023 5. Kousseri Expansion Permit (KCC-2019-0047-A1) — issued April 3, 2024
Our preliminary review has identified a timing correlation: Crestfield invoices appear to spike in the 30–60 day window preceding each permit issuance. Pinnacle should quantify this pattern rigorously. The deliverable for this workstream should include a visual timeline chart and a supporting data table showing payment amounts and dates alongside permit milestones.
**III. Deliverable Expectations and Timeline**
We request that Pinnacle prepare a preliminary findings memorandum covering Workstreams 1–4, addressed to Calderwood & Harkness LLP as counsel, by approximately **April 25, 2025**. This timing is driven by the second wave of witness interviews, which are scheduled for April 28 – May 2, 2025 (to be conducted via video with witnesses in Ganara), and Pinnacle's findings will be essential to our preparation for those interviews. Pinnacle's work product will also feed into the interim investigation report targeted for presentation to the Torchlight Audit Committee on May 15, 2025.
All work product should be clearly marked: **"PRIVILEGED AND CONFIDENTIAL — PREPARED AT THE DIRECTION OF COUNSEL."**
As noted in the retention letter, the estimated fee range for the full engagement is $1.8–$2.4 million. I would appreciate it if Pinnacle could provide a Phase 1 budget estimate for the priority workstreams described above at your earliest convenience.
**IV. Data Access and Coordination**
Calderwood & Harkness will arrange for Pinnacle to receive access to the relevant financial records through Marlowe Asset Management Digital Forensics' document hosting platform once processing is complete. Hard-copy records — including original Crestfield invoices and bank statements — are currently being collected from the following locations:
- Torchlight's Toronto headquarters - TGH's BVI registered office (Wickhams Cay II, Suite 408, Road Town, Tortola) - TGM's offices in Ganara (Boulevard du Commerce 14, Quartier Plateau, Libreville)
Jasmine Thornton (copied on this email) will serve as the day-to-day Calderwood & Harkness contact for Pinnacle coordination. Conrad Ashby (also copied) is the responsible partner on the engagement.
**V. Key Subjects and Persons of Interest**
For Pinnacle's awareness as you conduct your analysis, the following individuals are relevant:
*Subjects:*
- **Marcus Delacroix** — Former VP, Africa Operations, Torchlight Mining Corp. (resigned November 15, 2024). Key subject. Personally introduced Jean-Philippe Renard and Crestfield to TGH. Used personal (non-company) email for 37 identified communications with Renard. - **Raymond Osei-Bonsu** — Former Country Manager, TGM (terminated January 8, 2025). Key subject. Sole approver on numerous Crestfield invoices exceeding the $50,000 single-approval threshold. - **Jean-Philippe Renard** — Managing Director and sole beneficial owner of Crestfield Advisory Partners Ltd. French citizen, based in Dakar, Senegal. Subject.
*Witnesses:*
- **Thomas Achebe** — Finance Director, TGM. Processed Crestfield invoices and managed cash withdrawals at Regency International Bank. - **Kwame Mensah** — Procurement Manager, TGM. Involved in vehicle purchases and in-kind benefits.
*Government Officials (Alleged Recipients — for Context):*
- Hon. Boubacar Diallo — Former Minister of Mines and Natural Resources, Republic of Ganara. Estimated approximately $1,850,000 received. - Amadou Traoré — Director of Environmental Permitting. Estimated approximately $620,000. - Col. Ibrahim Konaté — Former Regional Prefect, Kousseri Province. Estimated approximately $340,000. - Other/unidentified officials: approximately $1,920,000. - **Total estimated improper payments to officials: $4,730,000.**
**VI. Next Steps**
Leonard, please confirm receipt of this email and your proposed approach to the workstreams outlined above. I am happy to schedule a call early next week to discuss any questions you or your team may have regarding data sources, scope, or methodology. Please let Jasmine know your availability and she will coordinate.
I want to reiterate the importance of maintaining strict privilege protections over all communications and work product generated in connection with this engagement. Please ensure that all members of the Pinnacle team working on this matter are aware of these requirements.
We look forward to working with you on this.
Best regards,
Steven Hollander Senior Associate Calderwood & Harkness LLP 825 Eighth Avenue, 42nd Floor New York, NY 10019 Tel: (212) 555-4280 shollander@calderwoodharkness.com
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