CALDERWOOD & HARKNESS LLP Counsellors at Law
825 Eighth Avenue, 42nd Floor New York, New York 10019
Telephone: (212) 554-7000 Facsimile: (212) 554-7001 www.calderwoodharkness.com
March 18, 2025
VIA ELECTRONIC MAIL AND OVERNIGHT COURIER
Margaret Calloway Assistant Chief, FCPA Unit Fraud Section, Criminal Division U.S. Department of Justice 1400 New York Avenue NW Washington, D.C. 20530
Re: Torchlight Mining Corp. — Acknowledgment of Voluntary Document Preservation Request dated February 14, 2025
Dear Assistant Chief Calloway:
I. Identification of Firm, Client, and Purpose of This Letter
This firm, Calderwood & Harkness LLP, represents Torchlight Mining Corp. ("Torchlight" or the "Company"), a corporation organized and existing under the Canada Business Corporations Act, R.S.C. 1985, c. C-44, with its principal corporate offices located at 200 King Street West, Suite 3400, Toronto, Ontario M5H 3T4, Canada. Torchlight's American Depositary Receipts are listed on the New York Stock Exchange under the ticker symbol "TRCH," and its common shares are listed on the Toronto Stock Exchange under the ticker symbol "TMC." The Company is a publicly reporting issuer in both the United States and Canada and is subject to the reporting requirements of the Securities Exchange Act of 1934, as amended.
The purpose of this letter is to formally acknowledge receipt of the Fraud Section's voluntary document preservation request dated February 14, 2025, which was directed to Torchlight Mining Corp. at its principal offices in Toronto, Ontario. We write to advise the Department of the preservation measures the Company has already undertaken and to express the Company's willingness to cooperate with the Department in connection with this matter.
Calderwood & Harkness LLP's representation of Torchlight in this matter was formalized pursuant to an engagement letter executed by Patricia Sung, General Counsel and Corporate Secretary of Torchlight Mining Corp., dated March 5, 2025. This matter is being handled under Calderwood & Harkness Matter No. 1039-00005. The engagement concerns potential violations of the Foreign Corrupt Practices Act of 1977, as amended, 15 U.S.C. §§ 78dd-1 et seq. (the "FCPA"), in connection with the Company's mining operations in the Republic of Ganara, West Africa, including the activities of the Company's subsidiaries and their interactions with governmental authorities and third-party intermediaries in that jurisdiction.
Conrad Ashby, a Partner in Calderwood & Harkness's White Collar & Investigations practice group, serves as the primary point of contact for all communications with the Department regarding this matter. Mr. Ashby's contact information is set forth in Section VI of this letter, and we respectfully request that all future correspondence and communications from the Department be directed to his attention.
II. Confirmation of Receipt of the Voluntary Document Preservation Request
Torchlight Mining Corp. confirms that it received the Department's voluntary document preservation request, dated February 14, 2025, at its principal offices in Toronto, Ontario. The Company takes the Department's request with the utmost seriousness and has treated it as a matter of the highest priority since receipt.
The Company understands the scope of the Department's request to encompass documents and electronically stored information relating to Torchlight's West African operations broadly, including the operations and activities of its subsidiaries. Specifically, the Company understands the request to cover documents and information pertaining to Torchlight Ganara Holdings Ltd. ("TGH"), a corporation organized under the laws of the British Virgin Islands, which serves as the intermediate holding entity for the Company's Ganaran interests, and Torchlight Ganara Mining S.A. ("TGM"), the Company's principal operating entity organized under the laws of the Republic of Ganara, which holds the Company's mining concessions and conducts day-to-day extraction and processing operations in country. The Company further understands the request to encompass documents and information relating to the Company's engagement of third-party consultants, agents, and intermediaries in connection with its Ganaran operations, as well as communications with or concerning governmental officials and entities of the Republic of Ganara.
Should the Department believe that the Company's understanding of the scope of the preservation request is in any respect incomplete or inaccurate, we respectfully request that the Department advise us promptly so that the Company may take any additional steps necessary to ensure that its preservation efforts are fully responsive.
III. Description of Document Preservation Measures Already Undertaken
Upon receipt of the Department's voluntary document preservation request, Torchlight acted promptly to implement a series of comprehensive document preservation measures designed to ensure the integrity and availability of all potentially relevant documents and electronically stored information. Those measures are summarized below.
A. Litigation Hold Notice. The Company, under the direction of Calderwood & Harkness, issued a comprehensive litigation hold notice dated March 17, 2025. The litigation hold was directed to all relevant personnel and custodians across the three corporate entities encompassed by the Department's request — namely, Torchlight Mining Corp., TGH, and TGM. The hold notice was distributed by email to each custodian individually, with a return-receipt acknowledgment requirement, and hard copies were delivered to those custodians located at the Company's operational facilities in the Republic of Ganara where electronic delivery could not be reliably confirmed.
B. Identified Custodians. The litigation hold encompasses a total of twenty-three (23) identified custodians. These custodians were identified through a comprehensive process involving interviews with senior management, review of the Company's organizational charts and reporting structures, and analysis of the Company's prior internal audit and compliance records relating to the Ganaran operations. The twenty-three custodians comprise the following categories:
• Twelve (12) current employees of Torchlight Mining Corp., TGH, or TGM, including senior executives, in-country management, finance and accounting personnel, and individuals in the Company's government relations and community affairs functions;
• Four (4) former employees who held positions relevant to the Company's Ganaran operations during the period covered by the preservation request, with whom the Company has communicated to the extent practicable regarding the preservation obligation; and
• Seven (7) shared or departmental mailboxes and electronic repositories, including those associated with the offices of the Chief Financial Officer, the Vice President of African Operations, the Ganara Country Manager, the Government Relations department, the Procurement department, the Legal and Compliance department, and the Corporate Development group.
The Company reserves the right to supplement or modify the custodian list as the Company's internal investigation progresses and as additional relevant custodians are identified.
C. Scope of the Hold. The litigation hold covers all documents, communications (including email, instant messages, text messages, messaging application communications, and communications on personal devices and personal email accounts to the extent Company business was conducted thereon), financial records, contracts, memoranda, reports, presentations, spreadsheets, databases, and all other electronically stored information related to any of the following subjects:
(i) the Company's operations in the Republic of Ganara, including its mining concessions, extraction activities, joint ventures, and regulatory interactions;
(ii) third-party consultants, agents, intermediaries, and advisors retained in connection with the Company's Ganaran operations, including without limitation any individuals or entities engaged to assist with the procurement of mining licenses, permits, environmental approvals, customs clearances, or other governmental authorizations;
(iii) interactions with, payments to, or benefits conferred upon government officials of the Republic of Ganara, including officials of the Ministry of Mines and Natural Resources, the Ministry of Finance, the Environmental Protection Agency of Ganara, the Ganaran Revenue Authority, and any other governmental or quasi-governmental body; and
(iv) any related internal audit, compliance, or investigative activities conducted by the Company with respect to its Ganaran operations.
The temporal scope of the hold extends from January 1, 2018 through the present, consistent with the Company's understanding of the time period identified in the Department's preservation request.
D. Engagement of E-discovery Vendor. To assist with the forensic collection, processing, and preservation of electronically stored information, the Company has engaged Marlowe Asset Management Digital Forensics Inc. ("VDF"), a digital forensics and e-discovery services firm headquartered in Arlington, Virginia. VDF's work is being performed under the direction and at the instruction of Calderwood & Harkness, and VDF's engagement lead for this matter is Rachel Hartley, a Senior Managing Director of the firm. VDF has extensive experience in large-scale, cross-border forensic collection and has performed similar work in prior FCPA-related matters.
VDF has commenced forensic imaging and collection from the identified custodians and data sources. Based on preliminary assessments conducted to date, the estimated total data volume subject to preservation is approximately 1.625 terabytes, consisting of the following categories:
• Approximately 1.2 terabytes of email data, sourced from the Company's Strathmore Data Systems and Ashgrove Software environments, as well as from archived email repositories and, where applicable, forensic images of personal devices used by custodians for Company business;
• Approximately 340 gigabytes of financial systems data, sourced from the Company's enterprise resource planning system (Harborline Software), the TGM local accounting system (Severin Services Inc.), and related financial databases; and
• Approximately 85 gigabytes of shared-drive documents, sourced from the Company's Westvale Services Inc. environment and local network file shares maintained at the Company's Toronto, London, and Ganara offices.
These estimates are preliminary and are expected to be refined as VDF completes its forensic collection activities. The Company will promptly advise the Department of any material changes to the estimated data volume.
E. Suspension of Routine Destruction. The Company has instructed all identified custodians, as well as the Company's Information Technology and Records Management departments, to immediately suspend any routine document destruction, recycling, or deletion processes with respect to potentially relevant materials. This instruction applies to electronic data, paper records, and all other media. Former employees have been contacted to the extent the Company is able and have been requested to preserve all documents in their possession, custody, or control that relate to their work for Torchlight, TGH, or TGM. The Company's automated email and data retention policies have been modified to exclude all identified custodians and repositories from any scheduled purging or archiving cycles.
F. Preservation of Financial Institution Records. In addition to the preservation of the Company's own records, the Company has taken steps to ensure the preservation of records held at relevant financial institutions. Specifically, the Company has issued written preservation requests to Meridian Commercial Bank (BVI), which maintains accounts on behalf of TGH, and to Regency International Bank, headquartered in the Republic of Ganara, which maintains operating accounts on behalf of TGM. These requests direct the institutions to preserve all account records, transaction histories, wire transfer documentation, and related correspondence for the accounts associated with TGH and TGM for the period from January 1, 2018 through the present.
IV. Awareness of Parallel SEC Investigation
For completeness, and to ensure full transparency with the Department, we note that the Company is aware of, and is separately responding to, a formal order of investigation issued by the Division of Enforcement of the U.S. Securities and Exchange Commission (File No. HO-14892, dated January 22, 2025), as well as a document subpoena served on the Company pursuant to that order on February 3, 2025. The Company is represented by Calderwood & Harkness in connection with the SEC investigation as well.
The Company's document preservation efforts have been designed to encompass the full scope of both the Department's voluntary document preservation request and the SEC's document subpoena, so as to ensure consistent, comprehensive, and non-duplicative document preservation across both proceedings. The litigation hold issued on March 17, 2025 expressly incorporates the subject matter and temporal scope of the SEC subpoena in addition to the Department's request.
The Company is currently producing documents to the SEC on a rolling basis, with the first production having been delivered on March 10, 2025, and subsequent productions scheduled on a biweekly basis. The Company will coordinate with the Department regarding any document production requests that may follow the Department's initial preservation request, and the Company is prepared to discuss with the Department any issues relating to the coordination of productions or the treatment of privileged or protected materials in the context of parallel proceedings.
V. Expression of Willingness to Cooperate
Torchlight Mining Corp. is committed to cooperating fully and in good faith with the Department of Justice in connection with this matter. The Company recognizes the importance of the issues raised by the Department's request and is dedicated to ensuring that its responses are thorough, timely, and complete.
To that end, the Company, through Calderwood & Harkness, has commenced a thorough and independent internal investigation into the matters at issue, including the Company's interactions with governmental officials and the use of third-party intermediaries in connection with its Ganaran operations. The internal investigation is ongoing, and the Company intends to provide the Department with the results of that investigation at the appropriate time, consistent with the Company's cooperation objectives and its obligations to preserve applicable privileges and protections.
In furtherance of the internal investigation, the Company has also retained Pinnacle Forensic Advisory LLC ("Pinnacle"), a nationally recognized forensic accounting firm, to conduct a comprehensive forensic review of relevant financial records, including payment flows, third-party disbursements, expense reimbursements, and related transactional data. Pinnacle's work is being performed under the direction of Calderwood & Harkness and is subject to the protection of the attorney-client privilege and the work product doctrine.
The Company welcomes the opportunity to discuss with the Department the scope and format of any additional document preservation or production requests, and to address any questions or concerns the Department may have regarding the Company's preservation efforts or the progress of the internal investigation.
VI. Identification of Counsel and Request for Future Communications
We respectfully request that all future communications from the Department regarding this matter be directed to the undersigned at the following address and contact information:
Conrad Ashby, Partner Calderwood & Harkness LLP 825 Eighth Avenue, 42nd Floor New York, New York 10019 Telephone: (212) 554-7218
Email: cashby@calderwoodharkness.com
In addition, the following attorneys at Calderwood & Harkness may be in contact with the Department's attorneys on operational matters relating to document preservation, collection, production, and scheduling:
Victoria Chambers, Partner (Billing Partner) Telephone: (212) 554-7305
Email: vchambers@calderwoodharkness.com
Steven Hollander, Associate (Lead Associate) Telephone: (212) 554-7419
Email: shollander@calderwoodharkness.com
We are available for a meeting or telephonic conference at the Department's convenience to discuss the Company's preservation efforts, the scope of the matter, and any other issues the Department may wish to address. We would welcome the opportunity for an introductory discussion at the earliest date that is convenient for the Department and its team, and we are happy to accommodate the Department's scheduling preferences.
VII. Closing and Reservation
We appreciate the Department's consideration of this letter and the Company's good-faith efforts to promptly and comprehensively respond to the Department's voluntary document preservation request. The Company looks forward to continuing to work constructively and cooperatively with the Department throughout this process.
We note, however, that the Company expressly reserves all rights, privileges, and defenses available to it, including but not limited to the attorney-client privilege, the work product doctrine, the joint defense and common interest privileges, and any other applicable protections, with respect to the Company's internal investigation and any documents, communications, memoranda, analyses, or other materials generated in connection therewith or in connection with the rendering of legal advice to the Company regarding this matter. Nothing in this letter is intended as, nor should it be construed as, a waiver of any such rights, privileges, or defenses, whether express or implied. The Company's cooperation with the Department is undertaken voluntarily and without prejudice to the Company's ability to assert any such rights, privileges, or defenses at any time.
Should you have any questions regarding the matters addressed in this letter, or should you wish to discuss any aspect of the Company's preservation efforts or this matter more generally, please do not hesitate to contact me directly at the number or email address listed above.
Thank you for your courtesy and attention to this matter.
Respectfully submitted,
CALDERWOOD & HARKNESS LLP
By: ________
Conrad Ashby Partner White Collar & Investigations Practice Calderwood & Harkness LLP 825 Eighth Avenue, 42nd Floor New York, New York 10019
cc:
Patricia Sung, General Counsel & Corporate Secretary, Torchlight Mining Corp. (via email) Victoria Chambers, Partner, Calderwood & Harkness LLP (via email) Steven Hollander, Associate, Calderwood & Harkness LLP (via email)