PRIVILEGED AND CONFIDENTIAL ATTORNEY-CLIENT PRIVILEGE / ATTORNEY WORK PRODUCT
CALDERWOOD & HARKNESS LLP WHITE COLLAR DEFENSE & INVESTIGATIONS
INTERNAL MEMORANDUM
March 7, 2025
TO: Victoria Chambers, Billing Partner, Calderwood & Harkness LLP Jasmine Thornton, Working Associate, Calderwood & Harkness LLP
FROM: Conrad Ashby, Responsible Partner, White Collar & Investigations, Calderwood & Harkness LLP Steven Hollander, Lead Associate, White Collar & Investigations, Calderwood & Harkness LLP
RE: Investigation Scope and Work Plan — Torchlight Mining Corp. FCPA Investigation
C&H Matter No.: 1039-00005
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I. Purpose of This Memorandum
This memorandum sets forth the scope, objectives, and detailed work plan for the internal investigation of Torchlight Mining Corp. ("Torchlight" or "TMC") concerning potential violations of the Foreign Corrupt Practices Act of 1977, as amended, 15 U.S.C. §§ 78dd-1 et seq. (the "FCPA"). The purpose of this memorandum is to provide a comprehensive roadmap for all members of the Calderwood & Harkness LLP ("C&H" or the "Firm") engagement team, to establish the substantive scope of the investigation, to identify key facts and persons, to assign responsibilities, and to set forth the timeline for the delivery of critical work product and investigative milestones.
Calderwood & Harkness LLP was formally engaged on March 5, 2025, by Torchlight Mining Corp. to conduct this internal investigation. Patricia Sung, Torchlight's General Counsel and Corporate Secretary, serves as the primary client contact for purposes of day-to-day coordination, communication, and direction. All engagement terms are set forth in the engagement letter executed on that date.
The investigation is being conducted at the direction of, and under the oversight of, the Audit Committee of Torchlight's Board of Directors (the "Audit Committee"). The Audit Committee is chaired by Dr. Eleanor Fiske, with Warren Ogilvy and Marguerite Chen serving as members. The Audit Committee has been delegated plenary authority by the Board to oversee the investigation, retain counsel, and receive interim and final reports. All reporting obligations run through the Audit Committee, with coordination through Ms. Sung as General Counsel.
This memorandum is intended to guide all team members in the conduct of the investigation, to establish investigative priorities, to assign responsibilities among team members and co-counsel, and to set realistic but aggressive timelines for the completion of critical deliverables. All team members are expected to review this memorandum in its entirety and to direct any questions regarding scope, approach, or timing to Conrad Ashby or Steven Hollander.
All work product generated in connection with this investigation is protected by the attorney-client privilege and the work product doctrine. The privilege belongs to Torchlight Mining Corp. and may be waived only by the company, acting through the Audit Committee or its designee. No team member should disclose any privileged or confidential information relating to this investigation to any person or entity outside the authorized distribution list without the express prior authorization of Conrad Ashby.
II. Background and Factual Summary
A. Overview of Torchlight Mining Corp.
Torchlight Mining Corp. is a Canadian corporation organized under the Canada Business Corporations Act ("CBCA"), with its principal executive offices located at 200 King Street West, Suite 3400, Toronto, Ontario M5H 3T4, Canada. Torchlight is a mid-cap, publicly traded mining company with diversified operations spanning multiple commodities and geographic regions.
Torchlight's common shares are listed on the Toronto Stock Exchange under the ticker symbol "TMC." In addition, Torchlight's shares are traded in the United States on the New York Stock Exchange in the form of American Depositary Receipts ("ADRs") under the ticker symbol "TRCH," with each ADR representing one common share. As a result of its NYSE listing and ADR program, Torchlight is an "issuer" as defined under Section 3(a) of the Securities Exchange Act of 1934 and is subject to the SEC's jurisdiction under the FCPA's anti-bribery, books and records, and internal controls provisions.
The company operates copper, cobalt, and rare-earth mining operations across four countries, with significant operations in Canada, the Republic of Ganara (West Africa), Peru, and Mongolia. For the fiscal year ended December 31, 2024, Torchlight reported total consolidated revenues of approximately CAD $2.1 billion. The company's West African operations, centered in the Republic of Ganara, generated approximately CAD $387 million in revenue for FY2024, representing approximately 18.4% of the company's total consolidated revenue. The Ganaran operations therefore constitute a material component of the company's overall business and financial performance.
As of approximately March 1, 2025, Torchlight had a market capitalization of approximately CAD $5.8 billion, based on approximately 166.7 million shares outstanding. The company's Chief Executive Officer is Gerald R. Vandermeer, who was appointed to that position on June 22, 2018.
B. Relevant Subsidiaries
The Ganaran operations that are the focus of this investigation are conducted through two intermediate subsidiaries, each of which requires separate analysis for purposes of jurisdictional considerations, document preservation, and local regulatory compliance.
Torchlight Ganara Holdings Ltd. ("TGH"). TGH is a wholly owned subsidiary of Torchlight Mining Corp., incorporated on March 15, 2017, under the laws of the British Virgin Islands ("BVI"). Its registered office is located at Wickhams Cay II, Suite 408, Road Town, Tortola, BVI. TGH functions as a holding company for Torchlight's Ganaran mining operations. It does not conduct direct mining activities but serves as the intermediate entity through which funding, contracts, and financial flows are channeled between the parent company in Toronto and the operating subsidiary in Ganara. TGH maintains bank accounts at Meridian Commercial Bank (BVI) (Account No. 7740-2281-0056) and at Regency International Bank in the Republic of Ganara. The Meridian Commercial Bank account is of particular significance to this investigation, as it was the account from which all payments to Crestfield Advisory Partners Ltd. were remitted.
Torchlight Ganara Mining S.A. ("TGM"). TGM is a 100%-owned operating subsidiary organized under the laws of the Republic of Ganara, with its registered office and principal place of operations located at Boulevard du Commerce 14, Quartier Plateau, Libreville, Republic of Ganara. TGM is the entity that directly holds the mining concessions, licenses, and environmental permits issued by the Ganaran government. As of December 2024, TGM employed approximately 2,400 local workers and 85 expatriate staff. TGM maintained local currency accounts at Regency International Bank (Account No. GAN-4419-8837). The TGM local currency accounts are relevant to the investigation because they are the accounts from which the $890,000 in suspected improper cash withdrawals and $630,000 in suspected in-kind benefits were funded.
C. Genesis of the Investigation
On August 19, 2024, an anonymous whistleblower complaint was received via Torchlight's third-party ethics hotline, which is operated by Sentinel Compliance Solutions Inc. The complaint was assigned Report ID: SCH-2024-08-4417 in Sentinel's tracking system. The complaint was filed anonymously through Sentinel's web-based intake portal and could not be attributed to a specific individual.
The substance of the whistleblower complaint alleged, in relevant part:
"Payments being made to government ministers through a fake consulting company in Mauritius to get mining permits approved faster. The country manager and VP from Toronto both know about it."
The complaint was initially processed by Sentinel Compliance Solutions and forwarded to Torchlight's compliance department in accordance with the standing intake protocol. Nadia Berenson, Torchlight's Vice President of Compliance and Ethics, received the complaint and, recognizing the seriousness of the allegations and their potential implications under the FCPA and the Canadian Corruption of Foreign Public Officials Act ("CFPOA"), escalated the complaint to the Chair of the Audit Committee, Dr. Eleanor Fiske, on August 26, 2024.
Following receipt of Ms. Berenson's escalation memorandum, the Audit Committee convened a special meeting on September 5, 2024, at which it authorized a preliminary internal review to be conducted by the in-house compliance team under Ms. Berenson's direction, with oversight from the General Counsel, Patricia Sung. The preliminary review revealed sufficient indicators of potential FCPA violations to warrant engagement of outside counsel to conduct a full-scope internal investigation.
In parallel with the internal review, Torchlight became subject to government scrutiny. As detailed further in Section II.D below, the U.S. Securities and Exchange Commission ("SEC") commenced a formal investigation in January 2025, and the U.S. Department of Justice ("DOJ") opened a preliminary inquiry around the same time.
On February 7, 2025, Torchlight filed a Current Report on Form 8-K with the SEC disclosing the existence of the SEC investigation and the company's engagement of outside counsel to conduct an internal investigation. Following the 8-K disclosure, Torchlight's share price declined from CAD $34.80 to CAD $27.15, representing a decline of approximately 22.0% and a loss of approximately CAD $1.28 billion in market capitalization. This market reaction underscores the materiality of the matters under investigation and the urgency of the investigation.
D. Government Proceedings
SEC Investigation. The Division of Enforcement of the U.S. Securities and Exchange Commission commenced a formal order of investigation under File No. HO-14892 on January 22, 2025. The investigation is being conducted by the Division of Enforcement's FCPA Unit. On February 3, 2025, the SEC served a formal document subpoena on Torchlight Mining Corp., requiring the production of documents relating to, among other things, the company's operations in the Republic of Ganara, all contracts and payments to Crestfield Advisory Partners Ltd. or Jean-Philippe Renard, all communications with Ganaran government officials concerning mining permits and environmental approvals, and all internal audit, compliance, and accounting records relating to the foregoing. The SEC subpoena contemplates rolling production on a negotiated schedule, with the first rolling production targeted for April 14, 2025 (as discussed in Section XII below).
DOJ Inquiry. The Criminal Division of the U.S. Department of Justice, Fraud Section, opened a preliminary inquiry into the same matters in approximately January 2025. The assigned unit within the Fraud Section is the FCPA Unit, and the matter has been assigned to Assistant Chief Margaret Calloway. On February 14, 2025, the DOJ sent a voluntary document preservation request to Torchlight Mining Corp. through Patricia Sung. The preservation request directed Torchlight to preserve all documents and communications potentially relevant to the DOJ's inquiry, consistent with the categories identified in the SEC's formal subpoena. As of the date of this memorandum, no formal grand jury subpoenas have been issued by the DOJ, and the DOJ has not indicated whether it intends to seek formal compulsory process at this time. An acknowledgment letter responding to the DOJ's preservation request is to be sent to Assistant Chief Calloway on or before March 18, 2025.
E. The Alleged Scheme — Summary
Based on the preliminary internal review conducted by Torchlight's compliance department and our initial analysis of available records, the following summary of the alleged scheme has been developed. This summary is preliminary and subject to revision as the investigation proceeds.
Between approximately April 2019 and October 2024, TGH retained Crestfield Advisory Partners Ltd. ("Crestfield"), a Mauritius-incorporated consulting firm with a registered office at the 7th Floor, Nexus Tower, Ebène Cybercity, Port Louis, Mauritius. Crestfield was operated by Jean-Philippe Renard, a French citizen, age 54, who currently resides at Villa Les Almadies, Route de Ngor, Dakar, Senegal. Mr. Renard is the sole beneficial owner of Crestfield. The firm maintained no website, had no employees other than Mr. Renard, and used only a registered-agent office address in Port Louis. Mr. Renard is a former diplomat with longstanding connections to senior Ganaran government officials.
Crestfield was engaged under a "Government Relations Advisory Agreement" dated April 12, 2019 (the "Crestfield Agreement" or the "GRAA"). The stated purpose of the engagement was to provide government relations advisory services to TGH in connection with the Republic of Ganara's regulatory and permitting processes. The Crestfield Agreement was executed on behalf of TGH by Marcus Delacroix, then VP, Africa Operations.
Over the approximately five-and-a-half-year period of the engagement, total payments from TGH to Crestfield amounted to $3,210,000, made across 24 invoices. The investigation has identified evidence suggesting that a substantial portion of these payments — estimated at approximately $2,410,000, or roughly 75% of the total — were channeled to Ganaran government officials to secure and expedite the issuance of mining permits and environmental approvals. The mechanisms by which these funds were channeled to government officials are under active investigation and will be a primary focus of the forensic accounting engagement with Pinnacle Forensic Advisory LLC.
In addition to the Crestfield channel, the investigation has identified additional suspected improper payments made directly from TGM local accounts at Regency International Bank. Specifically, the preliminary review has identified approximately $890,000 in cash withdrawals from TGM accounts coded as "community development" or "stakeholder gifts" under General Ledger Account 7450 — "Community Relations Expenses." These withdrawals were made over the period of the alleged scheme and appear to lack adequate supporting documentation. Furthermore, the review has identified approximately $630,000 in in-kind benefits provided to Ganaran government officials, including vehicle purchases and travel expenses, booked under GL 7200 ("Transportation and Logistics") and GL 7310 ("Travel and Entertainment").
In total, the investigation team estimates that the aggregate value of suspected improper payments is approximately $4,730,000, consisting of: (i) $3,210,000 paid through the Crestfield channel; (ii) $890,000 in direct cash payments from TGM; and (iii) $630,000 in in-kind benefits provided directly by TGM. This figure is preliminary and may be revised upward or downward as the investigation proceeds.
III. Key Subjects and Persons of Interest
The investigation has identified the following individuals as key subjects and persons of interest. For each, we set forth the available identifying information, their role in the alleged scheme, and their current representation status. This section is intended to provide the team with a reference for investigative planning purposes. Detailed dossiers on each individual will be prepared separately.
A. Marcus Delacroix — Former VP, Africa Operations
Marcus Delacroix is a French-Canadian dual citizen, age 47. He was appointed as Torchlight's Vice President, Africa Operations on November 3, 2018, and held that position until his resignation, which became effective on November 15, 2024. The circumstances of his departure are under investigation; it is anticipated that interviews with Patricia Sung and others will shed light on whether his resignation was voluntary or prompted by the company's awareness of the matters at issue.
Mr. Delacroix currently resides at 47 Rue de la République, 69002 Lyon, France. His current location outside of U.S. and Canadian jurisdiction presents potential challenges for compelling his cooperation, should voluntary cooperation not be forthcoming.
As VP, Africa Operations, Mr. Delacroix was the primary Torchlight executive responsible for overseeing all of the company's African mining operations, including direct management responsibility for the Ganaran subsidiaries, TGH and TGM. In that capacity, he was involved in all material decisions relating to the Ganaran operations, including the retention of consultants, the management of government relations, and the pursuit of mining permits and environmental approvals.
Critically, Mr. Delacroix personally introduced Jean-Philippe Renard and Crestfield Advisory Partners Ltd. to TGH, and the engagement of Crestfield was effectuated without any competitive selection process or vendor due diligence review. Mr. Delacroix signed the Crestfield Agreement on behalf of TGH on April 12, 2019. Additionally, the investigation has identified 37 communications between Mr. Delacroix and Mr. Renard conducted through Mr. Delacroix's personal email account (i.e., a non-Torchlight email address), raising significant questions about the nature of those communications and Mr. Delacroix's intent in conducting business outside of corporate channels.
Mr. Delacroix is currently represented by Helen Whitmore at Whitmore & Sharpe LLP, located at 1401 K Street NW, Suite 700, Washington, DC 20005. All communications directed to Mr. Delacroix must be routed through Ms. Whitmore.
B. Raymond Osei-Bonsu — Former Country Manager, TGM
Raymond Osei-Bonsu is a Ganaran citizen, age 44. He was hired as Country Manager of TGM on February 7, 2019 — notably, approximately two months before the execution of the Crestfield Agreement — and his employment was terminated effective January 8, 2025.
In his capacity as Country Manager, Mr. Osei-Bonsu directly oversaw all TGM operations on the ground in the Republic of Ganara, including the operational aspects of the Crestfield engagement. He was the principal point of contact within TGM for Mr. Renard and Crestfield and was responsible for the day-to-day management of government relations activities in Ganara.
Significantly, Mr. Osei-Bonsu was the sole approver on several Crestfield invoices that exceeded $50,000, which is the single-approval threshold under Torchlight's Delegation of Authority Policy. Under that policy, expenditures exceeding $50,000 require dual authorization — i.e., approval by both the local signatory and a designated counterpart at the regional or corporate level. The preliminary review has identified that 14 of the 24 Crestfield invoices exceeded the $50,000 threshold, with individual invoices ranging from $55,000 to $185,000, and that Mr. Osei-Bonsu was the sole approver on each of these invoices, in direct violation of the company's Delegation of Authority Policy.
Additionally, Mr. Osei-Bonsu directed the General Ledger coding of the $890,000 in cash withdrawals under GL 7450 ("Community Relations Expenses"), a categorization that obscured the true nature and purpose of those payments.
Mr. Osei-Bonsu is currently represented by Barrister Emeka Okoro of Okoro Law Chambers, located at 9 Avenue Mobutu, Libreville, Republic of Ganara. All communications directed to Mr. Osei-Bonsu must be routed through Barrister Okoro.
C. Jean-Philippe Renard — Principal of Crestfield Advisory Partners Ltd.
Jean-Philippe Renard is a French citizen, age 54, currently based in Dakar, Senegal, where he resides at Villa Les Almadies, Route de Ngor. Mr. Renard is a former French diplomat who, by virtue of his prior diplomatic career, developed extensive contacts among senior Ganaran government officials, including the officials identified as alleged recipients of improper payments in this investigation.
Mr. Renard is the sole beneficial owner of Crestfield Advisory Partners Ltd. As noted above, Crestfield had no website, no employees other than Mr. Renard himself, and utilized only a registered-agent office address in Port Louis, Mauritius. The firm appears to have been constituted principally, if not solely, for the purpose of facilitating the payments at issue in this investigation. Mr. Renard's role in the alleged scheme is central, as he is alleged to have served as the intermediary through whom approximately $2,410,000 in improper payments were channeled to Ganaran government officials.
As of the date of this memorandum, Mr. Renard is not known to be represented by counsel. Given his significant criminal exposure and his residence outside of U.S. jurisdiction, no interview request is planned at this stage. His status will be reassessed as the investigation progresses.
D. Ganaran Government Officials (Alleged Recipients)
The investigation has identified the following Ganaran government officials as alleged recipients of improper payments. These individuals are classified as "foreign officials" within the meaning of the FCPA, 15 U.S.C. § 78dd-1(f)(1).
1. Hon. Boubacar Diallo — Former Minister of Mines and Natural Resources of the Republic of Ganara, serving in that capacity from 2018 to 2023. As Minister of Mines and Natural Resources, Mr. Diallo had authority over the issuance of mining licenses and concessions, including the Kousseri and Dembélé licenses at issue. He is alleged to have received approximately $1,850,000 through Crestfield and through intermediary accounts. The precise routing of payments to Mr. Diallo is a priority for the forensic accounting engagement.
2. Amadou Traoré — Director of Environmental Permitting, Ministry of Environment, serving in that capacity from 2017 to the present. Mr. Traoré had direct authority over the issuance of environmental impact approvals, including the Kousseri Environmental Impact Approval (Certificate No. ENV-KCC-2020-113). He is alleged to have received approximately $620,000 in Crestfield payments and direct wire transfers characterized as "expediting fees."
3. Col. Ibrahim Konaté — Former Regional Prefect, Kousseri Province, serving from 2019 to 2023. Col. Konaté exercised regional administrative authority over the Kousseri mining area, including the authority to approve or delay infrastructure and access permits at the provincial level. He is alleged to have received approximately $340,000 in cash and in-kind benefits, including vehicle purchases and travel expenses.
4. Other Officials / Unidentified Recipients. The preliminary review has identified approximately $1,920,000 in payments for which the ultimate recipients have not yet been conclusively determined. The tracing and identification of these recipients is a priority for the forensic accounting work and the witness interview program.
IV. Mining Permits at Issue
The following five permits and licenses are at the center of the investigation. Each was obtained during the period of the alleged scheme (April 2019 through October 2024), and each is associated with activity by Crestfield Advisory Partners Ltd. and/or suspected improper payments to the Ganaran government officials identified in Section III.D above.
1. Kousseri Copper-Cobalt Complex Mining License. License No. KCC-2019-0047, issued on September 14, 2019, by the Ministry of Mines and Natural Resources of the Republic of Ganara. This is a 25-year mining license covering an area of 14,200 hectares in the Kousseri Province. The license authorizes the extraction of copper and cobalt ores within the concession area. Notably, this license was obtained approximately four months faster than the statutory average processing time for mining licenses of comparable scope in Ganara, a fact that will require careful analysis in the context of the timing correlation with Crestfield payments.
2. Kousseri Environmental Impact Approval. Certificate No. ENV-KCC-2020-113, issued on March 27, 2020, by the Ministry of Environment of the Republic of Ganara. This environmental impact approval was required by Ganaran law as a precondition to the commencement of extraction operations at the Kousseri Copper-Cobalt Complex. The approval was within the direct authority of Director Amadou Traoré, one of the alleged recipients of improper payments.
3. Dembélé Rare Earths Exploration License. License No. DRE-2021-0092, issued on July 8, 2021, by the Ministry of Mines and Natural Resources. This is a five-year exploration license covering an area of 8,750 hectares in the Dembélé region, authorizing geological exploration and assessment of rare-earth mineral deposits.
4. Dembélé Mining License Upgrade. License No. DRE-M-2023-0018, issued on February 14, 2023, by the Ministry of Mines and Natural Resources. This license represents the conversion of the Dembélé exploration license (DRE-2021-0092) to a full mining license, authorizing commercial-scale extraction of rare-earth minerals. The upgrade process is subject to more intensive regulatory scrutiny than initial exploration licenses and typically requires multiple layers of government approval.
5. Kousseri Expansion Permit. Amendment KCC-2019-0047-A1, issued on April 3, 2024, by the Ministry of Mines and Natural Resources. This amendment expanded the Kousseri concession area by 3,200 hectares, bringing the total licensed area to 17,400 hectares. The expansion was significant because it encompassed a geologically promising zone adjacent to the existing concession that had been the subject of competitive interest from other mining companies.
A critical investigative focus area will be the timing correlation between Crestfield invoices and the issuance of each of these permits. Preliminary analysis indicates that Crestfield invoices consistently spiked in the 30–60 day period preceding each permit issuance. This pattern is highly suggestive of a relationship between the payments and the official actions, and the forensic accounting engagement will include a detailed timeline correlation analysis mapping Crestfield invoice dates and payment dates against the five permit issuance dates identified above.
V. Scope of the Internal Investigation
A. Substantive Legal Issues
The investigation will address the following substantive legal issues, each of which requires separate analysis and each of which will be the subject of a dedicated analysis memorandum:
1. FCPA Anti-Bribery Provisions (15 U.S.C. §§ 78dd-1, 78dd-2, 78dd-3). The investigation will determine whether payments made by TGH and TGM to Ganaran government officials — whether through Crestfield Advisory Partners Ltd. or directly — constitute "corrupt" payments to "foreign officials" made for the purpose of "obtaining or retaining business" or "directing business" within the meaning of the FCPA's anti-bribery provisions. This analysis will require assessment of: (a) the "issuer" jurisdictional basis for Torchlight (arising from its NYSE ADR listing); (b) whether the payments were made "corruptly," i.e., with the intent to improperly influence official action; (c) whether the Ganaran officials involved qualify as "foreign officials" under the statute; (d) the business nexus requirement, including whether the mining permits and environmental approvals constitute the "obtaining or retaining of business"; and (e) the applicability of any affirmative defenses, including the "reasonable and bona fide expenditure" defense and the "local law" defense.
2. FCPA Books and Records Provisions (Section 13(b)(2)(A) of the Securities Exchange Act of 1934). The investigation will assess whether Torchlight's books and records accurately reflected the nature, purpose, and recipients of payments made through the Crestfield channel and through TGM's direct payments. Of particular concern are: (a) the mischaracterization of $890,000 in cash withdrawals under GL 7450 as "Community Relations Expenses" when the true nature of those payments may have been bribes to government officials; (b) the vague and uninformative descriptions on Crestfield invoices; and (c) the failure to record in-kind benefits provided to government officials with appropriate specificity.
3. FCPA Internal Controls Provisions (Section 13(b)(2)(B) of the Securities Exchange Act of 1934). The investigation will evaluate whether Torchlight maintained a system of internal accounting controls sufficient to provide reasonable assurances that: (a) transactions were executed in accordance with management's general or specific authorization; (b) transactions were recorded as necessary to permit preparation of financial statements and to maintain accountability for assets; and (c) access to assets was permitted only in accordance with management's authorization. Particular areas of focus include: (i) the failure to enforce the Delegation of Authority Policy requiring dual authorization for expenditures exceeding $50,000; (ii) the absence of any third-party due diligence on Crestfield Advisory Partners Ltd.; and (iii) the lack of adequate monitoring and oversight of TGM's cash disbursement practices.
4. Canadian Corruption of Foreign Public Officials Act ("CFPOA"). As a Canadian corporation, Torchlight is also subject to the CFPOA, which criminalizes the bribery of foreign public officials by Canadian persons and entities. The CFPOA analysis will be coordinated with Bartlett Keene & Ostrander LLP, our Canadian co-counsel. The lead partner on the CFPOA analysis is Richard Bartlett III. The CFPOA exposure presents parallel criminal risk under Canadian law, including potential penalties of up to 14 years' imprisonment for natural persons and unlimited fines for corporate entities.
5. Ganaran Criminal and Administrative Exposure. TGM, as an entity organized under Ganaran law, and its personnel, may face criminal prosecution under Ganaran anti-corruption statutes, as well as administrative consequences including the potential revocation of mining licenses. The Ganaran legal risk analysis will be conducted in coordination with Ndong & Keïta Cabinet Juridique, our Ganaran local counsel, under the direction of Maître Salif Ndong. The risk of mining license revocation is of particular concern, as the loss of the Kousseri and Dembélé concessions would have a material adverse impact on Torchlight's operations and financial performance.
B. Temporal Scope
The temporal scope of the investigation spans from January 1, 2018 through the present date. This scope has been set to align with the litigation hold scope and to capture the period immediately preceding the execution of the Crestfield Agreement (April 12, 2019), as well as the period of Mr. Delacroix's appointment as VP, Africa Operations (November 3, 2018), in order to identify any relevant antecedent communications, negotiations, or planning activities.
The core focus period of the investigation is April 12, 2019 (the date of execution of the Crestfield Agreement) through October 31, 2024 (the date on which the last known Crestfield invoice was paid). This period encompasses the entirety of the Crestfield engagement and the issuance of all five mining permits identified in Section IV.
C. Geographic Scope
The investigation will encompass activities, documents, and persons located in the following jurisdictions:
• Republic of Ganara: As the locus of TGM's mining operations, government interactions, permit applications, and the provision of alleged improper payments to government officials.
• British Virgin Islands: As the jurisdiction of incorporation of TGH and the location of the Meridian Commercial Bank account from which Crestfield payments were remitted.
• Canada: As the jurisdiction of Torchlight's incorporation and headquarters, the location of corporate governance and compliance activities, and the jurisdiction of residence for certain key personnel.
• Mauritius: As the jurisdiction of Crestfield's incorporation and registered office.
• Senegal: As the jurisdiction of Mr. Renard's current residence.
• France: As the jurisdiction of Mr. Delacroix's current residence.
Each jurisdiction presents unique considerations relating to applicable law, document collection procedures, data privacy and blocking statutes, and the availability and enforceability of compulsory process. These considerations will be addressed in coordination with co-counsel in the relevant jurisdictions.
D. Entity Scope
The investigation will cover the following entities and their respective activities, records, and personnel:
• Torchlight Mining Corp. (parent company, Canada)
• Torchlight Ganara Holdings Ltd. (BVI holding company)
• Torchlight Ganara Mining S.A. (Ganaran operating subsidiary)
• Crestfield Advisory Partners Ltd. (Mauritius consulting firm)
The investigation may be expanded to encompass additional entities if evidence warrants, subject to authorization by Conrad Ashby and, as appropriate, the Audit Committee.
VI. Document Collection and Preservation
A. Litigation Hold
A comprehensive litigation hold notice is to be issued on March 17, 2025, to all 23 identified custodians. The custodian population has been determined based on the preliminary internal review and consists of the following categories:
• 12 current employees of Torchlight and its subsidiaries, identified based on their roles in the Ganaran operations, the Crestfield engagement, the compliance and finance functions, and the corporate governance process;
• 4 former employees, including Marcus Delacroix and Raymond Osei-Bonsu, who remain subject to preservation obligations to the extent they retain company documents or data; and
• 7 shared or departmental mailboxes, including the Africa Operations shared mailbox, the Compliance & Ethics team mailbox, the TGM procurement mailbox, the TGH corporate secretary mailbox, and others to be identified in the final custodian list.
The scope of the litigation hold encompasses all documents, communications (including those on personal devices and accounts where company business was conducted), financial records, and electronic data related to Ganaran operations, Crestfield Advisory Partners Ltd., Jean-Philippe Renard, and the named government officials, from January 1, 2018 to the present. The litigation hold notice will instruct all custodians to preserve all responsive materials in their original format, to refrain from deleting, modifying, or disposing of any potentially responsive materials, and to immediately notify the investigation team if they become aware of any destruction or loss of potentially relevant materials.
Steven Hollander will prepare the final litigation hold notice and custodian list for review and approval by Conrad Ashby. Jasmine Thornton will maintain an ongoing custodian management log to track the issuance, acknowledgment, and compliance status of all hold notices.
B. E-discovery
Marlowe Asset Management Digital Forensics Inc. has been identified as the e-discovery vendor for this investigation. The engagement will be led by Rachel Hartley, Engagement Lead, at Marlowe Asset Management's offices at 1950 Old Gallows Road, Suite 300, Tysons, Virginia 22182. Marlowe Asset Management will be responsible for forensic data collection from custodial and non-custodial sources, processing, hosting, and providing a review platform for the investigation team.
Based on preliminary scoping discussions with Torchlight's IT department, the estimated total data volume for collection is approximately 1.625 terabytes, consisting of:
• Approximately 1.2 TB of email data (Strathmore Data Systems / Ashbury Software mailboxes);
• Approximately 340 GB of financial systems data (ERP system extracts, accounting system records); and
• Approximately 85 GB of shared-drive documents (network file shares, Aldermere Systems sites, and local drives).
The following custodians have been designated as priority custodians for immediate collection, and forensic imaging or extraction from their accounts and devices should be commenced as soon as practicable following Marlowe Asset Management's retention:
• Marcus Delacroix
• Raymond Osei-Bonsu
• All communications involving Jean-Philippe Renard (Crestfield)
• Thomas Achebe (Finance Director, TGM)
• Kwame Mensah (Procurement Manager, TGM)
• Diane Fournier (VP Finance, Torchlight)
• Nadia Berenson (VP Compliance and Ethics, Torchlight)
• Patricia Sung (General Counsel, Torchlight)
Particular attention must be given to the collection of Mr. Delacroix's personal email account, which was used in 37 identified communications with Mr. Renard. The collection of personal email data raises complex issues of feasibility, consent, and compulsion. Mr. Delacroix is a former employee who has retained counsel and currently resides in France, which has stringent data privacy protections under the EU General Data Protection Regulation ("GDPR"). The collection strategy for Mr. Delacroix's personal email will require a separate analysis memorandum addressing the legal and practical considerations, including the possibility of seeking a voluntary production through his counsel, Ms. Whitmore.
C. Hard-Copy and Physical Records
In addition to electronic data, the investigation will require the collection and review of hard-copy and physical records from multiple locations:
• TGM office in Libreville, Republic of Ganara: Procurement files, vendor files, government correspondence, cash disbursement records, GL supporting documentation, and other locally maintained paper records must be collected and secured. This collection will be coordinated with Ndong & Keïta Cabinet Juridique to ensure compliance with Ganaran law and to mitigate any risk of document spoliation.
• TGH BVI corporate records: Board resolutions, corporate minutes, account opening documents at Meridian Commercial Bank, and other corporate governance records maintained in the BVI. This collection will be coordinated with Hargrove Whitfield LLP, our BVI counsel, led by Catherine Whitfield, Trident Chambers, Wickhams Cay I, Road Town, Tortola, BVI.
• Crestfield Advisory Agreement and all amendments/addenda: The original executed copies of the Government Relations Advisory Agreement dated April 12, 2019, together with any amendments, addenda, side letters, or other modifications, must be located and collected. The absence of any contract amendment is itself a significant investigative finding, given that actual payments exceeded the contractual maximum by $1,170,000.
D. Financial Records Priority
The following financial records have been designated as priority collection items and should be obtained and made available to the forensic accounting team at Pinnacle Forensic Advisory LLC at the earliest practicable date:
• Crestfield Invoice Register: All 24 invoices issued by Crestfield Advisory Partners Ltd. to TGH during the period 2019–2024, together with all supporting documentation, approvals, and correspondence.
• Meridian Commercial Bank Wire Transfer Records: Complete records of all wire transfers initiated from TGH's account at Meridian Commercial Bank (Account No. 7740-2281-0056), including wire transfer instructions, beneficiary information, and correspondent bank records.
• Regency International Bank Records for TGM: Complete records for TGM's account at Regency International Bank (Account No. GAN-4419-8837), with particular focus on all cash withdrawal documentation, including withdrawal slips, authorization records, and any accompanying memoranda or justifications.
• General Ledger Entries: Detailed transactional data and supporting documentation for GL 7450 ("Community Relations Expenses"), GL 7200 ("Transportation and Logistics"), and GL 7310 ("Travel and Entertainment"), for the full investigation period.
• Bank Statements and Payment Authorizations: Complete bank statements, check registers, and payment authorizations for TGH and TGM for the investigation period.
• Crestfield Advisory Agreement — Financial Terms Analysis: The Crestfield Agreement provides for: (i) a monthly retainer of $15,000 per month; (ii) "success fees" of $100,000 per permit obtained, applied across the five permits identified in Section IV ($100,000 × 5 permits = $500,000 in total success fees); and (iii) expense reimbursement, subject to a cap of $25,000 per quarter. Based on these contractual terms, the total contractual maximum payable to Crestfield over the term of the engagement would have been approximately $2,040,000. The actual invoiced amount of $3,210,000 therefore exceeds the contractual maximum by approximately $1,170,000 — a 57.4% overage. The absence of any documented contract amendment or justification for this excess is a significant red flag that will be a primary focus of the investigation.
VII. Forensic Accounting — Coordination with Pinnacle Forensic Advisory LLC
Pinnacle Forensic Advisory LLC will be retained on or about March 12, 2025, to serve as the forensic accounting firm for the investigation. The engagement will be led by Dr. Leonard Strauss, CPA, CFF, Engagement Partner, at Pinnacle's offices at 1700 Market Street, Suite 1200, Philadelphia, PA 19103. Pinnacle is being retained at the direction and under the supervision of Calderwood & Harkness LLP in order to preserve the attorney-client privilege and work product protection for all forensic accounting work product. The engagement letter with Pinnacle will expressly memorialize this arrangement.
The estimated fees for the Pinnacle engagement are in the range of $1.8 million to $2.4 million, depending on the complexity of the tracing analysis and the availability of records from Crestfield and third-party financial institutions.
The scope of Pinnacle's forensic accounting review will encompass the following workstreams:
1. Complete Wire Transfer Reconstruction. Pinnacle will reconstruct all wire transfers from the TGH account at Meridian Commercial Bank (Account No. 7740-2281-0056) to Crestfield Advisory Partners Ltd., organized by amount, date, description, and approval chain. This reconstruction will form the foundation for the payment flow analysis.
2. Invoice-by-Invoice Analysis. Pinnacle will conduct a detailed analysis of all 24 Crestfield invoices, organized by year:
For each invoice, Pinnacle will analyze the stated services rendered, the relationship of the invoiced amount to the contractual fee schedule, the approval and payment processing chain, and any discrepancies or inconsistencies in the supporting documentation.
3. Onward Payment Tracing. To the extent that records are available, Pinnacle will identify and trace Crestfield's onward payments — i.e., payments made by Crestfield to third parties after receiving funds from TGH. This tracing analysis is critical to establishing the ultimate destination of the funds and the identity of the beneficiaries. The availability of Crestfield's bank records and the cooperation (or lack thereof) of financial institutions in Mauritius and other jurisdictions will be a limiting factor in this analysis.
4. TGM Direct Payment Analysis. Pinnacle will analyze the $890,000 in cash withdrawals from TGM's account at Regency International Bank coded under GL 7450 ("Community Relations Expenses") and the approximately $630,000 in in-kind benefits (vehicle purchases, travel) recorded under GL 7200 and GL 7310. The analysis will include review of all supporting documentation, identification of recipients, and assessment of whether the GL coding was consistent with the actual nature of the expenditures.
5. Timeline Correlation Analysis. Pinnacle will prepare a detailed timeline mapping Crestfield invoice dates and payment dates against the five permit issuance dates identified in Section IV. This analysis will quantify the temporal relationship between payments and official actions and will be a key exhibit in any eventual reporting to the Audit Committee, the SEC, or the DOJ.
6. Delegation of Authority Compliance Analysis. Pinnacle will identify all invoices that exceeded the $50,000 single-approval threshold under Torchlight's Delegation of Authority Policy and determine whether dual authorization was obtained. The preliminary review has identified that 14 of the 24 Crestfield invoices exceeded this threshold and were approved solely by Mr. Osei-Bonsu, without secondary authorization.
7. External Audit Workpaper Review. Pinnacle will review the audit workpapers of Clarendon Group LLP (Torchlight's external auditors), with Alain Beaumont serving as the Engagement Partner on the Torchlight audit, for fiscal years 2019 through 2023. The purpose of this review is to determine whether Crestfield payments were identified, flagged, or substantively tested during the external audit process, and whether the auditors identified any control deficiencies related to the Ganaran operations.
Priority Deliverable: Pinnacle has been directed to deliver a preliminary payment flow analysis by April 3, 2025. This deliverable will provide the investigation team with a foundational understanding of the payment flows and will inform the first wave of witness interviews scheduled for April 7–11, 2025.
VIII. Witness Interview Schedule and Plan
A. Interview Protocol
All witness interviews conducted as part of this investigation will adhere to the following protocols, which are designed to protect the integrity of the investigation, the rights of interview subjects, and the company's attorney-client privilege:
• Two-Attorney Requirement: All interviews will be conducted by at least two Calderwood & Harkness attorneys. One attorney will serve as the primary questioner, and the second will take detailed notes and serve as a corroborating witness to the interview. This protocol ensures the accuracy of the interview record and protects against disputes regarding the content of interviews.
• Upjohn/Corporate Miranda Warnings. At the outset of each interview, the following admonitions (commonly known as "Upjohn warnings" or "corporate Miranda" warnings) will be administered to the witness:
(a) Calderwood & Harkness LLP represents Torchlight Mining Corp. in connection with this investigation. Calderwood & Harkness does not represent the individual witness.
(b) The purpose of the interview is to gather facts relevant to the investigation.
(c) The interview and the information provided by the witness are protected by the attorney-client privilege. However, the privilege belongs to Torchlight Mining Corp., not to the individual witness.
(d) Torchlight Mining Corp., through its Audit Committee, may decide to waive the privilege and disclose the contents of this interview and any information provided, including to government regulators and law enforcement.
(e) The witness is asked to keep the fact and content of the interview confidential in order to protect the integrity of the investigation.
• Detailed Interview Protocol and Script. Steven Hollander will prepare a detailed interview protocol, including the full text of the Upjohn warnings and a standardized opening statement, for review and approval by Conrad Ashby prior to the commencement of the first interview. The protocol will also include guidelines for handling requests for counsel, invocations of the Fifth Amendment privilege (to the extent applicable), and requests to go "off the record."
B. First Wave — Toronto (April 7–11, 2025)
The first wave of witness interviews will focus on current Torchlight headquarters personnel based in Toronto, Ontario. These interviews are designed to establish the baseline factual record regarding the company's knowledge, oversight, and control of the Ganaran operations and the Crestfield engagement.
Planned Interviews:
1. Nadia Berenson, VP Compliance and Ethics — Target Date: April 7, 2025. Interview topics will include: her receipt and escalation of the whistleblower complaint (Report ID: SCH-2024-08-4417); her knowledge of the Crestfield engagement, including whether Crestfield was ever subjected to third-party due diligence; the scope and effectiveness of the compliance training program as applied to Ganaran operations; her assessment of the conduct and performance of Mr. Delacroix and Mr. Osei-Bonsu; the history and structure of the ethics hotline; and any prior complaints, red flags, or concerns related to the Ganaran operations.
2. Diane Fournier, VP Finance — Target Date: April 8, 2025. Interview topics will include: her oversight of the financial consolidation of TGH and TGM results into Torchlight's consolidated financial statements; her knowledge of the Crestfield invoices and the approval processes applied to those invoices; the GL 7450 coding practices and whether she was aware of the coding of cash withdrawals as "Community Relations Expenses"; the absence of any contract amendment to authorize payments in excess of the contractual maximum; her interactions with Mr. Delacroix regarding the financial aspects of the Ganaran operations; and any communications with Clarendon Group LLP regarding the Crestfield payments.
3. Patricia Sung, General Counsel and Corporate Secretary — Target Date: April 9, 2025. Interview topics will include: her role in the initial Audit Committee review following the whistleblower complaint; her awareness of the Crestfield engagement and the Government Relations Advisory Agreement; the circumstances surrounding Mr. Delacroix's resignation; Torchlight's response to the SEC subpoena and the DOJ preservation request; the status of the company's legal hold efforts; and her communications with the Board and the Audit Committee regarding the investigation.
4. Additional Headquarters Personnel — April 10–11, 2025. Additional interviews may be scheduled based on findings from the document review and forensic accounting work. The identity of these additional witnesses will be determined as the investigation progresses.
C. Second Wave — Republic of Ganara, via Video (April 28 – May 2, 2025)
The second wave of witness interviews will focus on current and available Ganaran-based TGM personnel. Due to logistical and cost considerations, these interviews will be conducted via videoconference, with the interview team participating from Calderwood & Harkness's offices and the witnesses participating from a secure location arranged in coordination with Ndong & Keïta Cabinet Juridique.
Planned Interviews:
1. Thomas Achebe, Finance Director, TGM — Target Date: April 28, 2025. Interview topics will include: his role in processing Crestfield invoices; the procedures for cash withdrawals at Regency International Bank, including who authorized the withdrawals and how they were documented; any directions he received from Mr. Osei-Bonsu regarding the GL coding of cash disbursements; his knowledge of the ultimate recipients of the cash withdrawals; and his awareness of the Crestfield Agreement and its financial terms.
2. Kwame Mensah, Procurement Manager, TGM — Target Date: April 29, 2025. Interview topics will include: his role in procuring vehicles and arranging travel for government officials; the justification provided for the vehicle purchases and travel expenses booked under GL 7200 and GL 7310; the identities of the government officials who received in-kind benefits; the procurement procedures applied to these expenditures; and any interactions with or directions from Mr. Osei-Bonsu regarding these expenditures.
3. Additional TGM Personnel — April 30 – May 2, 2025. Additional TGM personnel may be interviewed based on information obtained during the first wave of interviews and the forensic accounting review.
D. Key Subjects — Interview Status
• Marcus Delacroix. Mr. Delacroix is represented by Helen Whitmore at Whitmore & Sharpe LLP. A voluntary interview request will be sent to Ms. Whitmore by March 25, 2025. Mr. Delacroix has resigned from Torchlight and currently resides in Lyon, France. In light of his potential criminal exposure under the FCPA and the CFPOA, we anticipate that Mr. Delacroix may decline the interview request, either invoking Fifth Amendment protections (to the extent applicable) or simply declining through counsel. A videoconference format will be proposed to accommodate his location. If Mr. Delacroix declines to be interviewed, the team will assess alternative avenues for obtaining his testimony, including the possibility of a proffer agreement or immunity request through the DOJ process.
• Raymond Osei-Bonsu. Mr. Osei-Bonsu is represented by Barrister Emeka Okoro of Okoro Law Chambers. An interview request will be sent to Barrister Okoro by March 26, 2025. Mr. Osei-Bonsu was terminated from TGM on January 8, 2025, and his cooperation with the company's investigation is uncertain. As with Mr. Delacroix, we anticipate the possibility of a declination based on criminal exposure concerns.
• Jean-Philippe Renard. Mr. Renard is not currently represented by known counsel. Given his central role in the alleged scheme, his significant criminal exposure, and his residence outside of U.S. and Canadian jurisdiction, no interview request is planned at this stage. Mr. Renard's status will be reassessed periodically as the investigation develops.
E. Gerald R. Vandermeer, CEO
The interview of Gerald R. Vandermeer, Torchlight's Chief Executive Officer, will be scheduled following the completion of the first and second waves of witness interviews. The timing of Mr. Vandermeer's interview will be coordinated with Patricia Sung to minimize disruption to the company's operations and to ensure that the investigation team has the benefit of information obtained from other witnesses before interviewing the CEO.
The focus of Mr. Vandermeer's interview will include: his level of knowledge of the Crestfield engagement and the Government Relations Advisory Agreement; his oversight of the Africa Operations division and his communications with Mr. Delacroix regarding Ganaran permits and government relations; his knowledge of the financial terms of the Crestfield arrangement and the payments made thereunder; and his awareness of any red flags or concerns related to the Ganaran operations.
IX. Coordination with Co-Counsel
The investigation requires coordination with outside counsel in multiple jurisdictions. The following co-counsel engagements are either in place or are being finalized:
A. Bartlett Keene & Ostrander LLP (Canadian Counsel)
• Lead Partner: Richard Bartlett III
• Address: 100 Wellington Street West, Suite 2600, Toronto, Ontario M5K 1J3, Canada
• Role: Bartlett Keene & Ostrander is advising Torchlight on Canadian securities disclosure obligations, including TSX continuous disclosure requirements under National Instrument 51-102, as well as Torchlight's criminal exposure under the Canadian Corruption of Foreign Public Officials Act ("CFPOA"). The CFPOA analysis is particularly significant because it runs in parallel with the FCPA analysis and because Canadian authorities, including the Royal Canadian Mounted Police's Sensitive and International Investigations unit, may take an independent interest in the matter.
• Common Interest Agreement: A common interest / joint defense agreement between Calderwood & Harkness and Bartlett Keene & Ostrander is to be executed by March 10, 2025. The agreement will govern the sharing of privileged materials related to the FCPA and CFPOA analyses without waiver of the attorney-client privilege. Steven Hollander will prepare the initial draft of the common interest agreement for review by Conrad Ashby.
B. Hargrove Whitfield LLP (BVI Counsel)
• Lead Partner: Catherine Whitfield
• Address: Trident Chambers, Wickhams Cay I, Road Town, Tortola, BVI
• Role: Hargrove Whitfield is advising on the review of TGH's corporate records maintained in the BVI, including board resolutions, corporate minutes, and account opening documents at Meridian Commercial Bank. They will also advise on any BVI regulatory considerations relating to TGH's status as a BVI company and will assist with obtaining records from Meridian Commercial Bank, which may require a formal process under BVI law. Catherine Whitfield's team will also assess whether any BVI regulatory notifications are required in connection with the investigation.
C. Ndong & Keïta Cabinet Juridique (Ganaran Local Counsel)
• Lead Partner: Maître Salif Ndong
• Address: Rue de l'Indépendance 22, Libreville, Republic of Ganara
• Role: Ndong & Keïta is providing advice on Ganaran criminal and administrative law, including the anti-corruption statutes applicable to TGM and its personnel. Of critical importance, they are advising on the risk of mining license revocation, which could result from the Ganaran government's response to the revelations of bribery of its officials. Additionally, Ndong & Keïta will assist with the collection and preservation of documents from TGM's Libreville office, ensuring that all collection activities comply with Ganaran law and that proper chain-of-custody protocols are maintained.
X. Estimated Financial Exposure
The following summary of estimated government exposure is presented for the purpose of guiding the investigation team's prioritization decisions and for inclusion in reporting to the Audit Committee. These estimates are preliminary and are subject to significant revision as the investigation develops additional facts.