1039-00005 · Torchlight Mining Corp · Insurance

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CALDERWOOD & HARKNESS LLP Attorneys at Law

825 Eighth Avenue, 42nd Floor New York, New York 10019

Telephone: (212) 554-8000 Facsimile: (212) 554-8001 www.calderwoodharkness.com

Matter No.: 1039-00005

March 8, 2025

VIA CERTIFIED MAIL — RETURN RECEIPT REQUESTED AND ELECTRONIC MAIL (rdj@daltonmercer.com)

Robert Dalton Jr., Esq. Claims Counsel Dalton & Mercer Inc. 55 Farmington Avenue, Suite 400 Hartford, Connecticut 06105

Re: Notice of Claim Under Directors' and Officers' Liability Insurance Policy No. DM-0092-FCPA-2024 — Torchlight Mining Corp.

Dear Mr. Dalton:

I. Purpose and Authority

Calderwood & Harkness LLP writes on behalf of the insured, Torchlight Mining Corp. ("Torchlight" or "TMC"), a corporation organized under the Canada Business Corporations Act, R.S.C. 1985, c. C-44, headquartered 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." Calderwood & Harkness has been retained by Torchlight as outside counsel in connection with the matters described herein, with the engagement formalized pursuant to an engagement letter dated March 5, 2025. A copy of the executed engagement letter is enclosed herewith for your reference.

This letter constitutes formal and timely notice of a claim and/or circumstances that may reasonably be expected to give rise to a claim (as those terms are defined in the Policy) under the above-referenced Directors' and Officers' Liability Insurance Policy, Policy No. DM-0092-FCPA-2024 (the "Policy"), issued by Dalton & Mercer Inc. ("D&M" or the "Insurer") to Torchlight Mining Corp. This notice is submitted in accordance with the notice provisions set forth in Article IX of the Policy and is intended to preserve all rights of the insured thereunder.

The engagement team at Calderwood & Harkness responsible for this matter consists of Conrad Ashby, Partner, who serves as the Responsible Partner, and Victoria Chambers, Partner, who serves as the Billing Partner, both within the White Collar & Investigations practice group of Calderwood & Harkness LLP. All substantive and billing communications regarding this claim should be directed to Messrs. Ashby and Chambers at the address set forth above unless otherwise indicated.

II. Identification of the Policy

For purposes of clarity and completeness, the relevant details of the Policy are as follows:

Torchlight confirms, based on its records, that the Policy is currently in force and effect, that all premiums due have been paid in full, and that the Policy covers the relevant period during which the circumstances giving rise to this claim first arose. The underlying conduct at issue, as described more fully below, spans the period from approximately 2019 through 2024, with the governmental investigations and formal proceedings commencing in January and February 2025. Torchlight reserves the right to supplement or amend this identification of the Policy to the extent additional policy details become relevant, including with respect to any excess or ancillary coverage that may be implicated.

III. Description of the Underlying Matters

A. SEC Investigation

The Division of Enforcement of the United States Securities and Exchange Commission (the "SEC") commenced a formal order of investigation, designated as File No. HO-14892, on January 22, 2025. The investigation 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 Torchlight's mining operations in the Republic of Ganara, a sovereign nation located in West Africa. A copy of the SEC's Formal Order of Investigation is enclosed herewith.

On February 3, 2025, the SEC served a formal document subpoena on Torchlight pursuant to Section 21(b) of the Securities Exchange Act of 1934, 15 U.S.C. § 78u(b). The subpoena calls for the production of an extensive body of documents, including financial records, internal communications, consulting agreements, compliance records, and board-level materials relating to Torchlight's operations in the Republic of Ganara, and specifically to payments made through or on behalf of Torchlight's subsidiary entities in that country. The return date on the subpoena, as extended by agreement with the SEC staff, is April 14, 2025. A copy of the SEC Document Subpoena is enclosed herewith.

In response to the commencement of the SEC investigation, and in consultation with counsel, Torchlight filed a Current Report on Form 8-K with the SEC on February 7, 2025, disclosing the existence of the investigation and the general nature of the matters under review. A copy of the Form 8-K is enclosed herewith.

B. DOJ Inquiry

Separately, the Fraud Section of the Criminal Division of the United States Department of Justice (the "DOJ") has opened a preliminary inquiry into Torchlight's conduct in the Republic of Ganara. The matter is being handled under the supervision of Assistant Chief Margaret Calloway of the DOJ's FCPA Unit. On February 14, 2025, the DOJ transmitted a voluntary document preservation request to Torchlight through its counsel, requesting that Torchlight preserve all documents and electronically stored information potentially relevant to the subject matter of the inquiry. A copy of the DOJ Voluntary Document Preservation Request is enclosed herewith.

As of the date of this letter, the DOJ has not issued formal grand jury subpoenas or compulsory process. However, the issuance of a voluntary document preservation request reflects active investigative interest on the part of the DOJ and, based on the experience of undersigned counsel in similar matters, is typically followed by additional investigative steps, which may include formal subpoenas, witness interviews, and requests for voluntary testimony. Torchlight's counsel will continue to monitor this matter closely and will provide supplemental notice to D&M as developments warrant.

C. Nature of the Underlying Allegations

The governmental investigations described above center on approximately $4,730,000 in payments made between 2019 and 2024 through Torchlight's wholly owned subsidiary, Torchlight Ganara Holdings Ltd. ("TGH"), a holding company incorporated in the British Virgin Islands, and TGH's Ganaran operating subsidiary, Torchlight Ganara Mining S.A. ("TGM"), a société anonyme organized under the laws of the Republic of Ganara. The payments are alleged to have been made to government officials and intermediaries in the Republic of Ganara in connection with the procurement, issuance, and renewal of mining permits, exploration licenses, and environmental approvals for Torchlight's copper-cobalt and rare earths projects in Kousseri Province and the Dembélé concession area.

The structure of the payments, as currently understood based on preliminary review, is as follows:

(i) A substantial portion of the payments — totaling approximately $3,210,000 — was routed through Crestfield Advisory Partners Ltd. ("Crestfield"), a consulting firm incorporated in the Republic of Mauritius. Crestfield was engaged by TGH under a Government Relations Advisory Agreement dated April 12, 2019 (the "Crestfield Agreement"). Under the terms of the Crestfield Agreement, Crestfield was retained to provide "government relations advisory services," "regulatory liaison," and "stakeholder engagement support" in the Republic of Ganara. Between 2019 and 2024, Crestfield invoiced TGH a total of $3,210,000 across multiple invoices for services rendered under the Crestfield Agreement. Preliminary review suggests that Crestfield may have functioned as a conduit for payments to Ganaran government officials, although this remains subject to further investigation.

(ii) An additional $890,000 in payments appears to have been made in the form of cash withdrawals from TGM's local bank accounts held at Banque Commerciale de Ganara S.A. in Libreville, Republic of Ganara. These withdrawals were recorded in TGM's general ledger under various account codes, including "community development," "local procurement," and "site operations contingency." The forensic accounting review currently underway is examining the documentary support for these withdrawals and the ultimate disposition of the funds.

(iii) Approximately $630,000 in additional suspected payments is attributable to in-kind benefits, including the provision of vehicles, travel, educational expenses, and other items of value to Ganaran government officials and their family members. These in-kind benefits were recorded in TGM's books and records under various expense categories that did not identify the recipients as government officials or persons affiliated with government officials.

The payments are alleged to have been made to, among others, the following officials of the Republic of Ganara:

• The former Minister of Mines and Natural Resources;

• The Director of Environmental Permitting within the Ministry of Environment and Sustainable Development; and

• The Regional Prefect of Kousseri Province.

The governmental permits and approvals at issue in the investigations include the following:

Each of these permits and licenses was material to Torchlight's West African mining operations and represented a significant element of the company's growth strategy as publicly disclosed in its annual information forms, management discussion and analysis, and investor presentations during the relevant period.

D. Individuals Potentially Subject to Claims

Based on the nature of the investigations and the roles and responsibilities of Torchlight's officers and directors during the relevant period, the following individuals are or may reasonably become the subject of claims, investigations, enforcement actions, or civil proceedings arising out of or related to the matters described herein. Each of these individuals is believed to qualify as an "Insured Person" or "Insured" under the definitions set forth in the Policy:

1. Gerald R. Vandermeer, Chief Executive Officer, Torchlight Mining Corp. Mr. Vandermeer has served as CEO of Torchlight since 2017 and had direct oversight of the company's international operations, including its West African expansion strategy.

2. Patricia Sung, General Counsel and Corporate Secretary, Torchlight Mining Corp. Ms. Sung serves as the company's chief legal officer and has responsibility for legal compliance, regulatory matters, and corporate governance.

3. Marcus Delacroix, Former Vice President, Africa Operations, Torchlight Mining Corp. Mr. Delacroix served in this role from 2018 until his resignation on November 15, 2024. He had direct supervisory responsibility for TGH and TGM, including oversight of the Crestfield engagement and relationships with Ganaran government officials. Mr. Delacroix is currently residing at 47 Rue de la République, 69002 Lyon, France. He is a key subject of both the SEC and DOJ investigations.

4. Raymond Osei-Bonsu, Former Country Manager, Torchlight Ganara Mining S.A. Mr. Osei-Bonsu served as the in-country manager of TGM from 2019 until his termination on January 8, 2025. He was responsible for day-to-day operations in the Republic of Ganara, including relationships with local authorities, the management of TGM's local bank accounts, and the administration of TGM's community development and procurement expenditures. He is a key subject of both the SEC and DOJ investigations.

5. Diane Fournier, Vice President, Finance, Torchlight Mining Corp. Ms. Fournier is responsible for the company's financial reporting, internal controls over financial reporting, and the certification of financial statements.

6. Nadia Berenson, Vice President, Compliance and Ethics, Torchlight Mining Corp. Ms. Berenson oversees Torchlight's global compliance program, including its FCPA and anti-corruption compliance policies and procedures.

7. Dr. Eleanor Fiske, Independent Director and Chair, Audit Committee, Torchlight Mining Corp. Board of Directors. Dr. Fiske chairs the Audit Committee and has oversight responsibility for the company's internal and external audit functions, financial reporting integrity, and compliance programs.

8. Warren Ogilvy, Independent Director and Member, Audit Committee, Torchlight Mining Corp. Board of Directors.

9. Marguerite Chen, Independent Director and Member, Audit Committee, Torchlight Mining Corp. Board of Directors.

10. Such other directors and officers of Torchlight and its subsidiaries (including TGH and TGM) as may hereafter be named, identified, or designated as subjects, targets, or persons of interest in connection with the governmental investigations, or as defendants, respondents, or parties in any civil or regulatory proceedings arising out of or related to the matters described herein.

Torchlight reserves the right to supplement this list of individuals as the investigations and any related proceedings develop.

IV. Whistleblower Complaint and Internal Review

The matters described above first came to Torchlight's attention through an anonymous whistleblower complaint received on August 19, 2024. The complaint was submitted through Torchlight's third-party ethics and compliance hotline, which is operated by Sentinel Compliance Solutions Inc. and is accessible to all employees, contractors, and third parties globally via telephone and web portal. The complaint was assigned Report ID SCH-2024-08-4417 by Sentinel.

The substance of the whistleblower complaint alleged, in summary, that payments had been made to government ministers in the Republic of Ganara through a consulting company retained by Torchlight's subsidiary in order to expedite the issuance and renewal of mining permits and related governmental approvals. The complaint did not identify the complainant and did not provide detailed supporting documentation, but it contained sufficient specificity regarding the nature of the payments, the identity of the intermediary, and the permits at issue to warrant prompt escalation and review.

In accordance with Torchlight's Whistleblower and Ethics Reporting Policy, the complaint was escalated to the Chair of the Audit Committee, Dr. Eleanor Fiske, on August 26, 2024. Dr. Fiske, in consultation with outside counsel, determined that the allegations warranted further inquiry. On September 5, 2024, the Audit Committee of the Board of Directors of Torchlight formally authorized a preliminary internal review of the allegations contained in the whistleblower complaint.

The preliminary internal review was initially conducted under the supervision of the Audit Committee with the assistance of Torchlight's internal legal and compliance teams. Following the commencement of the SEC and DOJ investigations in January and February 2025, the Audit Committee determined that a comprehensive, independent internal investigation was warranted. Calderwood & Harkness LLP was engaged as outside investigation counsel effective March 5, 2025, to conduct this investigation under the direction of the Audit Committee and pursuant to the protections of the attorney-client privilege and the work product doctrine.

In addition, Pinnacle Forensic Advisory LLC ("Pinnacle"), a forensic accounting firm, has been retained under the direction of Calderwood & Harkness, effective March 12, 2025, to perform a comprehensive forensic accounting review of TGH and TGM financial records, the Crestfield invoices and underlying documentation, TGM's local bank accounts, and related financial transactions. Pinnacle's work is being conducted at the direction of counsel and is protected by the attorney-client privilege and the work product doctrine.

A comprehensive litigation hold notice was issued to all relevant custodians on March 17, 2025. The hold encompasses twenty-three (23) custodians across Torchlight, TGH, and TGM, and covers all documents and electronically stored information potentially relevant to the subject matter of the governmental investigations, the whistleblower complaint, and the internal investigation. Torchlight has also engaged in discussions with its information technology department and its external e-discovery vendor regarding the preservation and collection of relevant data, including email, instant messaging records, shared drive documents, and locally stored files.

V. Financial Impact and Market Consequences

The public disclosure of the SEC investigation has had a significant and material adverse impact on Torchlight's market capitalization and share price. On February 6, 2025, the last trading day prior to the filing of the Form 8-K, Torchlight's common shares closed at CAD $34.80 on the Toronto Stock Exchange. Following the public disclosure of the SEC investigation on February 7, 2025, Torchlight's common shares declined sharply, closing at CAD $27.15 on February 10, 2025 (the first full trading day following the disclosure), representing a decline of approximately 22.0% over the disclosure period.

With approximately 166.7 million common shares outstanding as of February 6, 2025, this decline in share price represents a market capitalization loss of approximately CAD $1.28 billion (calculated as the difference between the pre-disclosure market capitalization of approximately CAD $5.80 billion and the post-disclosure market capitalization of approximately CAD $4.52 billion). The share price has continued to experience significant volatility in the weeks since the initial disclosure and remains materially below pre-disclosure levels as of the date of this letter.

Given the magnitude of the share price decline and the nature of the underlying allegations, Torchlight's counsel believes there is a substantial risk of the following additional proceedings, each of which may give rise to covered claims under the Policy:

(a) Shareholder Derivative Actions. One or more shareholders may file derivative actions, purportedly on behalf of Torchlight, against individual directors and officers alleging breaches of fiduciary duty, corporate waste, failure of oversight, and related claims in connection with the FCPA violations and the failure to detect or prevent the alleged improper payments. Such claims are particularly likely given the magnitude of the financial exposure and the extended duration of the alleged conduct.

(b) Securities Class Action Litigation. One or more putative securities class actions may be filed against Torchlight and individual officers alleging violations of Sections 10(b) and 20(a) of the Securities Exchange Act of 1934, 15 U.S.C. §§ 78j(b), 78t(a), and Rule 10b-5 promulgated thereunder, 17 C.F.R. § 240.10b-5, as well as corresponding claims under the Ontario Securities Act, R.S.O. 1990, c. S.5, or the Securities Act (British Columbia), R.S.B.C. 1996, c. 418, based on alleged material misstatements or omissions in Torchlight's public disclosures concerning the effectiveness of its internal controls and compliance programs and the legality of its operations in the Republic of Ganara.

(c) Regulatory Proceedings. Individual directors and officers may become the subject of administrative or civil enforcement proceedings initiated by the SEC, including proceedings seeking officer-and-director bars, disgorgement, and civil monetary penalties pursuant to Sections 21C and 21(d) of the Securities Exchange Act of 1934. In addition, the Ontario Securities Commission or other Canadian provincial securities regulators may initiate their own proceedings.

In this connection, we note that Kingsley Institutional Partners LP, a significant institutional shareholder holding approximately 8.2% of Torchlight's outstanding common shares (approximately 13.67 million shares), has already sent governance inquiry letters to Torchlight's Board of Directors. While those letters have not yet taken the form of formal litigation demands, they signal heightened shareholder scrutiny and suggest a meaningful likelihood of formal derivative or other shareholder proceedings in the near term.

VI. Estimated Potential Government Exposure

Based on the information currently available and the experience of undersigned counsel in comparable FCPA matters, Torchlight's estimated potential exposure to government penalties, fines, disgorgement, and related financial remedies is summarized below. These figures are preliminary estimates and are subject to revision as additional facts are developed through the internal investigation and as the government investigations progress.

These estimates reflect direct governmental financial exposure only. They do not include the substantial investigation and defense costs that have been and will continue to be incurred, which are separately estimated as follows:

• Calderwood & Harkness LLP (outside investigation and defense counsel): estimated fees of $4,500,000 to $6,200,000 through the conclusion of the governmental investigations, exclusive of any subsequent civil litigation.

• Pinnacle Forensic Advisory LLC (forensic accounting): estimated fees of $1,800,000 to $2,400,000 for the comprehensive forensic review.

In addition, the foregoing estimates do not account for the following potential additional areas of exposure, which remain under assessment:

(a) Potential proceedings under the Corruption of Foreign Public Officials Act, S.C. 1998, c. 34 ("CFPOA"), by Canadian authorities. Torchlight's Canadian counsel, Bartlett Keene & Ostrander LLP, is currently assessing the risk of CFPOA proceedings and coordinating with Calderwood & Harkness on the cross-border dimensions of the matter.

(b) Potential regulatory actions by the authorities of the Republic of Ganara, including the revocation, suspension, or modification of Torchlight's mining permits and licenses, and potential criminal or administrative proceedings against TGM and individual employees under Ganaran law.

(c) Potential private civil litigation, including shareholder derivative actions, securities class actions, and other civil proceedings, as described in Section V above.

VII. Defense Costs and Counsel

The following law firms and professional advisors have been retained or are expected to be retained in connection with the defense, investigation, and resolution of the matters described in this notice. Torchlight intends to submit the costs associated with these engagements for reimbursement under the Policy, subject to the terms and conditions thereof, including the self-insured retention:

(a) Calderwood & Harkness LLP serves as principal outside counsel for the internal investigation and the defense and coordination of the SEC and DOJ matters. The engagement team is as follows:

• Conrad Ashby, Partner — Responsible Partner

• Victoria Chambers, Partner — Billing Partner

• Steven Hollander — Lead Associate

• Jasmine Thornton — Working Associate

Calderwood & Harkness LLP 825 Eighth Avenue, 42nd Floor New York, New York 10019 Telephone: (212) 554-8000

(b) Bartlett Keene & Ostrander LLP serves as Canadian counsel regarding securities disclosure obligations, TSX regulatory compliance, and CFPOA exposure.

• Richard Bartlett III, Partner

Bartlett Keene & Ostrander LLP 100 Wellington Street West, Suite 2600 Toronto, Ontario M5K 1J3, Canada Telephone: (416) 362-4500

• Catherine Whitfield, Partner

Hargrove Whitfield LLP Trident Chambers, Wickhams Cay I Road Town, Tortola British Virgin Islands Telephone: +1 (284) 494-3200

(d) Ndong & Keïta Cabinet Juridique advises on Ganaran legal and regulatory matters, including potential proceedings under the laws of the Republic of Ganara.

• Maître Salif Ndong

Ndong & Keïta Cabinet Juridique Rue de l'Indépendance 22 Libreville, Republic of Ganara Telephone: +245 30 22 4400

In addition, we note for the Insurer's awareness that the following individuals have separately retained personal counsel in connection with the governmental investigations:

(e) Marcus Delacroix has retained Whitmore & Sharpe LLP (Helen Whitmore, Partner), 1401 K Street NW, Suite 700, Washington, DC 20005. Mr. Delacroix's retention of separate counsel reflects the likelihood that his interests may diverge from those of Torchlight in the course of the investigations.

(f) Raymond Osei-Bonsu has retained Okoro Law Chambers (Barrister Emeka Okoro), 9 Avenue Mobutu, Libreville, Republic of Ganara.

The costs of separate counsel retained by Messrs. Delacroix and Osei-Bonsu may be submitted for reimbursement under the Policy's Side A coverage, to the extent applicable, and the insured reserves the right to assert such claims.

Torchlight anticipates that defense costs and investigation expenses will be substantial and will promptly exceed the $2,500,000 self-insured retention. Accordingly, Torchlight requests that D&M confirm the applicability of the SIR and the procedure for certifying its exhaustion so that reimbursement of covered defense costs may commence without undue delay.

VIII. Requests to the Insurer

In light of the foregoing, Torchlight Mining Corp. respectfully requests that Dalton & Mercer Inc. take the following actions promptly:

1. Acknowledgment of Notice. Provide formal written acknowledgment of receipt of this notice of claim and circumstances, confirming the date on which notice was received.

2. Coverage Confirmation. Confirm that the claim described herein is covered under Policy No. DM-0092-FCPA-2024, subject to the terms and conditions of the Policy.

3. Applicable Coverage Parts. Identify the applicable coverage parts under the Policy, including the extent to which Side A coverage (non-indemnifiable loss of individual insured persons), Side B coverage (indemnifiable loss for which Torchlight is required or permitted to indemnify its directors and officers), and/or Side C coverage (entity coverage for securities claims), as applicable, are triggered by the matters described in this notice.

4. Confirmation of Policy Limits. Confirm the $50,000,000 per-occurrence limit and $100,000,000 aggregate limit of liability as set forth in the Policy and confirm the remaining available limits thereunder.

5. Confirmation of Self-Insured Retention. Confirm the $2,500,000 self-insured retention and its applicability to defense costs, and provide guidance on the procedure for certifying exhaustion of the SIR.

6. Reservation of Rights. If Dalton & Mercer intends to issue a reservation of rights with respect to this claim, or to invoke any exclusion, condition, limitation, or other provision of the Policy that may affect coverage, Torchlight requests that D&M do so promptly and in writing, specifying with particularity any exclusions or conditions upon which it intends to rely.

7. Claims Handler Designation. Designate a claims handler with authority to manage this claim and provide direct contact information (including telephone, email, and mailing address) for ongoing coordination between D&M, Torchlight, and Calderwood & Harkness LLP.

8. Consent to Counsel and Professionals. Provide written consent, to the extent required under the Policy, for the engagement of Calderwood & Harkness LLP, Bartlett Keene & Ostrander LLP, Hargrove Whitfield LLP, Ndong & Keïta Cabinet Juridique, and Pinnacle Forensic Advisory LLC as defense counsel and professional advisors, the reasonable and necessary fees and costs of which the insured intends to submit for reimbursement under the Policy.

9. Claims-Reporting Format and Frequency. Provide guidance on the Insurer's preferred format for ongoing claims reporting, including the frequency and level of detail required for interim updates, the format for submission of defense cost invoices, and any other administrative requirements applicable to the ongoing management of this claim.

IX. Reservation of Insured's Rights

This notice is provided without prejudice to any rights, defenses, claims, or remedies that the insured — including Torchlight Mining Corp. and each of its directors, officers, and subsidiaries — may have under the Policy or at law or in equity. By providing this notice, neither Torchlight nor any other insured person waives, modifies, or limits any right under the Policy, including but not limited to any right to dispute any coverage determination, reservation of rights, or denial of coverage that may hereafter be issued by D&M.

Torchlight and its directors and officers expressly reserve all rights under the Policy, including without limitation the right to supplement, amend, or modify this notice as additional facts, circumstances, claims, proceedings, or potential claimants become known in the course of the governmental investigations, the internal investigation, and any related proceedings.

Nothing in this letter shall be construed as an admission of liability, fault, wrongdoing, or responsibility by any insured person, by Torchlight, or by any of its subsidiaries with respect to the matters described herein. The description of the allegations and circumstances contained in this notice is provided solely for the purpose of satisfying the Policy's notice requirements and does not constitute an acknowledgment or concession that any violation of law has occurred.

X. Confidentiality

The contents of this letter, the enclosures, and the underlying facts and circumstances described herein are privileged and confidential. They are protected by the attorney-client privilege, the attorney work product doctrine, and the common interest privilege, as applicable. This letter is prepared by Calderwood & Harkness LLP in its capacity as counsel to Torchlight Mining Corp. and is transmitted to Dalton & Mercer Inc. solely for the purpose of providing notice under the Policy and in furtherance of the common interest of the insured and the insurer in the defense and resolution of the claims and matters described herein.

Torchlight respectfully requests that Dalton & Mercer treat all information provided in connection with this claim as strictly confidential and not disclose any such information to any third party without the prior written consent of Torchlight and Calderwood & Harkness LLP, except to the limited extent required by applicable law, regulation, or court order. In the event D&M receives any request or demand for disclosure of information relating to this claim, Torchlight requests that D&M promptly notify Calderwood & Harkness LLP in advance of any disclosure so that the insured may take appropriate steps to protect its privilege and confidentiality interests.

XI. Contact Information and Closing

All correspondence, communications, and notices regarding this claim and the matters described herein should be directed to:

Conrad Ashby Victoria Chambers Calderwood & Harkness LLP 825 Eighth Avenue, 42nd Floor New York, New York 10019 Telephone: (212) 554-8000

Email: cashby@calderwoodharkness.com / vchambers@calderwoodharkness.com

With a copy to:

Patricia Sung General Counsel & Corporate Secretary Torchlight Mining Corp. 200 King Street West, Suite 3400 Toronto, Ontario M5H 3T4, Canada Telephone: (416) 368-7200

Email: patricia.sung@torchlightmining.com

Given the active nature of the governmental investigations, the ongoing internal investigation, and the substantial risk of additional proceedings, Torchlight respectfully urges D&M to respond to this notice promptly, and in any event within the time periods specified in the Policy. Time is of the essence. The insured is incurring significant defense costs on a daily basis and requires clarity regarding the insurer's coverage position so that the defense and investigation can proceed in an orderly and efficient manner.

Torchlight and its counsel stand ready to provide any additional information or documentation that D&M may reasonably request in connection with its evaluation of this claim. We are available to meet with D&M's claims team, whether in person or by video conference, at D&M's earliest convenience to discuss the claim, the status of the investigations, and the anticipated defense strategy.

We look forward to your prompt response and to working cooperatively with Dalton & Mercer in connection with this matter.

Very truly yours,

CALDERWOOD & HARKNESS LLP

By: ________

Conrad Ashby Partner White Collar & Investigations Practice Group

cc:

Patricia Sung, General Counsel & Corporate Secretary, Torchlight Mining Corp. Victoria Chambers, Partner, Calderwood & Harkness LLP Dr. Eleanor Fiske, Audit Committee Chair, Board of Directors, Torchlight Mining Corp.

Enclosures:

The following documents are enclosed herewith, or will be made available upon request pursuant to arrangements to be agreed with D&M's claims team:

1. SEC Formal Order of Investigation (File No. HO-14892), dated January 22, 2025

2. SEC Document Subpoena, dated February 3, 2025

3. DOJ Voluntary Document Preservation Request, dated February 14, 2025

4. Torchlight Mining Corp. Current Report on Form 8-K, filed February 7, 2025

5. Calderwood & Harkness LLP Engagement Letter, dated March 5, 2025

CONFIDENTIAL — ATTORNEY-CLIENT PRIVILEGED — ATTORNEY WORK PRODUCT This communication and its enclosures contain information that is privileged, confidential, and/or protected from disclosure. If you are not the intended recipient, or an agent responsible for delivering this communication to the intended recipient, you are hereby notified that any dissemination, distribution, or copying of this communication is strictly prohibited. If you have received this communication in error, please notify the sender immediately and destroy all copies.

Policy Element	Detail
Policy Number	DM-0092-FCPA-2024
Named Insured	Torchlight Mining Corp. and its subsidiaries, directors, and officers (as defined in the Policy)
Insurer	Dalton & Mercer Inc.
Per-Occurrence Limit of Liability	$50,000,000
Aggregate Limit of Liability	$100,000,000
Self-Insured Retention ("SIR")	$2,500,000
Policy Period	January 1, 2024 – January 1, 2025 (with extended reporting period provisions)
Permit / License	Reference Number	Approximate Date of Issuance
Kousseri Copper-Cobalt Complex Mining License	KCC-2019-0047	2019
Kousseri Environmental Impact Approval	ENV-KCC-2020-113	2020
Dembélé Rare Earths Exploration License	DRE-2021-0092	2021
Dembélé Mining License Upgrade	DRE-M-2023-0018	2023
Kousseri Expansion Permit	KCC-2019-0047-A1	2023–2024
Category of Exposure	Estimated Amount
DOJ Criminal Fine (2× gain, per U.S. Sentencing Guidelines §§ 2C1.1, 8C2.4)	$9,460,000
SEC Disgorgement of Ill-Gotten Gains (15 U.S.C. § 78u(d)(5))	$4,730,000
SEC Prejudgment Interest (estimated at 5.0% per annum over ~3-year average period)	$709,500
SEC Civil Monetary Penalty — Tier III (per occurrence, 15 U.S.C. § 78u(d)(3))	Up to $4,730,000
Total Estimated Government Exposure Range	$14,190,000 – $19,629,500

CALDERWOOD & HARKNESS LLP Attorneys at Law
825 Eighth Avenue, 42nd Floor New York, New York 10019
Telephone: (212) 554-8000 Facsimile: (212) 554-8001 www.calderwoodharkness.com
Matter No.: 1039-00005
March 8, 2025
VIA CERTIFIED MAIL — RETURN RECEIPT REQUESTED AND ELECTRONIC MAIL (rdj@daltonmercer.com)
Robert Dalton Jr., Esq. Claims Counsel Dalton & Mercer Inc. 55 Farmington Avenue, Suite 400 Hartford, Connecticut 06105
Re: Notice of Claim Under Directors' and Officers' Liability Insurance Policy No. DM-0092-FCPA-2024 — Torchlight Mining Corp.
Dear Mr. Dalton:
I. Purpose and Authority
Calderwood & Harkness LLP writes on behalf of the insured, Torchlight Mining Corp. ("Torchlight" or "TMC"), a corporation organized under the Canada Business Corporations Act, R.S.C. 1985, c. C-44, headquartered 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." Calderwood & Harkness has been retained by Torchlight as outside counsel in connection with the matters described herein, with the engagement formalized pursuant to an engagement letter dated March 5, 2025. A copy of the executed engagement letter is enclosed herewith for your reference.
This letter constitutes formal and timely notice of a claim and/or circumstances that may reasonably be expected to give rise to a claim (as those terms are defined in the Policy) under the above-referenced Directors' and Officers' Liability Insurance Policy, Policy No. DM-0092-FCPA-2024 (the "Policy"), issued by Dalton & Mercer Inc. ("D&M" or the "Insurer") to Torchlight Mining Corp. This notice is submitted in accordance with the notice provisions set forth in Article IX of the Policy and is intended to preserve all rights of the insured thereunder.
The engagement team at Calderwood & Harkness responsible for this matter consists of Conrad Ashby, Partner, who serves as the Responsible Partner, and Victoria Chambers, Partner, who serves as the Billing Partner, both within the White Collar & Investigations practice group of Calderwood & Harkness LLP. All substantive and billing communications regarding this claim should be directed to Messrs. Ashby and Chambers at the address set forth above unless otherwise indicated.
II. Identification of the Policy
For purposes of clarity and completeness, the relevant details of the Policy are as follows:
Torchlight confirms, based on its records, that the Policy is currently in force and effect, that all premiums due have been paid in full, and that the Policy covers the relevant period during which the circumstances giving rise to this claim first arose. The underlying conduct at issue, as described more fully below, spans the period from approximately 2019 through 2024, with the governmental investigations and formal proceedings commencing in January and February 2025. Torchlight reserves the right to supplement or amend this identification of the Policy to the extent additional policy details become relevant, including with respect to any excess or ancillary coverage that may be implicated.
III. Description of the Underlying Matters
A. SEC Investigation
The Division of Enforcement of the United States Securities and Exchange Commission (the "SEC") commenced a formal order of investigation, designated as File No. HO-14892, on January 22, 2025. The investigation 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 Torchlight's mining operations in the Republic of Ganara, a sovereign nation located in West Africa. A copy of the SEC's Formal Order of Investigation is enclosed herewith.
On February 3, 2025, the SEC served a formal document subpoena on Torchlight pursuant to Section 21(b) of the Securities Exchange Act of 1934, 15 U.S.C. § 78u(b). The subpoena calls for the production of an extensive body of documents, including financial records, internal communications, consulting agreements, compliance records, and board-level materials relating to Torchlight's operations in the Republic of Ganara, and specifically to payments made through or on behalf of Torchlight's subsidiary entities in that country. The return date on the subpoena, as extended by agreement with the SEC staff, is April 14, 2025. A copy of the SEC Document Subpoena is enclosed herewith.
In response to the commencement of the SEC investigation, and in consultation with counsel, Torchlight filed a Current Report on Form 8-K with the SEC on February 7, 2025, disclosing the existence of the investigation and the general nature of the matters under review. A copy of the Form 8-K is enclosed herewith.
B. DOJ Inquiry
Separately, the Fraud Section of the Criminal Division of the United States Department of Justice (the "DOJ") has opened a preliminary inquiry into Torchlight's conduct in the Republic of Ganara. The matter is being handled under the supervision of Assistant Chief Margaret Calloway of the DOJ's FCPA Unit. On February 14, 2025, the DOJ transmitted a voluntary document preservation request to Torchlight through its counsel, requesting that Torchlight preserve all documents and electronically stored information potentially relevant to the subject matter of the inquiry. A copy of the DOJ Voluntary Document Preservation Request is enclosed herewith.
As of the date of this letter, the DOJ has not issued formal grand jury subpoenas or compulsory process. However, the issuance of a voluntary document preservation request reflects active investigative interest on the part of the DOJ and, based on the experience of undersigned counsel in similar matters, is typically followed by additional investigative steps, which may include formal subpoenas, witness interviews, and requests for voluntary testimony. Torchlight's counsel will continue to monitor this matter closely and will provide supplemental notice to D&M as developments warrant.
C. Nature of the Underlying Allegations
The governmental investigations described above center on approximately $4,730,000 in payments made between 2019 and 2024 through Torchlight's wholly owned subsidiary, Torchlight Ganara Holdings Ltd. ("TGH"), a holding company incorporated in the British Virgin Islands, and TGH's Ganaran operating subsidiary, Torchlight Ganara Mining S.A. ("TGM"), a société anonyme organized under the laws of the Republic of Ganara. The payments are alleged to have been made to government officials and intermediaries in the Republic of Ganara in connection with the procurement, issuance, and renewal of mining permits, exploration licenses, and environmental approvals for Torchlight's copper-cobalt and rare earths projects in Kousseri Province and the Dembélé concession area.
The structure of the payments, as currently understood based on preliminary review, is as follows:
(i) A substantial portion of the payments — totaling approximately $3,210,000 — was routed through Crestfield Advisory Partners Ltd. ("Crestfield"), a consulting firm incorporated in the Republic of Mauritius. Crestfield was engaged by TGH under a Government Relations Advisory Agreement dated April 12, 2019 (the "Crestfield Agreement"). Under the terms of the Crestfield Agreement, Crestfield was retained to provide "government relations advisory services," "regulatory liaison," and "stakeholder engagement support" in the Republic of Ganara. Between 2019 and 2024, Crestfield invoiced TGH a total of $3,210,000 across multiple invoices for services rendered under the Crestfield Agreement. Preliminary review suggests that Crestfield may have functioned as a conduit for payments to Ganaran government officials, although this remains subject to further investigation.
(ii) An additional $890,000 in payments appears to have been made in the form of cash withdrawals from TGM's local bank accounts held at Banque Commerciale de Ganara S.A. in Libreville, Republic of Ganara. These withdrawals were recorded in TGM's general ledger under various account codes, including "community development," "local procurement," and "site operations contingency." The forensic accounting review currently underway is examining the documentary support for these withdrawals and the ultimate disposition of the funds.
(iii) Approximately $630,000 in additional suspected payments is attributable to in-kind benefits, including the provision of vehicles, travel, educational expenses, and other items of value to Ganaran government officials and their family members. These in-kind benefits were recorded in TGM's books and records under various expense categories that did not identify the recipients as government officials or persons affiliated with government officials.
The payments are alleged to have been made to, among others, the following officials of the Republic of Ganara:
• The former Minister of Mines and Natural Resources;
• The Director of Environmental Permitting within the Ministry of Environment and Sustainable Development; and
• The Regional Prefect of Kousseri Province.
The governmental permits and approvals at issue in the investigations include the following:
Each of these permits and licenses was material to Torchlight's West African mining operations and represented a significant element of the company's growth strategy as publicly disclosed in its annual information forms, management discussion and analysis, and investor presentations during the relevant period.
D. Individuals Potentially Subject to Claims
Based on the nature of the investigations and the roles and responsibilities of Torchlight's officers and directors during the relevant period, the following individuals are or may reasonably become the subject of claims, investigations, enforcement actions, or civil proceedings arising out of or related to the matters described herein. Each of these individuals is believed to qualify as an "Insured Person" or "Insured" under the definitions set forth in the Policy:
1. Gerald R. Vandermeer, Chief Executive Officer, Torchlight Mining Corp. Mr. Vandermeer has served as CEO of Torchlight since 2017 and had direct oversight of the company's international operations, including its West African expansion strategy.
2. Patricia Sung, General Counsel and Corporate Secretary, Torchlight Mining Corp. Ms. Sung serves as the company's chief legal officer and has responsibility for legal compliance, regulatory matters, and corporate governance.
3. Marcus Delacroix, Former Vice President, Africa Operations, Torchlight Mining Corp. Mr. Delacroix served in this role from 2018 until his resignation on November 15, 2024. He had direct supervisory responsibility for TGH and TGM, including oversight of the Crestfield engagement and relationships with Ganaran government officials. Mr. Delacroix is currently residing at 47 Rue de la République, 69002 Lyon, France. He is a key subject of both the SEC and DOJ investigations.
4. Raymond Osei-Bonsu, Former Country Manager, Torchlight Ganara Mining S.A. Mr. Osei-Bonsu served as the in-country manager of TGM from 2019 until his termination on January 8, 2025. He was responsible for day-to-day operations in the Republic of Ganara, including relationships with local authorities, the management of TGM's local bank accounts, and the administration of TGM's community development and procurement expenditures. He is a key subject of both the SEC and DOJ investigations.
5. Diane Fournier, Vice President, Finance, Torchlight Mining Corp. Ms. Fournier is responsible for the company's financial reporting, internal controls over financial reporting, and the certification of financial statements.
6. Nadia Berenson, Vice President, Compliance and Ethics, Torchlight Mining Corp. Ms. Berenson oversees Torchlight's global compliance program, including its FCPA and anti-corruption compliance policies and procedures.
7. Dr. Eleanor Fiske, Independent Director and Chair, Audit Committee, Torchlight Mining Corp. Board of Directors. Dr. Fiske chairs the Audit Committee and has oversight responsibility for the company's internal and external audit functions, financial reporting integrity, and compliance programs.
8. Warren Ogilvy, Independent Director and Member, Audit Committee, Torchlight Mining Corp. Board of Directors.
9. Marguerite Chen, Independent Director and Member, Audit Committee, Torchlight Mining Corp. Board of Directors.
10. Such other directors and officers of Torchlight and its subsidiaries (including TGH and TGM) as may hereafter be named, identified, or designated as subjects, targets, or persons of interest in connection with the governmental investigations, or as defendants, respondents, or parties in any civil or regulatory proceedings arising out of or related to the matters described herein.
Torchlight reserves the right to supplement this list of individuals as the investigations and any related proceedings develop.
IV. Whistleblower Complaint and Internal Review
The matters described above first came to Torchlight's attention through an anonymous whistleblower complaint received on August 19, 2024. The complaint was submitted through Torchlight's third-party ethics and compliance hotline, which is operated by Sentinel Compliance Solutions Inc. and is accessible to all employees, contractors, and third parties globally via telephone and web portal. The complaint was assigned Report ID SCH-2024-08-4417 by Sentinel.
The substance of the whistleblower complaint alleged, in summary, that payments had been made to government ministers in the Republic of Ganara through a consulting company retained by Torchlight's subsidiary in order to expedite the issuance and renewal of mining permits and related governmental approvals. The complaint did not identify the complainant and did not provide detailed supporting documentation, but it contained sufficient specificity regarding the nature of the payments, the identity of the intermediary, and the permits at issue to warrant prompt escalation and review.
In accordance with Torchlight's Whistleblower and Ethics Reporting Policy, the complaint was escalated to the Chair of the Audit Committee, Dr. Eleanor Fiske, on August 26, 2024. Dr. Fiske, in consultation with outside counsel, determined that the allegations warranted further inquiry. On September 5, 2024, the Audit Committee of the Board of Directors of Torchlight formally authorized a preliminary internal review of the allegations contained in the whistleblower complaint.
The preliminary internal review was initially conducted under the supervision of the Audit Committee with the assistance of Torchlight's internal legal and compliance teams. Following the commencement of the SEC and DOJ investigations in January and February 2025, the Audit Committee determined that a comprehensive, independent internal investigation was warranted. Calderwood & Harkness LLP was engaged as outside investigation counsel effective March 5, 2025, to conduct this investigation under the direction of the Audit Committee and pursuant to the protections of the attorney-client privilege and the work product doctrine.
In addition, Pinnacle Forensic Advisory LLC ("Pinnacle"), a forensic accounting firm, has been retained under the direction of Calderwood & Harkness, effective March 12, 2025, to perform a comprehensive forensic accounting review of TGH and TGM financial records, the Crestfield invoices and underlying documentation, TGM's local bank accounts, and related financial transactions. Pinnacle's work is being conducted at the direction of counsel and is protected by the attorney-client privilege and the work product doctrine.
A comprehensive litigation hold notice was issued to all relevant custodians on March 17, 2025. The hold encompasses twenty-three (23) custodians across Torchlight, TGH, and TGM, and covers all documents and electronically stored information potentially relevant to the subject matter of the governmental investigations, the whistleblower complaint, and the internal investigation. Torchlight has also engaged in discussions with its information technology department and its external e-discovery vendor regarding the preservation and collection of relevant data, including email, instant messaging records, shared drive documents, and locally stored files.
V. Financial Impact and Market Consequences
The public disclosure of the SEC investigation has had a significant and material adverse impact on Torchlight's market capitalization and share price. On February 6, 2025, the last trading day prior to the filing of the Form 8-K, Torchlight's common shares closed at CAD $34.80 on the Toronto Stock Exchange. Following the public disclosure of the SEC investigation on February 7, 2025, Torchlight's common shares declined sharply, closing at CAD $27.15 on February 10, 2025 (the first full trading day following the disclosure), representing a decline of approximately 22.0% over the disclosure period.
With approximately 166.7 million common shares outstanding as of February 6, 2025, this decline in share price represents a market capitalization loss of approximately CAD $1.28 billion (calculated as the difference between the pre-disclosure market capitalization of approximately CAD $5.80 billion and the post-disclosure market capitalization of approximately CAD $4.52 billion). The share price has continued to experience significant volatility in the weeks since the initial disclosure and remains materially below pre-disclosure levels as of the date of this letter.
Given the magnitude of the share price decline and the nature of the underlying allegations, Torchlight's counsel believes there is a substantial risk of the following additional proceedings, each of which may give rise to covered claims under the Policy:
(a) Shareholder Derivative Actions. One or more shareholders may file derivative actions, purportedly on behalf of Torchlight, against individual directors and officers alleging breaches of fiduciary duty, corporate waste, failure of oversight, and related claims in connection with the FCPA violations and the failure to detect or prevent the alleged improper payments. Such claims are particularly likely given the magnitude of the financial exposure and the extended duration of the alleged conduct.
(b) Securities Class Action Litigation. One or more putative securities class actions may be filed against Torchlight and individual officers alleging violations of Sections 10(b) and 20(a) of the Securities Exchange Act of 1934, 15 U.S.C. §§ 78j(b), 78t(a), and Rule 10b-5 promulgated thereunder, 17 C.F.R. § 240.10b-5, as well as corresponding claims under the Ontario Securities Act, R.S.O. 1990, c. S.5, or the Securities Act (British Columbia), R.S.B.C. 1996, c. 418, based on alleged material misstatements or omissions in Torchlight's public disclosures concerning the effectiveness of its internal controls and compliance programs and the legality of its operations in the Republic of Ganara.
(c) Regulatory Proceedings. Individual directors and officers may become the subject of administrative or civil enforcement proceedings initiated by the SEC, including proceedings seeking officer-and-director bars, disgorgement, and civil monetary penalties pursuant to Sections 21C and 21(d) of the Securities Exchange Act of 1934. In addition, the Ontario Securities Commission or other Canadian provincial securities regulators may initiate their own proceedings.
In this connection, we note that Kingsley Institutional Partners LP, a significant institutional shareholder holding approximately 8.2% of Torchlight's outstanding common shares (approximately 13.67 million shares), has already sent governance inquiry letters to Torchlight's Board of Directors. While those letters have not yet taken the form of formal litigation demands, they signal heightened shareholder scrutiny and suggest a meaningful likelihood of formal derivative or other shareholder proceedings in the near term.
VI. Estimated Potential Government Exposure
Based on the information currently available and the experience of undersigned counsel in comparable FCPA matters, Torchlight's estimated potential exposure to government penalties, fines, disgorgement, and related financial remedies is summarized below. These figures are preliminary estimates and are subject to revision as additional facts are developed through the internal investigation and as the government investigations progress.
These estimates reflect direct governmental financial exposure only. They do not include the substantial investigation and defense costs that have been and will continue to be incurred, which are separately estimated as follows:
• Calderwood & Harkness LLP (outside investigation and defense counsel): estimated fees of $4,500,000 to $6,200,000 through the conclusion of the governmental investigations, exclusive of any subsequent civil litigation.
• Pinnacle Forensic Advisory LLC (forensic accounting): estimated fees of $1,800,000 to $2,400,000 for the comprehensive forensic review.
In addition, the foregoing estimates do not account for the following potential additional areas of exposure, which remain under assessment:
(a) Potential proceedings under the Corruption of Foreign Public Officials Act, S.C. 1998, c. 34 ("CFPOA"), by Canadian authorities. Torchlight's Canadian counsel, Bartlett Keene & Ostrander LLP, is currently assessing the risk of CFPOA proceedings and coordinating with Calderwood & Harkness on the cross-border dimensions of the matter.
(b) Potential regulatory actions by the authorities of the Republic of Ganara, including the revocation, suspension, or modification of Torchlight's mining permits and licenses, and potential criminal or administrative proceedings against TGM and individual employees under Ganaran law.
(c) Potential private civil litigation, including shareholder derivative actions, securities class actions, and other civil proceedings, as described in Section V above.
VII. Defense Costs and Counsel
The following law firms and professional advisors have been retained or are expected to be retained in connection with the defense, investigation, and resolution of the matters described in this notice. Torchlight intends to submit the costs associated with these engagements for reimbursement under the Policy, subject to the terms and conditions thereof, including the self-insured retention:
(a) Calderwood & Harkness LLP serves as principal outside counsel for the internal investigation and the defense and coordination of the SEC and DOJ matters. The engagement team is as follows:
• Conrad Ashby, Partner — Responsible Partner
• Victoria Chambers, Partner — Billing Partner
• Steven Hollander — Lead Associate
• Jasmine Thornton — Working Associate
Calderwood & Harkness LLP 825 Eighth Avenue, 42nd Floor New York, New York 10019 Telephone: (212) 554-8000
(b) Bartlett Keene & Ostrander LLP serves as Canadian counsel regarding securities disclosure obligations, TSX regulatory compliance, and CFPOA exposure.
• Richard Bartlett III, Partner
Bartlett Keene & Ostrander LLP 100 Wellington Street West, Suite 2600 Toronto, Ontario M5K 1J3, Canada Telephone: (416) 362-4500
(c) Hargrove Whitfield LLP advises on TGH corporate matters and BVI regulatory issues.
• Catherine Whitfield, Partner
Hargrove Whitfield LLP Trident Chambers, Wickhams Cay I Road Town, Tortola British Virgin Islands Telephone: +1 (284) 494-3200
(d) Ndong & Keïta Cabinet Juridique advises on Ganaran legal and regulatory matters, including potential proceedings under the laws of the Republic of Ganara.
• Maître Salif Ndong
Ndong & Keïta Cabinet Juridique Rue de l'Indépendance 22 Libreville, Republic of Ganara Telephone: +245 30 22 4400
In addition, we note for the Insurer's awareness that the following individuals have separately retained personal counsel in connection with the governmental investigations:
(e) Marcus Delacroix has retained Whitmore & Sharpe LLP (Helen Whitmore, Partner), 1401 K Street NW, Suite 700, Washington, DC 20005. Mr. Delacroix's retention of separate counsel reflects the likelihood that his interests may diverge from those of Torchlight in the course of the investigations.
(f) Raymond Osei-Bonsu has retained Okoro Law Chambers (Barrister Emeka Okoro), 9 Avenue Mobutu, Libreville, Republic of Ganara.
The costs of separate counsel retained by Messrs. Delacroix and Osei-Bonsu may be submitted for reimbursement under the Policy's Side A coverage, to the extent applicable, and the insured reserves the right to assert such claims.
Torchlight anticipates that defense costs and investigation expenses will be substantial and will promptly exceed the $2,500,000 self-insured retention. Accordingly, Torchlight requests that D&M confirm the applicability of the SIR and the procedure for certifying its exhaustion so that reimbursement of covered defense costs may commence without undue delay.
VIII. Requests to the Insurer
In light of the foregoing, Torchlight Mining Corp. respectfully requests that Dalton & Mercer Inc. take the following actions promptly:
1. Acknowledgment of Notice. Provide formal written acknowledgment of receipt of this notice of claim and circumstances, confirming the date on which notice was received.
2. Coverage Confirmation. Confirm that the claim described herein is covered under Policy No. DM-0092-FCPA-2024, subject to the terms and conditions of the Policy.
3. Applicable Coverage Parts. Identify the applicable coverage parts under the Policy, including the extent to which Side A coverage (non-indemnifiable loss of individual insured persons), Side B coverage (indemnifiable loss for which Torchlight is required or permitted to indemnify its directors and officers), and/or Side C coverage (entity coverage for securities claims), as applicable, are triggered by the matters described in this notice.
4. Confirmation of Policy Limits. Confirm the $50,000,000 per-occurrence limit and $100,000,000 aggregate limit of liability as set forth in the Policy and confirm the remaining available limits thereunder.
5. Confirmation of Self-Insured Retention. Confirm the $2,500,000 self-insured retention and its applicability to defense costs, and provide guidance on the procedure for certifying exhaustion of the SIR.
6. Reservation of Rights. If Dalton & Mercer intends to issue a reservation of rights with respect to this claim, or to invoke any exclusion, condition, limitation, or other provision of the Policy that may affect coverage, Torchlight requests that D&M do so promptly and in writing, specifying with particularity any exclusions or conditions upon which it intends to rely.
7. Claims Handler Designation. Designate a claims handler with authority to manage this claim and provide direct contact information (including telephone, email, and mailing address) for ongoing coordination between D&M, Torchlight, and Calderwood & Harkness LLP.
8. Consent to Counsel and Professionals. Provide written consent, to the extent required under the Policy, for the engagement of Calderwood & Harkness LLP, Bartlett Keene & Ostrander LLP, Hargrove Whitfield LLP, Ndong & Keïta Cabinet Juridique, and Pinnacle Forensic Advisory LLC as defense counsel and professional advisors, the reasonable and necessary fees and costs of which the insured intends to submit for reimbursement under the Policy.
9. Claims-Reporting Format and Frequency. Provide guidance on the Insurer's preferred format for ongoing claims reporting, including the frequency and level of detail required for interim updates, the format for submission of defense cost invoices, and any other administrative requirements applicable to the ongoing management of this claim.
IX. Reservation of Insured's Rights
This notice is provided without prejudice to any rights, defenses, claims, or remedies that the insured — including Torchlight Mining Corp. and each of its directors, officers, and subsidiaries — may have under the Policy or at law or in equity. By providing this notice, neither Torchlight nor any other insured person waives, modifies, or limits any right under the Policy, including but not limited to any right to dispute any coverage determination, reservation of rights, or denial of coverage that may hereafter be issued by D&M.
Torchlight and its directors and officers expressly reserve all rights under the Policy, including without limitation the right to supplement, amend, or modify this notice as additional facts, circumstances, claims, proceedings, or potential claimants become known in the course of the governmental investigations, the internal investigation, and any related proceedings.
Nothing in this letter shall be construed as an admission of liability, fault, wrongdoing, or responsibility by any insured person, by Torchlight, or by any of its subsidiaries with respect to the matters described herein. The description of the allegations and circumstances contained in this notice is provided solely for the purpose of satisfying the Policy's notice requirements and does not constitute an acknowledgment or concession that any violation of law has occurred.
X. Confidentiality
The contents of this letter, the enclosures, and the underlying facts and circumstances described herein are privileged and confidential. They are protected by the attorney-client privilege, the attorney work product doctrine, and the common interest privilege, as applicable. This letter is prepared by Calderwood & Harkness LLP in its capacity as counsel to Torchlight Mining Corp. and is transmitted to Dalton & Mercer Inc. solely for the purpose of providing notice under the Policy and in furtherance of the common interest of the insured and the insurer in the defense and resolution of the claims and matters described herein.
Torchlight respectfully requests that Dalton & Mercer treat all information provided in connection with this claim as strictly confidential and not disclose any such information to any third party without the prior written consent of Torchlight and Calderwood & Harkness LLP, except to the limited extent required by applicable law, regulation, or court order. In the event D&M receives any request or demand for disclosure of information relating to this claim, Torchlight requests that D&M promptly notify Calderwood & Harkness LLP in advance of any disclosure so that the insured may take appropriate steps to protect its privilege and confidentiality interests.
XI. Contact Information and Closing
All correspondence, communications, and notices regarding this claim and the matters described herein should be directed to:
Conrad Ashby Victoria Chambers Calderwood & Harkness LLP 825 Eighth Avenue, 42nd Floor New York, New York 10019 Telephone: (212) 554-8000
Email: cashby@calderwoodharkness.com / vchambers@calderwoodharkness.com
With a copy to:
Patricia Sung General Counsel & Corporate Secretary Torchlight Mining Corp. 200 King Street West, Suite 3400 Toronto, Ontario M5H 3T4, Canada Telephone: (416) 368-7200
Email: patricia.sung@torchlightmining.com
Given the active nature of the governmental investigations, the ongoing internal investigation, and the substantial risk of additional proceedings, Torchlight respectfully urges D&M to respond to this notice promptly, and in any event within the time periods specified in the Policy. Time is of the essence. The insured is incurring significant defense costs on a daily basis and requires clarity regarding the insurer's coverage position so that the defense and investigation can proceed in an orderly and efficient manner.
Torchlight and its counsel stand ready to provide any additional information or documentation that D&M may reasonably request in connection with its evaluation of this claim. We are available to meet with D&M's claims team, whether in person or by video conference, at D&M's earliest convenience to discuss the claim, the status of the investigations, and the anticipated defense strategy.
We look forward to your prompt response and to working cooperatively with Dalton & Mercer in connection with this matter.
Very truly yours,
CALDERWOOD & HARKNESS LLP
By: ________
Conrad Ashby Partner White Collar & Investigations Practice Group
cc:
Patricia Sung, General Counsel & Corporate Secretary, Torchlight Mining Corp. Victoria Chambers, Partner, Calderwood & Harkness LLP Dr. Eleanor Fiske, Audit Committee Chair, Board of Directors, Torchlight Mining Corp.
Enclosures:
The following documents are enclosed herewith, or will be made available upon request pursuant to arrangements to be agreed with D&M's claims team:
1. SEC Formal Order of Investigation (File No. HO-14892), dated January 22, 2025
2. SEC Document Subpoena, dated February 3, 2025
3. DOJ Voluntary Document Preservation Request, dated February 14, 2025
4. Torchlight Mining Corp. Current Report on Form 8-K, filed February 7, 2025
5. Calderwood & Harkness LLP Engagement Letter, dated March 5, 2025
CONFIDENTIAL — ATTORNEY-CLIENT PRIVILEGED — ATTORNEY WORK PRODUCT This communication and its enclosures contain information that is privileged, confidential, and/or protected from disclosure. If you are not the intended recipient, or an agent responsible for delivering this communication to the intended recipient, you are hereby notified that any dissemination, distribution, or copying of this communication is strictly prohibited. If you have received this communication in error, please notify the sender immediately and destroy all copies.
Policy Element | Detail
Policy Number | DM-0092-FCPA-2024
Named Insured | Torchlight Mining Corp. and its subsidiaries, directors, and officers (as defined in the Policy)
Insurer | Dalton & Mercer Inc.
Per-Occurrence Limit of Liability | $50,000,000
Aggregate Limit of Liability | $100,000,000
Self-Insured Retention ("SIR") | $2,500,000
Policy Period | January 1, 2024 – January 1, 2025 (with extended reporting period provisions)
Permit / License | Reference Number | Approximate Date of Issuance
Kousseri Copper-Cobalt Complex Mining License | KCC-2019-0047 | 2019
Kousseri Environmental Impact Approval | ENV-KCC-2020-113 | 2020
Dembélé Rare Earths Exploration License | DRE-2021-0092 | 2021
Dembélé Mining License Upgrade | DRE-M-2023-0018 | 2023
Kousseri Expansion Permit | KCC-2019-0047-A1 | 2023–2024
Category of Exposure | Estimated Amount
DOJ Criminal Fine (2× gain, per U.S. Sentencing Guidelines §§ 2C1.1, 8C2.4) | $9,460,000
SEC Disgorgement of Ill-Gotten Gains (15 U.S.C. § 78u(d)(5)) | $4,730,000
SEC Prejudgment Interest (estimated at 5.0% per annum over ~3-year average period) | $709,500
SEC Civil Monetary Penalty — Tier III (per occurrence, 15 U.S.C. § 78u(d)(3)) | Up to $4,730,000
Total Estimated Government Exposure Range | $14,190,000 – $19,629,500

CALDERWOOD & HARKNESS LLP Attorneys at Law

CALDERWOOD & HARKNESS LLP

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