PRIVILEGED AND CONFIDENTIAL — ATTORNEY-CLIENT PRIVILEGED / ATTORNEY WORK PRODUCT
MEMORANDUM
TO: Conrad Ashby, Responsible Partner, White Collar & Investigations
FROM: Steven Hollander, Lead Associate, White Collar & Investigations
DATE: March 11, 2025
RE: SEC Document Subpoena Response Strategy — Torchlight Mining Corp. (File No. HO-14892)
C&H Matter No.: 1039-00005
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I. Executive Summary
On February 3, 2025, the Division of Enforcement of the United States Securities and Exchange Commission (the "SEC" or the "Commission") served a formal document subpoena on Torchlight Mining Corp. ("Torchlight" or "TMC") in connection with the SEC's formal order of investigation, File No. HO-14892, issued on January 22, 2025. The investigation concerns potential violations of the Foreign Corrupt Practices Act of 1977, as amended (the "FCPA"), arising from Torchlight's operations in the Republic of Ganara, a nation in West Africa where Torchlight holds significant mining concessions through a chain of wholly owned subsidiaries.
The SEC investigation centers on approximately $4.73 million in suspected improper payments made between 2019 and 2024 through Torchlight's West African subsidiaries. These payments were allegedly made in connection with the procurement of mining permits and environmental approvals from Ganaran government officials and regulatory bodies. The suspected payments were routed primarily through a Mauritius-incorporated consulting firm, Crestfield Advisory Partners Ltd. ("Crestfield"), and supplemented by cash withdrawals and in-kind benefits disbursed directly from Torchlight's Ganaran operating subsidiary.
This memorandum analyzes the scope and specifications of the SEC's document subpoena, identifies the principal categories of responsive documents, flags significant privilege and work-product issues that will arise during the production process, proposes a four-tranche rolling production schedule designed to satisfy the subpoena's requirements while protecting privileged materials, and addresses the necessary coordination with the United States Department of Justice ("DOJ"), which has issued a separate voluntary document preservation request dated February 14, 2025.
As an important contextual matter, on February 7, 2025, Torchlight filed a Current Report on Form 8-K with the SEC disclosing the existence of the formal investigation. Following this disclosure, Torchlight's share price declined approximately 22.0%, falling from CAD $34.80 per share to CAD $27.15 per share, resulting in an estimated loss of approximately CAD $1.28 billion in market capitalization. This market reaction underscores the significance of the investigation and the need for a well-coordinated, strategic response to the subpoena that maximizes the potential for cooperation credit while preserving all available privilege protections.
II. Background
A. The SEC Investigation
The SEC's Division of Enforcement issued a formal order of investigation on January 22, 2025, assigned File No. HO-14892. The order authorizes Commission staff to investigate potential violations of the FCPA, specifically targeting both the anti-bribery provisions set forth in Section 30A of the Securities Exchange Act of 1934 (the "Exchange Act") and the books-and-records and internal-controls provisions codified at Sections 13(b)(2)(A) and 13(b)(2)(B) of the Exchange Act. The breadth of the order — encompassing both the substantive anti-bribery prohibitions and the accounting provisions — Signals that the SEC staff intends to pursue both tracks of potential liability, which is consistent with the Commission's enforcement practice in significant FCPA matters.
Torchlight Mining Corp. is a corporation organized under the Canada Business Corporations Act ("CBCA"), headquartered at 200 King Street West, Suite 3400, Toronto, Ontario M5H 3T4, Canada. The company's American Depositary Receipts ("ADRs") 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." As an issuer with ADRs listed on a United States national securities exchange, Torchlight qualifies as an "issuer" within the meaning of Section 3(a)(47) of the Exchange Act and is therefore subject to the FCPA's anti-bribery, books-and-records, and internal-controls provisions.
Torchlight reported consolidated revenue of approximately CAD $2.1 billion for fiscal year 2024. Of this amount, approximately CAD $387 million — or 18.4% of total consolidated revenue — was attributable to the company's West African operations in the Republic of Ganara. These operations, while not the largest segment of Torchlight's business, represent a strategically important growth area for the company and have been the subject of significant capital investment in recent years. As of March 1, 2025, Torchlight's market capitalization stood at approximately CAD $5.8 billion, with approximately 166.7 million shares outstanding.
Calderwood & Harkness LLP ("C&H") was formally engaged by Torchlight on March 5, 2025 to represent the company in connection with the SEC and DOJ investigations and to conduct an independent internal investigation into the conduct at issue. The engagement was authorized by Torchlight's Audit Committee and formalized through an engagement letter executed on that date. The company's internal investigation was opened concurrently with the engagement. The primary client contact for the engagement is Patricia Sung, General Counsel and Corporate Secretary of Torchlight Mining Corp.
B. The DOJ Inquiry
In parallel with the SEC investigation, the Fraud Section of the Criminal Division of the DOJ opened a preliminary inquiry into the same underlying conduct in approximately January 2025, following a referral from the SEC. The DOJ inquiry is being handled by the FCPA Unit of the Fraud Section. The assigned lead personnel at the DOJ is Assistant Chief Margaret Calloway.
To date, the DOJ has not issued formal compulsory process — neither a federal grand jury subpoena nor a civil investigative demand ("CID") has been served on Torchlight or any of its subsidiaries. However, on February 14, 2025, the DOJ sent a voluntary document preservation request to Torchlight, which was received by the company's General Counsel. The preservation request is not legally compulsory but carries significant practical weight, as failure to preserve documents following receipt of such a request could be construed as evidence of obstruction or, at a minimum, would undermine any future assertion of cooperation credit. The coordination of our response to the SEC's compulsory subpoena with our handling of the DOJ's voluntary request is a critical strategic issue addressed at length in Section VI of this memorandum.
C. Corporate Structure Relevant to Subpoena
The SEC's document subpoena is directed to Torchlight Mining Corp. and, through Torchlight's custody and control over its subsidiaries, encompasses documents held by the following entities in the corporate chain relevant to the Ganaran operations:
Torchlight Mining Corp. (the "Parent") — A corporation organized under the CBCA and headquartered in Toronto, Ontario. Torchlight serves as the ultimate parent company and is the entity on which the SEC subpoena was formally served.
Torchlight Ganara Holdings Ltd. ("TGH") — A wholly owned subsidiary of Torchlight, incorporated in the British Virgin Islands on March 15, 2017. TGH functions as the intermediate holding company for Torchlight's Ganaran operations. TGH is the entity that entered into the Government Relations Advisory Agreement with Crestfield. TGH maintained financial accounts at Meridian Commercial Bank in the British Virgin Islands, Account No. 7740-2281-0056, through which the Crestfield payments were routed.
Torchlight Ganara Mining S.A. ("TGM") — A 100% subsidiary of TGH, organized under the laws of the Republic of Ganara. TGM is the in-country operating entity responsible for the day-to-day conduct of Torchlight's mining operations in Ganara, including all interactions with Ganaran government officials and regulatory bodies. TGM maintained financial accounts at Regency International Bank in Ganara, Account No. GAN-4419-8837. TGM employs approximately 2,400 local workers and 85 expatriate staff across its operations. TGM is the entity from which the additional suspected cash withdrawals and in-kind benefit payments originated.
This three-tier corporate structure — with the Canadian parent, a BVI holding company, and a Ganaran operating subsidiary — creates significant logistical and legal complexities for document collection and production, including cross-border data transfer issues, foreign data privacy laws, and banking confidentiality restrictions, all of which are discussed in detail in Section VII below.
D. The Alleged Scheme — Summary
Based on information gathered to date by Torchlight's in-house legal team and our preliminary review of available records since our engagement on March 5, 2025, the alleged scheme involves a course of conduct spanning approximately five and a half years, from April 2019 through at least October 2024.
The Crestfield Engagement. TGH retained Crestfield Advisory Partners Ltd. ("Crestfield"), a consulting firm incorporated in Mauritius, under a Government Relations Advisory Agreement dated April 12, 2019. Crestfield is operated by Jean-Philippe Renard, a French citizen, age 54, based in Dakar. The stated purpose of the Crestfield engagement was to provide government relations advisory services to TGH in connection with its mining operations in the Republic of Ganara, including assistance with the permitting process and engagement with relevant government ministries. The engagement of Crestfield was principally managed on the Torchlight side by Marcus Delacroix, then Vice President of Africa Operations, with day-to-day coordination handled by Raymond Osei-Bonsu, Country Manager of TGM.
Payments to Crestfield. Over the period from April 2019 through October 2024, Torchlight — through TGH — made total payments of $3,210,000 to Crestfield, spread across 24 invoices. The Government Relations Advisory Agreement established a contractual maximum of $2,040,000, broken down as follows: retainers of $990,000, success fees of $500,000, and expenses of $550,000. Actual payments invoiced by Crestfield exceeded this contractual maximum by $1,170,000. No contract amendment, addendum, or side letter has been identified in Torchlight's compliance records that would authorize payments exceeding the contractual ceiling. This absence of documented authorization for payments exceeding the contractual maximum by more than 57% is a significant red flag.
Additional Suspected Payments. In addition to the Crestfield payments routed through TGH's BVI bank account, Torchlight's preliminary review has identified approximately $890,000 in cash withdrawals from TGM's local bank account at Regency International Bank in Ganara, booked to general ledger account 7450 ("Community Relations Expenses"), as well as approximately $630,000 in in-kind benefits — including the purchase of vehicles and the provision of travel — booked to general ledger accounts 7200 and 7310. These expenditures are suspected of having been directed, in whole or in part, to Ganaran government officials.
Total Suspected Improper Payments. The aggregate amount of suspected improper payments is approximately $4,730,000, comprising the $3,210,000 in Crestfield payments plus $890,000 in cash withdrawals and $630,000 in in-kind benefits. Of the Crestfield payments, it is estimated that approximately $2,410,000 — or roughly 75% — was diverted to Ganaran government officials, with the balance retained by Crestfield as its own commission.
Alleged Recipients. The alleged recipients of improper payments include: (i) the Honourable Boubacar Diallo, Former Minister of Mines of the Republic of Ganara, who is alleged to have received approximately $1,850,000; (ii) Amadou Traoré, Director of Environmental Permitting at the Ganaran Ministry of Environment, who is alleged to have received approximately $620,000; (iii) Colonel Ibrahim Konaté, Former Regional Prefect of the Kousseri Province, who is alleged to have received approximately $340,000; and (iv) other unidentified individuals who are alleged to have received approximately $1,920,000. The identity and specific allocation of payments to these additional recipients remains a key focus of our internal investigation.
Permits at Issue. The suspected payments are connected to the procurement of five mining permits and regulatory approvals from Ganaran government authorities:
Key Subjects. The individuals most directly implicated in the alleged conduct include: (i) Marcus Delacroix, Former Vice President of Africa Operations, who served in that capacity from November 3, 2018 through November 15, 2024, when he resigned; Delacroix is currently residing at 47 Rue de la République, 69002 Lyon, France, and is represented by Helen Whitmore of Whitmore & Sharpe LLP; and (ii) Raymond Osei-Bonsu, Former Country Manager of TGM, who served in that capacity from February 7, 2019 through January 8, 2025, when he was terminated for cause; Osei-Bonsu is represented by Okoro Law Chambers.
III. Analysis of the SEC Document Subpoena
A. Overview of Subpoena Specifications
The SEC's formal document subpoena was served on Torchlight Mining Corp. on February 3, 2025, approximately twelve days after the formal order of investigation was issued. The subpoena was issued pursuant to the Commission's authority under the formal order of investigation, File No. HO-14892, dated January 22, 2025, and is enforceable in accordance with the provisions of Section 21(b) of the Exchange Act.
The subpoena is directed to Torchlight Mining Corp. and, through Torchlight's custody and control over its corporate subsidiaries, extends to documents in the possession of TGH and TGM. This is consistent with SEC practice in cases involving foreign subsidiaries of issuers, where the Commission's subpoena power runs to the issuer and requires the issuer to produce documents within its custody and control, including those held by entities over which it exercises legal or practical dominion.
The temporal scope of the subpoena's document requests appears to cover the period from January 1, 2017 through the present. This temporal scope is broader than the period of alleged improper payments (April 2019 through October 2024) and encompasses the date of TGH's incorporation in the British Virgin Islands on March 15, 2017. The inclusion of the pre-payment period likely reflects the SEC's interest in understanding the formation of the subsidiary structure, any pre-existing relationships between Torchlight personnel and Crestfield or government officials, and the establishment (or absence) of compliance controls prior to the commencement of the Ganaran operations.
The subpoena's original return date and our negotiations regarding a rolling production schedule are discussed in Section V below.
B. Responsive Document Categories
Based on our review of the subpoena specifications, we have identified ten principal categories of responsive documents. Each category is described below, together with an assessment of the likely scope of responsive materials, collection challenges, and any privilege or work-product concerns specific to that category.
Category 1: Corporate Organizational and Governance Documents
The subpoena requests all documents relating to the corporate organization, governance, and management of TGH and TGM, as well as any parent-level governance documents relating to the Ganaran operations. Responsive documents in this category include:
• TGH and TGM incorporation documents, certificates of formation, articles of association, bylaws, and shareholders' agreements, including all amendments thereto.
• Board of directors resolutions for TGH, including any resolutions authorizing the engagement of Crestfield Advisory Partners Ltd. or approving the retention of government relations agents or consultants in connection with the Ganaran operations.
• TGM organizational documents filed under Ganaran law, including any filings with the Ganaran Ministry of Commerce or other relevant regulatory bodies.
• Minutes of the Torchlight Mining Corp. board of directors and Audit Committee to the extent such minutes reference Ganaran operations, the Crestfield relationship, the engagement of government relations consultants generally, or the SEC or DOJ investigations.
• Delegation of Authority policies applicable to TGH and TGM, including any policies establishing approval thresholds for expenditures, consultant engagements, or payments to third-party agents. This is a particularly significant area because Torchlight's Delegation of Authority policy established a single-approval threshold of $50,000. Our preliminary review indicates that 14 of the 24 Crestfield invoices exceeded this $50,000 threshold but were approved with only a single signature — that of Marcus Delacroix — rather than the dual approval required under the policy. This pattern of single-signature approvals for above-threshold payments is likely to be a focal point of the SEC's investigation of internal-controls deficiencies.
Collection of TGH corporate records will require coordination with Hargrove Whitfield LLP (Catherine Whitfield, partner), Torchlight's BVI counsel. TGH's corporate records are maintained at the company's registered office in the British Virgin Islands, located at Wickhams Cay II, Suite 408, Road Town, Tortola. We have initiated contact with Ms. Whitfield to arrange for the collection and transmission of these records.
Category 2: Crestfield Advisory Agreement and Related Documentation
This category encompasses the contractual relationship between TGH and Crestfield Advisory Partners Ltd. and all documentation generated in connection with that relationship. Responsive documents include:
• The Government Relations Advisory Agreement dated April 12, 2019 between TGH and Crestfield Advisory Partners Ltd., including all schedules, exhibits, and appendices thereto.
• All amendments, addenda, or side letters to the Agreement. As noted above, no contract amendment has been identified in Torchlight's compliance records that would authorize payments in excess of the $2,040,000 contractual maximum. The absence of such documentation — despite actual payments exceeding the contractual ceiling by $1,170,000 — is a significant fact that the SEC staff will likely scrutinize closely.
• Due diligence files on Crestfield Advisory Partners Ltd., including any know-your-customer documentation, background checks, beneficial ownership inquiries, compliance questionnaires, or risk assessments conducted prior to or during the engagement. Critically, no due diligence file on Crestfield has been identified in Torchlight's compliance records to date. This absence is itself a significant red flag and a likely indicator of an internal-controls deficiency. The failure to conduct due diligence on a government relations consultant retained in connection with foreign mining permits — a paradigmatic high-risk engagement — will be a key area of SEC focus.
• All correspondence and communications between Torchlight, TGH, and TGM personnel on the one hand and Crestfield and/or Jean-Philippe Renard on the other. This includes communications by email, letter, text message, messaging application, and any other medium.
• Of particular note, our preliminary review has identified 37 communications between Marcus Delacroix and Jean-Philippe Renard that were sent via Delacroix's personal (non-company) email account. These communications are potentially responsive to the subpoena; however, they raise significant collection and privilege issues that are discussed in detail in Section IV.C below.
Category 3: Financial and Accounting Records
The financial and accounting records category is among the most voluminous and complex categories of responsive documents. It encompasses the complete financial record of payments made in connection with the alleged scheme. Responsive documents include:
• All 24 invoices submitted by Crestfield Advisory Partners Ltd. to TGH during the period from April 2019 through October 2024. The invoices are distributed across fiscal years as follows:
• Wire transfer records from Meridian Commercial Bank (British Virgin Islands), Account No. 7740-2281-0056, documenting all outgoing wire transfers from TGH to Crestfield's bank accounts. These records will include SWIFT messages, debit advices, and any correspondent bank intermediary documentation.
• TGM general ledger entries, with particular attention to the following accounts: GL 7450 ("Community Relations Expenses"), through which approximately $890,000 in cash withdrawals were booked between 2019 and 2024; GL 7200, through which certain in-kind benefits including vehicle purchases were recorded; and GL 7310, through which travel-related in-kind benefits totaling approximately $630,000 were booked.
• Regency International Bank (Republic of Ganara), Account No. GAN-4419-8837, monthly account statements and individual cash withdrawal records for the relevant period. These records are critical to tracing the cash withdrawals booked to GL 7450.
• Invoice approval chains and supporting documentation for each of the 24 Crestfield invoices, including any purchase requisitions, approval emails, sign-off sheets, and routing documentation. As noted above, we expect to find that 14 of 24 invoices were approved with only a single signature in apparent violation of the Delegation of Authority policy.
• Purchase orders and payment records for vehicle purchases and travel expenditures booked as in-kind benefits under GL 7200 and GL 7310.
• Consolidated financial statements and audit working papers relevant to Torchlight's West African operations for fiscal years 2019 through 2024.
We note that Pinnacle Forensic Advisory LLC has been retained, effective March 12, 2025, to conduct a forensic accounting review of the financial records described above. The engagement partner is Dr. Leonard Strauss. Pinnacle's forensic review is ongoing, and all work product generated by Pinnacle at the direction of C&H must be treated as protected attorney work product. We must be vigilant in maintaining the distinction between underlying financial records (which are responsive and must be produced) and Pinnacle's analytical work product (which is privileged and must be withheld and logged).
Category 4: Mining Permits and Regulatory Filings
This category encompasses the governmental permits and licenses that are alleged to have been procured through improper payments, as well as all documentation relating to the application for, processing of, and issuance of those permits. Responsive documents include:
Applications, correspondence with government agencies, and issuance documents for each of the five permits and licenses at issue:
• Kousseri Mining License (KCC-2019-0047): Issued September 14, 2019, granting TGM the right to conduct mining operations over a concession area of 14,200 hectares in the Kousseri Province for a 25-year term. This was the first major permit obtained following the engagement of Crestfield.
• Kousseri Environmental Approval (ENV-KCC-2020-113): Issued March 27, 2020, by the Ganaran Ministry of Environment, providing environmental clearance for TGM's mining operations at the Kousseri site. This approval was a condition precedent to the commencement of active mining operations.
• Dembélé Exploration License (DRE-2021-0092): Issued July 8, 2021, granting TGM the right to conduct exploration activities over an 8,750-hectare concession area in the Dembélé region for a 5-year term. The Dembélé concession represents a second major area of operations for Torchlight in Ganara.
• Dembélé Mining License Upgrade (DRE-M-2023-0018): Issued February 14, 2023, upgrading TGM's rights in the Dembélé concession from an exploration license to a full mining license, permitting commercial extraction activities.
• Kousseri Expansion Permit (KCC-2019-0047-A1): Issued April 3, 2024, expanding the Kousseri concession area by 3,200 hectares, bringing the total Kousseri concession to 17,400 hectares. This was the most recent permit obtained and the last known Crestfield invoice precedes its issuance.
In addition to the formal permit documentation, responsive materials in this category include internal Torchlight, TGH, and TGM communications regarding permit applications, timelines for government processing, and strategies for advancing permit applications through the Ganaran regulatory process. Also responsive is all correspondence with Ganaran government ministries and officials, including the Ministry of Mines, the Ministry of Environment, and the Kousseri Provincial office.
Category 5: Communications with Government Officials
This category, which overlaps in part with Category 4, specifically targets all communications — whether direct or indirect — between Torchlight personnel and the Ganaran government officials identified in the investigation. Responsive documents include:
• All communications between any Torchlight, TGH, or TGM employee or agent and the Honourable Boubacar Diallo (Former Minister of Mines), Amadou Traoré (Director, Environmental Permitting), Colonel Ibrahim Konaté (Former Regional Prefect of Kousseri Province), and their respective staff members, assistants, and associates.
• All communications between Crestfield and/or Jean-Philippe Renard and any Torchlight, TGH, or TGM personnel in which the above-named government officials are discussed, referenced, or identified.
• Meeting logs, calendar entries, travel records, expense reports, and any other documentation reflecting meetings, dinners, events, or other interactions between Torchlight personnel and Ganaran government officials.
The sensitivity of this category warrants particularly careful review, as documents in this category may contain evidence bearing directly on the elements of a substantive anti-bribery violation, including the corrupt intent element.
Category 6: Compliance Program Documents
The SEC's subpoena requests a comprehensive set of documents relating to Torchlight's anti-corruption compliance program, including the design, implementation, and operation of compliance controls applicable to the Ganaran operations. This category is relevant both to the SEC's assessment of internal-controls deficiencies under Sections 13(b)(2)(A) and (B) and to any future evaluation of cooperation credit or remedial measures. Responsive documents include:
• Anti-corruption policies, codes of conduct, compliance manuals, and any supplemental guidance documents applicable to Torchlight's global operations or specifically to the West African operations.
• Training records for West African operations personnel, including records of compliance training sessions, attendance lists, training materials, and any certifications of completion.
• Third-party due diligence procedures and any due diligence actually conducted on agents, intermediaries, consultants, or other third parties retained in connection with the Ganaran operations.
• Gift, hospitality, and entertainment logs maintained by TGH and TGM personnel.
• The whistleblower complaint filed through Torchlight's ethics hotline, administered by Sentinel Compliance Solutions Inc. The complaint was assigned reference number SCH-2024-08-4417 and was received on August 19, 2024. All follow-up documentation, including internal investigation notes, is responsive to the extent not protected by privilege or work product.
• Escalation records documenting the chain of reporting following receipt of the whistleblower complaint. Specifically, Nadia Berenson, Vice President of Compliance, escalated the whistleblower complaint to Dr. Eleanor Fiske, Chair of the Audit Committee, on August 26, 2024. On September 5, 2024, the Audit Committee authorized a preliminary internal review of the matters raised in the complaint.
Category 7: Personnel Files and Employment Records
The subpoena requests personnel files and employment records for the key individuals involved in the alleged conduct. Responsive documents include:
• The complete employment files for Marcus Delacroix (Vice President, Africa Operations, employed from November 3, 2018 through November 15, 2024, when he resigned) and Raymond Osei-Bonsu (Country Manager, TGM, employed from February 7, 2019 through January 8, 2025, when he was terminated for cause).
• Personnel files for other relevant employees, including but not limited to those with supervisory authority over Delacroix or Osei-Bonsu, those involved in the approval of Crestfield invoices or consultant engagements, and those with knowledge of the Ganaran operations.
• Separation agreements, severance terms, and any post-employment obligations, including non-compete agreements, non-solicitation agreements, and confidentiality agreements executed by Delacroix and Osei-Bonsu at the time of their departures.
Category 8: Audit and External Reporting Records
This category encompasses the external audit records and SEC filings relevant to the Ganaran operations. Responsive documents include:
• Audit working papers prepared by Clarendon Group LLP (engagement partner: Alain Beaumont) for fiscal years 2019 through 2023, to the extent such working papers relate to the West African operations, the Crestfield relationship, community relations expenses, or any of the general ledger accounts identified above.
• Management representation letters provided by Torchlight to Clarendon in connection with the annual audit for each year during the relevant period.
• Any communications between Clarendon Group LLP and Torchlight management regarding the Ganaran operations, the Crestfield relationship, unusual transactions, or concerns about the adequacy of internal controls.
• We note that the FY2024 audit is currently delayed pending the outcome of the investigation. Clarendon has not yet issued its audit report for FY2024, and any ongoing communications between Clarendon and Torchlight regarding the delay or the investigation itself will require careful assessment for privilege and responsiveness.
• Torchlight's SEC filings, including Forms 20-F, Form 8-K reports, and any other filings that reference the Ganaran operations, the SEC investigation, or the DOJ inquiry. The Form 8-K filed on February 7, 2025 disclosing the SEC investigation is responsive to this category.
Category 9: D&O Insurance and Related Notifications
The subpoena requests documents relating to Torchlight's directors' and officers' liability insurance coverage and any notifications made to the insurer in connection with the investigation. Responsive documents include:
• Torchlight's D&O insurance policy, issued by Dalton & Mercer Inc., Policy No. DM-0092-FCPA-2024. The policy provides coverage of $50 million per occurrence and $100 million in the aggregate, subject to a $2.5 million retention.
• All claim notifications and correspondence with the D&O carrier. We note that the notice of claim letter to Dalton & Mercer is scheduled to be sent on March 8, 2025.
• In reviewing documents in this category for production, we must consider whether any communications between Torchlight and its D&O insurer are protected by the attorney-client privilege. While coverage dispute communications may be privileged in certain circumstances, routine claim notifications and factual disclosures to the insurer are generally not privileged. We should review these materials carefully before production.
Category 10: Shareholder and Investor Communications
This final category encompasses Torchlight's communications with its shareholders and investors regarding the investigation and its potential impact on the company. Responsive documents include:
• Correspondence with Kingsley Institutional Partners LP ("KIP"), one of Torchlight's largest institutional shareholders. KIP, managed by Annette Kingsley, holds an 8.2% stake in Torchlight — approximately 13.67 million shares. KIP has sent governance inquiry letters to Torchlight's board of directors expressing concern about the investigation, requesting information about the company's response, and raising questions about board oversight of the Ganaran operations.
• Investor relations materials prepared by Torchlight addressing the investigation disclosures, including any investor presentations, talking points, Q&A documents, or press releases.
IV. Privilege and Work Product Issues
A. Attorney-Client Privilege
The SEC subpoena response will require careful identification and logging of documents protected by the attorney-client privilege. We have identified several categories of privileged communications that will arise in the production review process:
Pre-existing privilege (pre-engagement communications). Communications between Patricia Sung, in her capacity as General Counsel and Corporate Secretary of Torchlight, and Torchlight, TGH, and TGM personnel, to the extent such communications involve the seeking or rendering of legal advice regarding Ganaran operations, the Crestfield relationship, compliance with anti-corruption laws, or the government investigation. The privilege attaches to such communications from the point at which they involve legal advice, not merely business communications routed through in-house counsel. We will need to review these communications carefully to distinguish between privileged legal advice and non-privileged business communications that may have been copied to Ms. Sung in her capacity as a member of senior management rather than in her role as legal advisor.
Post-engagement privilege (C&H communications). All communications between Calderwood & Harkness LLP and Torchlight personnel from March 5, 2025 forward are protected by the attorney-client privilege, subject to the standard requirements that the communications were made in confidence for the purpose of obtaining or providing legal advice. This includes communications with the C&H investigation team, including all attorneys, paralegals, and support staff working under attorney direction.
Canadian counsel communications. Correspondence between Torchlight and Bartlett Keene & Ostrander LLP (engagement partner: Richard Bartlett III) regarding Torchlight's potential exposure under the Corruption of Foreign Public Officials Act ("CFPOA"), the Canadian analogue to the FCPA, as well as Canadian securities disclosure obligations arising from the investigation. These communications are privileged. To formalize the protection of materials shared between C&H and Bartlett Keene, a Common Interest and Joint Defense Agreement is scheduled to be executed on March 10, 2025. The common interest doctrine will protect from waiver the sharing of privileged materials between the two firms in furtherance of their joint representation of Torchlight's interests in the parallel U.S. and Canadian proceedings.
BVI counsel communications. Communications between Torchlight and Hargrove Whitfield LLP (Catherine Whitfield, partner), Torchlight's BVI counsel, regarding TGH corporate records, BVI regulatory requirements, and any BVI-specific legal issues arising from the investigation. These communications are privileged.
Ganaran counsel communications. Communications between Torchlight and Ndong & Keïta Cabinet Juridique (Maître Salif Ndong), Torchlight's Ganaran counsel, regarding Ganaran law, including mining regulations, environmental permitting requirements, anti-corruption laws, and data privacy restrictions. These communications are privileged.
Communications with subjects' counsel. An important limitation on the privilege must be noted: communications between Torchlight and the personal counsel for Marcus Delacroix (Helen Whitmore of Whitmore & Sharpe LLP) or Raymond Osei-Bonsu (Okoro Law Chambers) are NOT protected by Torchlight's attorney-client privilege. Delacroix's and Osei-Bonsu's personal counsel represent those individuals, not the company, and there is no joint defense or common interest agreement in place between the company and these individuals. Any such communications that are in the company's possession may be responsive to the subpoena and must be produced unless separately privileged on other grounds.
B. Work Product Doctrine
In addition to the attorney-client privilege, the work product doctrine — codified in Federal Rule of Civil Procedure 26(b)(3) and its analogues — protects materials prepared in anticipation of litigation or for trial. Given that the SEC investigation and the DOJ inquiry constitute reasonably foreseeable government enforcement proceedings, materials prepared from the commencement of the investigation forward are subject to work product protection. Key categories of protected work product include:
Pinnacle Forensic Advisory work product. All forensic accounting analyses, reports, memoranda, and other materials prepared by Pinnacle Forensic Advisory LLC at C&H's direction in connection with the internal investigation constitute attorney work product. Because Pinnacle was retained by counsel to assist in providing legal advice to Torchlight and in anticipation of government enforcement proceedings, Pinnacle's analytical work product is protected. However, we must be attentive to the dual-purpose doctrine, under which materials that serve both a legal purpose and a business purpose may receive reduced or no work product protection. To the extent that any Pinnacle work product is shared with Torchlight management for business decision-making purposes — such as financial restatement decisions or operational changes — the protection could be challenged. All Pinnacle work product must be carefully logged and its dissemination controlled.
Marlowe Asset Management Digital Forensics materials. Certain materials generated by Marlowe Asset Management Digital Forensics Inc. in the course of processing and hosting the document collection will constitute work product, while others will not. Processing logs, chain-of-custody records, and metadata extraction outputs are generally factual in nature and may not qualify for work product protection. However, analytical work product — such as search term reports, predictive coding models, and technology-assisted review outputs prepared at counsel's direction to identify responsive and privileged documents — should be protected as opinion work product reflecting the mental impressions, conclusions, and legal strategies of counsel.
Internal C&H materials. All internal Calderwood & Harkness memoranda, interview preparation materials, interview notes, witness assessment memoranda, strategic analyses, and correspondence among C&H attorneys regarding the investigation are privileged work product.
Fact work product vs. opinion work product. It is important to distinguish between fact work product and opinion work product. Fact work product — factual compilations, chronologies, and summaries prepared in anticipation of litigation — is protected but may be discoverable upon a showing of substantial need and inability to obtain the substantial equivalent by other means without undue hardship. Opinion work product — materials reflecting the mental impressions, conclusions, opinions, or legal theories of an attorney — receives heightened, near-absolute protection and is virtually never discoverable. We should ensure that all investigation materials prepared by C&H clearly reflect the analytical and strategic judgments of counsel to maximize the applicable level of protection.
C. Delacroix Personal Email Issue
A significant collection and privilege issue arises from the 37 identified communications between Marcus Delacroix and Jean-Philippe Renard that were sent via Delacroix's personal (non-company) email account. These communications are potentially among the most probative documents in the case, as they may contain unguarded discussions of the purpose and recipients of the Crestfield payments. Their significance to the SEC's investigation cannot be overstated.
However, these communications present a threshold custody-and-control issue. The 37 identified communications are not stored on Torchlight's email servers or in any company-controlled system. They were sent through Delacroix's personal email account and are in Delacroix's personal possession. Torchlight does not have legal custody or control over Delacroix's personal email account, and Delacroix has separated from the company. Absent an agreement from Delacroix or an order from his counsel, Torchlight cannot compel production of these communications.
We are aware of these communications only because certain of them were forwarded by Delacroix to his company email account or were referenced in communications within the company's email system. The existence of these 37 communications has been confirmed through metadata analysis, but the content of the originals resides outside Torchlight's control.
We recommend the following approach: In our initial meet-and-confer with SEC staff, we should disclose that Torchlight has identified the existence of communications between Delacroix and Renard conducted via Delacroix's personal email, and that these communications are not within Torchlight's possession, custody, or control. We should offer to make reasonable efforts to obtain these communications — specifically, by requesting that Delacroix's counsel, Helen Whitmore of Whitmore & Sharpe LLP, voluntarily produce them. However, we should not represent that Torchlight can compel their production.
It is anticipated that Delacroix's counsel may resist production on several grounds, including Delacroix's personal attorney-client privilege (to the extent any of the communications involve his counsel), his Fifth Amendment right against self-incrimination, and — given that Delacroix currently resides at 47 Rue de la République, 69002 Lyon, France — international collection challenges including potential GDPR restrictions on the transfer of personal data from the European Union.
D. Privilege Log Requirements
All documents withheld from production on the basis of attorney-client privilege or work product protection must be identified on a privilege log. The privilege log is a critical document that must be prepared with care, as an inadequate or untimely privilege log can result in waiver of the claimed privilege.
The privilege log must include, at a minimum, the following information for each document withheld: (i) the date of the document or communication; (ii) the author or sender; (iii) all recipients, including those copied; (iv) a general description of the nature of the document or communication, sufficient to allow the SEC staff to assess the claimed privilege without revealing the privileged content; and (v) the specific privilege basis asserted (attorney-client privilege, work product — fact, or work product — opinion).
Jasmine Thornton will take the lead on privilege log preparation, working under my supervision and Conrad Ashby's oversight. Given the anticipated volume of privileged documents — particularly the large number of C&H investigation materials, Pinnacle work product, and multi-jurisdictional counsel communications — we recommend a hybrid logging approach. For certain high-volume categories of clearly privileged materials (such as C&H internal investigation memoranda, Pinnacle forensic work product, and post-engagement C&H-Torchlight communications), we will prepare a categorical privilege log that describes the category of documents, the privilege basis, the date range, and the volume of documents withheld. For communications closer in time to the underlying conduct — particularly pre-engagement communications between in-house counsel and company personnel, and any communications touching on the Crestfield relationship — we will prepare individualized privilege log entries to ensure that the basis for each withholding can be adequately assessed.
This approach is consistent with the SEC's practice in complex investigations and is generally accepted by Commission staff, provided that the categorical entries are sufficiently detailed to permit meaningful evaluation of the claimed privilege.
E. Common Interest Considerations
Common Interest and Joint Defense Agreement with Canadian Counsel. As noted above, a Common Interest and Joint Defense Agreement between Calderwood & Harkness LLP and Bartlett Keene & Ostrander LLP is scheduled to be executed on March 10, 2025. This agreement will establish the framework for sharing privileged materials between the two firms in connection with the parallel FCPA and CFPOA investigations, and will protect such shared materials from any argument that the inter-firm sharing constituted a waiver of privilege. The agreement will cover communications, memoranda, work product, and other materials exchanged in furtherance of the firms' shared interest in defending Torchlight against the U.S. and Canadian enforcement actions.
No Common Interest with Subjects' Counsel. We do not recommend entering into a common interest or joint defense agreement with counsel for Marcus Delacroix (Whitmore & Sharpe LLP) or Raymond Osei-Bonsu (Okoro Law Chambers). The interests of these individuals may be adverse to Torchlight's interests. If the company ultimately pursues cooperation with the SEC and/or DOJ, it may be necessary to provide information adverse to Delacroix and Osei-Bonsu. A joint defense agreement would create complications in that scenario and could expose the company to claims that it breached the agreement. For the same reason, any communications with the subjects' counsel must be carefully managed to ensure that no privileged company information is inadvertently shared.
Auditor Communications. We must ensure that materials shared with Clarendon Group LLP (external auditors) are not inadvertently treated as privileged communications. Under the general rule, communications between a company and its external auditors are not protected by the attorney-client privilege, as the auditor relationship is not a legal advisory relationship. While there are limited exceptions — for example, when communications involve legal advice provided by in-house counsel and are shared with auditors only as necessary for the audit function — the default rule is that auditor communications are not privileged. This is particularly important in connection with any communications regarding the Crestfield relationship, as the SEC will be keenly interested in what Clarendon knew about the Crestfield payments and when.
V. Proposed Rolling Production Schedule
A. Rationale for Rolling Productions
The volume and complexity of the responsive data set warrants a rolling production schedule rather than a single bulk production. The estimated total data volume is approximately 1.625 terabytes, distributed across three principal data sources:
This data is held across 23 custodians, comprising 12 current employees (including Erik Vandermeer, Patricia Sung, Diane Fournier, Thomas Achebe, Nadia Berenson, and Kwame Mensah, among others), 4 former employees (including Marcus Delacroix and Raymond Osei-Bonsu, both of whom present collection challenges as discussed above), and 7 shared or departmental mailboxes (including the TGH general mailbox, TGM operations mailbox, and the compliance inbox).
Marlowe Asset Management Digital Forensics Inc. (engagement lead: Rachel Hartley) has been retained effective March 14, 2025 to perform forensic collection, processing, deduplication, and hosting of the responsive data, and to provide a technology-assisted review platform for privilege and responsiveness review. The scope of Marlowe Asset Management's engagement is described in greater detail in Section VII below.
A litigation hold notice was issued on March 17, 2025 to all 23 custodians and to the relevant IT departments at Torchlight, TGH, and TGM, directing the preservation of all documents and data potentially responsive to the SEC subpoena and the DOJ preservation request. The hold notice encompasses all data sources, including email, electronic documents, hard-copy files, financial systems data, and personal devices used for company business.
In addition to the sheer volume of data, the multi-jurisdictional nature of the collection — spanning Canada, the British Virgin Islands, and the Republic of Ganara — introduces logistical complexities that further support a rolling production approach. Collection from BVI and Ganara requires coordination with local counsel, compliance with local data privacy laws, and, in some cases, formal bank requests to obtain financial records. These processes cannot be completed on the same timeline as collection from Torchlight's Canadian headquarters.
Finally, privilege review must be completed before each production tranche. Given the significance of the privilege issues identified in Section IV and the volume of potentially privileged materials (including multi-jurisdictional counsel communications, internal investigation materials, and forensic work product), adequate time must be allocated for a thorough privilege review to avoid inadvertent production of privileged materials.
B. Proposed Schedule
We propose the following four-tranche rolling production schedule:
Production 1 (Target: April 14, 2025 — approximately 6 weeks from engagement)
The first production tranche will focus on the most readily available and least privilege-intensive categories of responsive documents:
• Corporate organizational documents for TGH and TGM, including incorporation documents, articles of association, bylaws, and board resolutions.
• The Government Relations Advisory Agreement dated April 12, 2019 between TGH and Crestfield Advisory Partners Ltd., together with all related contractual documents, amendments, addenda, and side letters (or confirmation that no amendments exist).
• All 24 Crestfield invoices and associated payment authorization records, including approval chains.
• Torchlight's anti-corruption policies, codes of conduct, compliance manuals, and related compliance program documents.
• The whistleblower complaint (reference SCH-2024-08-4417, received August 19, 2024) and all escalation records, including the escalation from Nadia Berenson to Dr. Eleanor Fiske and the Audit Committee's authorization of the preliminary internal review.
This tranche will demonstrate Torchlight's commitment to cooperation by producing high-priority, core documents on an expedited basis.
Production 2 (Target: May 5, 2025 — approximately 9 weeks)
The second production tranche will focus on financial records and permit documentation:
• Wire transfer records from Meridian Commercial Bank (Account No. 7740-2281-0056) documenting payments to Crestfield.
• Regency International Bank (Account No. GAN-4419-8837) account statements and cash withdrawal records.
• TGM general ledger extracts for accounts GL 7450, GL 7200, and GL 7310 covering the period from 2019 through 2024.
• Mining permit applications, correspondence with government agencies, and issuance documents for all five licenses and permits identified in Section III.B.4.
• Personnel files for Marcus Delacroix and Raymond Osei-Bonsu, including employment agreements, performance reviews, separation agreements, and post-employment obligations.
Production 3 (Target: May 26, 2025 — approximately 12 weeks)
The third production tranche will focus on the most voluminous category — email communications:
• Custodian email productions from Torchlight, TGH, and TGM email accounts, prioritized by key custodians. The priority order for review and production is: Marcus Delacroix (corporate email account only — personal email remains outside company control), Raymond Osei-Bonsu, Thomas Achebe, Kwame Mensah, Diane Fournier, Nadia Berenson, and Patricia Sung.
• Communications between Torchlight/TGH/TGM personnel and Ganaran government officials (Hon. Boubacar Diallo, Amadou Traoré, Col. Ibrahim Konaté, and their staff).
• Communications between Torchlight/TGH/TGM personnel and Crestfield/Jean-Philippe Renard.
This tranche will require the most intensive privilege review, given the likelihood that email collections will contain privileged communications intermingled with responsive business communications.
Production 4 (Target: June 16, 2025 — approximately 15 weeks)
The fourth and final production tranche will encompass remaining materials:
• Email productions from remaining custodians not included in the first-wave priority list.
• Shared-drive documents from departmental file servers and collaboration platforms.
• Clarendon Group LLP audit working papers and communications with Torchlight management, to the extent responsive and not protected by privilege.
• Any supplemental documents identified through the witness interview process (interviews are scheduled for April and May 2025, as discussed in Section VIII).
• The final comprehensive privilege log covering all documents withheld across all production tranches.
C. Negotiation Strategy with SEC Staff
We recommend proposing the rolling production schedule described above to the SEC staff in an initial meet-and-confer call. In that call, we should emphasize the following points to support the proposed timeline:
• The substantial scope of the multi-jurisdictional collection effort, which requires coordination with counsel in three foreign jurisdictions (Canada, BVI, and Ganara) and compliance with local data privacy and banking confidentiality laws.
• Torchlight's good faith commitment to full cooperation, as evidenced by the prompt engagement of outside counsel, the issuance of a comprehensive litigation hold, and the retention of forensic collection and accounting specialists.
• The practical necessity of a rolling schedule to ensure adequate privilege review before each production tranche, thereby avoiding the inadvertent production of privileged materials that would complicate the process for both sides.
We should also offer to prioritize specific document categories if the SEC staff identifies particular areas of focus that they wish to receive on an accelerated basis. This flexibility demonstrates cooperation while preserving our ability to manage the production process efficiently.
All cooperation efforts must be carefully documented for potential credit under the SEC's Cooperation Program and the framework established in the Commission's Report of Investigation Pursuant to Section 21(a) of the Securities Exchange Act of 1934 and Commission Statement on the Relationship of Cooperation to Agency Enforcement Decisions (the "Seaboard Report"), Exchange Act Release No. 44969 (October 23, 2001). Detailed production logs should be maintained, including records of each production tranche, the number and Bates range of documents produced, and the timing of each production relative to the proposed schedule. We recommend establishing a Bates numbering convention using the prefix "TMC-SEC-" followed by sequential seven-digit numbering (e.g., TMC-SEC-0000001).
VI. Coordination with DOJ Voluntary Preservation Request
A. Nature of DOJ Request
As noted in Section II.B, the DOJ Fraud Section sent a voluntary document preservation request to Torchlight dated February 14, 2025. This request was received by Torchlight's General Counsel and acknowledged internally. The request is not a subpoena, a civil investigative demand, or any other form of compulsory process. No formal grand jury subpoena or CID has been issued by the DOJ to date.
The preservation request covers substantially the same categories of documents and data as the SEC's formal subpoena. It directs Torchlight to preserve all documents and electronically stored information potentially relevant to the DOJ's investigation into potential FCPA violations in connection with the Ganaran operations. The request was issued by the FCPA Unit of the DOJ Fraud Section and is assigned to Assistant Chief Margaret Calloway.
B. Coordination Strategy
The litigation hold notice issued by Torchlight on March 17, 2025 — prepared in connection with the SEC subpoena — is comprehensive in scope and satisfies the company's preservation obligations under both the SEC subpoena and the DOJ preservation request. There is no need for a separate or supplemental preservation notice in response to the DOJ request, as the existing hold encompasses all categories of documents and data identified in both the SEC subpoena and the DOJ request.
Similarly, the documents collected by Marlowe Asset Management Digital Forensics for the SEC production process will also be preserved and available for any future production to the DOJ. The collection scope has been designed to encompass all potentially relevant data, regardless of the source of the obligation to preserve.
However, a critical strategic distinction must be maintained between the SEC production and any potential DOJ production. The SEC's document subpoena is formal compulsory process, and Torchlight is legally obligated to comply with it. The DOJ's preservation request, by contrast, is voluntary, and Torchlight has no legal obligation to produce documents to the DOJ at this stage absent the issuance of formal process.
The decision whether to produce documents voluntarily to the DOJ — and, more broadly, whether to make a voluntary self-disclosure ("VSD") under the DOJ's Corporate Enforcement and Voluntary Self-Disclosure Policy — is a separate strategic decision that must be evaluated in the context of the overall investigation. The target date for the VSD decision is June 30, 2025, by which time we expect to have sufficient information from the internal investigation to make an informed recommendation. Until that decision is made, we should not produce documents to the DOJ unless compelled by formal process or unless a strategic decision is made to do so in connection with a VSD.
We recommend that Conrad Ashby send a letter to Assistant Chief Margaret Calloway on or about March 18, 2025 acknowledging receipt of the DOJ's voluntary preservation request, confirming that Torchlight has implemented comprehensive document preservation measures, and expressing the company's willingness to cooperate with the DOJ's inquiry. The letter should not, however, commit to any specific production scope, timeline, or format, and should not be construed as a voluntary production of documents. The letter should be carefully drafted to preserve maximum flexibility for the VSD analysis.
C. Parallel-Track Considerations