PRIVILEGED & CONFIDENTIAL ATTORNEY-CLIENT PRIVILEGE / ATTORNEY WORK PRODUCT
DRAFT Interim Investigation Report to the Audit Committee of the Board of Directors of Torchlight Mining Corp.
May 15, 2025
Prepared by:
Calderwood & Harkness LLP 825 Eighth Avenue, 42nd Floor New York, New York 10019
Conrad Ashby, Responsible Partner Victoria Chambers, Billing Partner Steven Hollander, Lead Associate Jasmine Thornton, Working Associate White Collar & Investigations Practice
Addressed to:
The Audit Committee of the Board of Directors of Torchlight Mining Corp.
Dr. Eleanor Fiske, Chair, Independent Director Warren Ogilvy, Independent Director Marguerite Chen, Independent Director
C&H Matter No.: 1039-00005
PRIVILEGED AND CONFIDENTIAL LEGEND: This report has been prepared by Calderwood & Harkness LLP at the direction of the Audit Committee of the Board of Directors of Torchlight Mining Corp. in connection with the internal investigation described herein. This report, together with all drafts, supporting memoranda, interview memoranda, notes, and related work product, is protected by the attorney-client privilege and the attorney work product doctrine. The contents of this report reflect the mental impressions, conclusions, opinions, and legal theories of counsel. This report is strictly confidential and is intended solely for the use of the members of the Audit Committee identified above. This report shall not be disclosed, distributed, copied, or otherwise made available to any person or entity without the prior written consent of both Calderwood & Harkness LLP and the Audit Committee of Torchlight Mining Corp. Unauthorized disclosure may constitute a waiver of applicable privileges and protections. Receipt of this report by any person other than the intended recipients does not constitute a waiver of any privilege or protection.
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I. EXECUTIVE SUMMARY
This interim report summarizes the findings to date of the internal investigation conducted by Calderwood & Harkness LLP ("Calderwood & Harkness" or "C&H") at the direction of the Audit Committee (the "Audit Committee") of the Board of Directors (the "Board") of Torchlight Mining Corp. ("Torchlight" or the "Company") into potential violations of the U.S. Foreign Corrupt Practices Act ("FCPA") and related anti-corruption laws arising from Torchlight's operations in the Republic of Ganara. The engagement was formalized on March 5, 2025, and the investigation was opened the same day.
The investigation centers on approximately $4.73 million in suspected improper payments made between 2019 and 2024 through Torchlight's West African subsidiary structure — specifically Torchlight Ganara Holdings Ltd. ("TGH"), a British Virgin Islands holding company, and Torchlight Ganara Mining S.A. ("TGM"), the Ganaran operating entity — to government officials and intermediaries in the Republic of Ganara, in connection with mining permits and environmental approvals for the Kousseri Copper-Cobalt Complex and the Dembélé Rare Earths Project.
Our investigation has identified two principal channels through which the suspected improper payments were made:
First, $3,210,000 was paid over the period from 2019 through October 2024 to Crestfield Advisory Partners Ltd. ("Crestfield"), a Mauritius-incorporated intermediary entity solely owned and operated by Jean-Philippe Renard. Based on forensic accounting analysis conducted to date, an estimated $2,410,000 (approximately 75%) of the total payments to Crestfield was diverted to Ganaran government officials, with the remaining approximately $800,000 appearing to represent compensation to Renard and the legitimate costs of Crestfield's operations, though this remains subject to further analysis.
Second, $1,520,000 in direct payments was made from TGM local accounts in the Republic of Ganara, consisting of $890,000 in cash withdrawals and $630,000 in in-kind benefits (including vehicle purchases and travel expenses), which were provided to government officials.
Three Ganaran government officials have been identified as the primary recipients of these payments:
• Hon. Boubacar Diallo, former Minister of Mines and Natural Resources (2018–2023), received approximately $1,850,000, channeled primarily through Crestfield and intermediary accounts.
• Amadou Traoré, Director of Environmental Permitting at the Ministry of Environment (2017–present), received approximately $620,000 through Crestfield payments and direct wire transfers.
• Col. Ibrahim Konaté, former Regional Prefect of Kousseri Province (2019–2023), received approximately $340,000 in cash and in-kind benefits.
• Additional unidentified recipients account for approximately $1,920,000, the tracing and identification of which remains an active work stream.
The key subjects of the investigation are Marcus Delacroix (former Vice President, Africa Operations, who resigned on November 15, 2024) and Raymond Osei-Bonsu (former Country Manager of TGM, whose employment was terminated on January 8, 2025). Jean-Philippe Renard, the sole owner and operator of Crestfield, is also a key subject.
The investigation is proceeding in the context of parallel government proceedings. The U.S. Securities and Exchange Commission ("SEC") issued a formal order of investigation (File No. HO-14892) on January 22, 2025, followed by a formal document subpoena served on Torchlight on February 3, 2025. The U.S. Department of Justice ("DOJ") Fraud Section issued a voluntary document preservation request on February 14, 2025, under Assistant Chief Margaret Calloway of the FCPA Unit. Torchlight disclosed the SEC investigation in a Form 8-K filed on February 7, 2025.
Based on our analysis to date, the potential total government financial exposure to Torchlight is estimated in the range of $14.19 million to $19.63 million, encompassing potential DOJ criminal fines, SEC disgorgement, prejudgment interest, and SEC civil penalties. These estimates do not include potential penalties under the Canadian Corruption of Foreign Public Officials Act ("CFPOA"), Ganaran fines, or exposure from private shareholder litigation.
This report presents interim findings only. The investigation is ongoing, and several significant work streams remain active, including completion of forensic accounting, additional witness interviews, continued SEC document productions, and multi-jurisdictional coordination. A final investigation report will be prepared following the completion of all work streams. A decision regarding voluntary self-disclosure ("VSD") to the DOJ under the Corporate Enforcement Policy is targeted for June 30, 2025.
II. BACKGROUND
A. Torchlight Mining Corp. — Corporate Overview
Torchlight Mining Corp. is a corporation organized under the Canada Business Corporations Act, with its principal executive offices located at 200 King Street West, Suite 3400, Toronto, Ontario M5H 3T4, Canada. Torchlight is a publicly traded company: its American Depositary Receipts ("ADRs") are listed on the New York Stock Exchange under the ticker symbol "TRCH," and its common shares are listed on the Toronto Stock Exchange under the ticker symbol "TMC." As an issuer with securities registered under the U.S. Securities Exchange Act of 1934, Torchlight is subject to the provisions of the FCPA.
Torchlight is a diversified mining company with operations in copper, cobalt, and rare-earth mining across four countries. The Company's total consolidated revenues for fiscal year 2024 were approximately CAD $2.1 billion. As of March 1, 2025, Torchlight's market capitalization was approximately CAD $5.8 billion, based on approximately 166.7 million shares outstanding.
Torchlight's Chief Executive Officer is Gerald R. Vandermeer, who was appointed to that position on June 22, 2018. The Company's General Counsel and Corporate Secretary is Patricia Sung, who was appointed in 2020. Both individuals have been interviewed in connection with this investigation, as described further in Section VII below. The Company's board of directors consists of nine members, including four independent directors, of whom three serve on the Audit Committee.
B. West African Operations — Subsidiary Structure
Torchlight's operations in the Republic of Ganara are conducted through a two-tier subsidiary structure consisting of a British Virgin Islands holding company and a Ganaran operating entity.
Torchlight Ganara Holdings Ltd. ("TGH") is a wholly owned subsidiary of Torchlight, incorporated under the laws of the British Virgin Islands on March 15, 2017. TGH's registered address is Wickhams Cay II, Suite 408, Road Town, Tortola, British Virgin Islands. TGH serves as the holding company for Torchlight's Ganaran operations and is the 100% owner of TGM. TGH maintained bank accounts at Meridian Commercial Bank (BVI), Account No. 7740-2281-0056, which served as the primary account through which payments to Crestfield were made. TGH is a pass-through holding entity with no employees of its own; its board of directors consisted of Delacroix and two Torchlight-nominated directors during the relevant period.
Torchlight Ganara Mining S.A. ("TGM") is the Ganaran operating subsidiary, organized under the laws of the Republic of Ganara. TGM's principal office is located at Boulevard du Commerce 14, Quartier Plateau, Libreville, Republic of Ganara. TGM holds the mining concessions for the Kousseri Copper-Cobalt Complex and the Dembélé Rare Earths Project, which are the two principal mining operations at the center of this investigation. As of December 2024, TGM employed approximately 2,400 local workers and 85 expatriate staff. TGM maintained local currency operating accounts at Regency International Bank (Ganara), Account No. GAN-4419-8837, from which the cash withdrawals and in-kind benefit payments described in this report were made.
The West African operations are a significant component of Torchlight's overall business. During fiscal year 2024, the Ganaran operations generated approximately CAD $387 million in revenue, representing 18.4% of Torchlight's total consolidated revenue. The strategic importance of these operations — and the potential jeopardy to them posed by the conduct under investigation — is a significant factor in the Audit Committee's deliberations.
C. Mining Permits at Issue
Five mining permits and environmental approvals issued by the Republic of Ganara are at the center of the investigation. Each of these permits was obtained during the period in which improper payments were being made through the Crestfield intermediary and direct TGM channels. The permits are summarized below in chronological order:
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 14,200 hectares in the Kousseri Province. Notably, TGM's application for this license was processed in approximately four months, which is approximately four months faster than the statutory average processing time for mining licenses in the Republic of Ganara, based on publicly available data from the Ganaran Ministry of Mines. The accelerated timeline is itself a red flag that warrants further scrutiny.
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 certificate was a prerequisite for the commencement of extraction operations at the Kousseri Copper-Cobalt Complex. Without this approval, TGM could not have commenced mining activities at the Kousseri site.
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 8,750 hectares in the Dembélé region, authorizing TGM to conduct geological surveys, exploratory drilling, and sample extraction for rare-earth minerals.
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 converted TGM's exploration authorization at the Dembélé site into a full mining license, permitting commercial-scale extraction operations.
5. Kousseri Expansion Permit (Amendment KCC-2019-0047-A1) — Issued on April 3, 2024, by the Ministry of Mines and Natural Resources. This amendment to the original Kousseri mining license expanded the concession area by 3,200 hectares, bringing the total Kousseri concession to 17,400 hectares. The expansion permit was the most recent of the five permits and was obtained approximately six months before the last Crestfield invoice was paid.
The investigation is examining whether the issuance of each of these five permits was facilitated by improper payments to Ganaran government officials.
D. Key Personnel Involved
The following individuals are the key subjects of the investigation:
Marcus Delacroix served as Vice President, Africa Operations, for Torchlight from November 3, 2018, through November 15, 2024. Delacroix is a French-Canadian dual citizen, age 47. He resigned from Torchlight via written notice on November 15, 2024, following his being informed of the preliminary internal review that was then underway. Delacroix currently resides at 47 Rue de la République, 69002 Lyon, France. He is represented by Helen Whitmore of Whitmore & Sharpe LLP (Washington, D.C.). As described in Section VII.D below, Delacroix has declined to submit to a voluntary interview in connection with this investigation, citing potential criminal exposure and Fifth Amendment concerns.
Raymond Osei-Bonsu served as Country Manager of TGM from February 7, 2019, through January 8, 2025. Osei-Bonsu is a Ganaran citizen, age 44. His employment was terminated by Torchlight on January 8, 2025, following the escalation of the internal review. He is represented by Barrister Emeka Okoro of Okoro Law Chambers (Ganara). As described in Section VII.D below, Osei-Bonsu has not yet formally responded to Calderwood & Harkness's request for a voluntary interview, though informal indications suggest he will also decline.
Jean-Philippe Renard is a French citizen, age 54, currently based in Dakar, Senegal. Renard is a former diplomat who maintains personal connections to senior Ganaran government officials. He is the sole beneficial owner and operator of Crestfield Advisory Partners Ltd., the Mauritius-incorporated intermediary through which the largest portion of the suspected improper payments was channeled. Renard's address is Villa Les Almadies, Route de Ngor, Dakar, Senegal. As of the date of this report, Calderwood & Harkness has not sought to interview Renard directly, given his status as a key subject and the potential for DOJ enforcement action against him individually.
E. Genesis of the Investigation
The investigation originated with an anonymous whistleblower complaint and has progressed through several distinct phases, culminating in the engagement of Calderwood & Harkness and the formal opening of the investigation. The key events are summarized below in chronological order:
August 19, 2024: An anonymous whistleblower complaint was received through Torchlight's third-party ethics hotline, which is operated by Sentinel Compliance Solutions Inc. The complaint was assigned Report ID: SCH-2024-08-4417. The substance of the complaint was as follows: "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 identity of the whistleblower remains unknown.
August 26, 2024: VP Compliance and Ethics Nadia Berenson escalated the whistleblower complaint to Audit Committee Chair Dr. Eleanor Fiske. Berenson determined that the nature and specificity of the allegations warranted immediate attention at the board level, consistent with Torchlight's whistleblower response protocols.
September 5, 2024: The Audit Committee authorized a preliminary internal review to assess the credibility and scope of the allegations. The preliminary review was conducted by the Company's internal compliance function, in consultation with General Counsel Patricia Sung.
October 31, 2024: The last Crestfield invoice was paid in the amount of $115,000. This payment occurred after the preliminary internal review had been authorized but before the review had progressed to the point of identifying the full scope of the potential improper payments.
November 15, 2024: Marcus Delacroix resigned from his position as Vice President, Africa Operations, via written notice. As described by General Counsel Sung in her interview, Delacroix resigned after being informed of the preliminary internal review. Delacroix did not provide a substantive exit interview.
January 8, 2025: Raymond Osei-Bonsu's employment as Country Manager of TGM was terminated by Torchlight.
January 22, 2025: The SEC issued a formal order of investigation, File No. HO-14892, authorizing the SEC staff to compel testimony and the production of documents in connection with potential violations of the federal securities laws, including the FCPA.
February 3, 2025: The SEC served a formal document subpoena on Torchlight, requiring the production of a broad range of documents relating to the Company's operations in the Republic of Ganara, its relationship with Crestfield, and its anti-corruption compliance program.
February 7, 2025: Torchlight filed a Form 8-K with the SEC disclosing the existence of the SEC investigation. As discussed further in Section XII.D below, the filing precipitated a significant decline in Torchlight's share price.
February 14, 2025: The DOJ Fraud Section sent a voluntary document preservation request to Torchlight, under the authority of Assistant Chief Margaret Calloway of the FCPA Unit. The preservation request indicated that the DOJ was conducting a preliminary inquiry into the same subject matter addressed by the SEC's formal order of investigation.
March 5, 2025: Calderwood & Harkness LLP's engagement as outside investigation counsel to the Audit Committee was formalized, and the internal investigation was formally opened.
III. SCOPE AND METHODOLOGY OF THE INVESTIGATION
A. Scope of the Investigation
The scope of the investigation, as defined by the Audit Committee in consultation with Calderwood & Harkness, encompasses all payments, transactions, and communications involving TGH, TGM, Crestfield Advisory Partners Ltd., and any Ganaran government official or intermediary, from January 1, 2018, to the present. The investigation's start date was set at January 1, 2018 — approximately one year before the first identified Crestfield payment — to ensure that any precursor communications, negotiations, or planning activities would fall within the review period.
The investigation focuses on potential violations of the following provisions of U.S. law:
(a) The FCPA anti-bribery provisions, 15 U.S.C. § 78dd-1 et seq., which prohibit issuers from making payments to foreign officials for the purpose of obtaining or retaining business;
(b) The FCPA books and records provisions, 15 U.S.C. § 78m(b)(2)(A), which require issuers to make and keep books, records, and accounts that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the issuer; and
(c) The FCPA internal controls provisions, 15 U.S.C. § 78m(b)(2)(B), which require issuers to devise and maintain a system of internal accounting controls sufficient to provide reasonable assurances that transactions are executed in accordance with management's general or specific authorization and are recorded as necessary to maintain accountability for assets.
In addition, the investigation includes a parallel assessment of Torchlight's exposure under the Canadian Corruption of Foreign Public Officials Act ("CFPOA"), S.C. 1998, c. 34, which is being coordinated with Bartlett Keene & Ostrander LLP ("BKO") of Toronto, under the direction of Richard Bartlett III, lead partner. The investigation also includes consideration of applicable Ganaran anti-corruption statutes and regulatory provisions, coordinated with Ndong & Keïta Cabinet Juridique ("N&K") of Libreville, Republic of Ganara, under the direction of Maître Salif Ndong, lead partner. A review of TGH's corporate governance matters under BVI law is being conducted in coordination with Hargrove Whitfield LLP ("HW") of Road Town, Tortola, BVI, under the direction of Catherine Whitfield, lead partner.
B. Investigation Work Streams
The investigation is organized into five principal work streams, each of which is described below.
1. Document Collection and Review
A litigation hold notice was issued on March 17, 2025, covering all documents from January 1, 2018, to the present, in the possession, custody, or control of Torchlight, TGH, and TGM. The litigation hold applies to all forms of electronically stored information ("ESI"), including email, instant messages, documents stored on corporate servers and shared drives, financial system data, and any other potentially responsive materials.
Twenty-three custodians have been identified for purposes of document collection: twelve current employees of Torchlight, TGH, or TGM; four former employees (including Delacroix and Osei-Bonsu, to the extent documents remain in the Company's possession); and seven shared or departmental mailboxes and file repositories. Custodians were selected based on their roles, responsibilities, and potential involvement in or knowledge of the transactions at issue.
Marlowe Asset Management Digital Forensics Inc. ("Marlowe Asset Management") was retained on March 14, 2025, for forensic data collection, processing, and hosting. Rachel Hartley is the engagement lead at Marlowe Asset Management. The total volume of data collected to date is approximately 1.625 terabytes, comprising approximately 1.2 TB of email data, 340 GB of financial systems data (extracted from Torchlight's Aldermere Services Inc. system and TGM's local accounting records), and 85 GB of shared-drive documents. The data has been processed, de-duplicated, and loaded into a review platform for attorney review. Document review is being conducted by the Calderwood & Harkness investigation team using predictive coding and targeted keyword searches, supplemented by linear review of priority custodians and document categories.
2. Forensic Accounting
Pinnacle Forensic Advisory LLC ("Pinnacle") was retained on March 12, 2025, for a comprehensive forensic review of the financial records of TGH and TGM, including Crestfield invoices, wire transfer records, cash disbursements, and general ledger entries from 2019 through 2024. The engagement partner at Pinnacle is Dr. Leonard Strauss, CPA, CFF. Pinnacle's estimated fees for the engagement are $1.8 million to $2.4 million. The work completed to date and work remaining are described in detail in Section VIII of this report.
3. Witness Interviews
Two waves of witness interviews have been completed to date. The first wave was conducted in Toronto from April 7 through April 11, 2025, and included interviews with three corporate-level personnel. The second wave was conducted via video conference from April 28 through May 2, 2025, and included interviews with two TGM-based personnel located in the Republic of Ganara. All interviews were conducted in accordance with Upjohn / corporate Miranda protocols, as described further in Section VII.A below. A detailed summary of each interview is provided in Section VII. Two key subjects — Delacroix and Osei-Bonsu — have declined or not yet responded to interview requests, as also described in Section VII.D.
4. Legal Analysis
Calderwood & Harkness is conducting a comprehensive legal analysis addressing the following subjects: (a) analysis of the Crestfield Advisory Agreement and its terms; (b) identification and cataloguing of red flags associated with the Crestfield engagement and the direct TGM payments; (c) assessment of FCPA books and records and internal controls compliance; (d) evaluation of Torchlight's anti-corruption compliance program against the DOJ/SEC Evaluation of Corporate Compliance Programs guidance; and (e) analysis of the benefits, risks, and strategic considerations associated with voluntary self-disclosure to the DOJ under the Corporate Enforcement Policy.
5. Multi-Jurisdictional Coordination
Given the cross-border nature of the conduct at issue and the multiple jurisdictions implicated, Calderwood & Harkness is coordinating with the following counsel:
• Bartlett Keene & Ostrander LLP (Richard Bartlett III, lead partner, Toronto) — Canadian law, including CFPOA exposure and Canadian securities disclosure obligations.
• Hargrove Whitfield LLP (Catherine Whitfield, lead partner, Road Town, Tortola, BVI) — BVI corporate records, TGH board resolutions, and potential BVI regulatory matters.
• Ndong & Keïta Cabinet Juridique (Maître Salif Ndong, lead partner, Libreville, Republic of Ganara) — Ganaran anti-corruption statutes, mining regulatory risk, and potential administrative proceedings by the Ministry of Mines.
Regular coordination calls among all counsel are held on a bi-weekly basis, with ad hoc consultations as needed. Calderwood & Harkness serves as lead coordinating counsel for the investigation.
C. Government Proceedings Status
SEC Investigation. The SEC issued a formal order of investigation (File No. HO-14892) on January 22, 2025. A formal document subpoena was served on Torchlight on February 3, 2025, requesting a comprehensive range of documents relating to, among other things, Torchlight's operations in the Republic of Ganara, all engagements with government-facing agents or intermediaries, the Crestfield Advisory Agreement, all communications between Torchlight personnel and Crestfield or Renard, TGH and TGM financial records, and Torchlight's anti-corruption compliance program.
Calderwood & Harkness submitted the first rolling production of responsive documents to the SEC on April 14, 2025. A privilege log is being prepared for documents withheld on the basis of attorney-client privilege or attorney work product. Document production to the SEC is ongoing and will continue on a rolling basis.
DOJ Investigation. The DOJ Fraud Section sent a voluntary document preservation request to Torchlight on February 14, 2025, under the authority of Assistant Chief Margaret Calloway of the FCPA Unit. Calderwood & Harkness acknowledged receipt of the preservation request and confirmed the implementation of Torchlight's litigation hold via letter to Assistant Chief Calloway dated March 18, 2025. As of the date of this report, no subpoenas have been issued by the DOJ to Torchlight, and the DOJ has not taken formal enforcement action. The DOJ's inquiry remains at a preliminary stage, though the voluntary preservation request signals active interest in the matter.
Torchlight 8-K Disclosure
Torchlight filed a Form 8-K with the SEC on February 7, 2025, disclosing the existence of the SEC investigation. The filing stated that the Company was cooperating with the SEC and had retained outside counsel to conduct an internal investigation. Following the 8-K disclosure, Torchlight's share price declined from a closing price of CAD $34.80 on February 6, 2025, to a closing price of CAD $27.15 on February 10, 2025 — a decline of 22.0%, representing an approximate market capitalization loss of CAD $1.28 billion. The market impact is discussed further in Section XII.D below.
IV. FINDINGS TO DATE — THE CRESTFIELD CHANNEL
A. The Government Relations Advisory Agreement
The Crestfield Advisory Agreement (the "Agreement") was executed on April 12, 2019, between TGH, as client, and Crestfield Advisory Partners Ltd. ("Crestfield"), as advisor. The Agreement defined Crestfield's scope of services as "government relations advisory services, including regulatory liaison, permit facilitation, and stakeholder engagement in the Republic of Ganara."
The compensation structure set forth in the Agreement consisted of the following components:
(i) A monthly retainer of $15,000;
(ii) A success fee of $100,000 per permit obtained through Crestfield's advisory services; and
(iii) Reimbursement of expenses at cost, capped at $25,000 per quarter.
Based on these terms, the contractual maximum payable to Crestfield over the period from April 2019 through October 2024 (a period of approximately 66 months, encompassing 22 calendar quarters) would have been approximately $2,040,000, calculated as follows:
• Monthly retainers: $15,000 × 66 months = $990,000
• Success fees: $100,000 × 5 permits = $500,000
• Expenses: $25,000 × 22 quarters = $550,000 (maximum)
• Total contractual maximum: $2,040,000
However, the actual amounts invoiced by Crestfield and paid by TGH totaled $3,210,000 — an excess of $1,170,000 over the contractual maximum. Calderwood & Harkness's review of corporate records has not identified any contract amendment, addendum, side letter, or formal approval authorizing payments in excess of the contractual maximums. The excess payments were processed without any documented justification or explanation in the corporate files.
With respect to anti-corruption protections, the Agreement contained a general compliance warranty at Clause 9.2, under which Crestfield warranted compliance with "all applicable anti-corruption laws." However, Calderwood & Harkness notes the following significant deficiencies in the Agreement's anti-corruption provisions:
(a) The Agreement contained no specific reference to the FCPA, the CFPOA, or any other named anti-corruption statute;
(b) The Agreement contained no audit rights clause that would have permitted Torchlight or its designee to inspect Crestfield's books and records or to verify the end-use of funds paid to Crestfield;
(c) The Agreement contained no requirement that Crestfield disclose its relationships with government officials or report on the disposition of funds received from TGH; and
(d) The Agreement contained no termination-for-cause provision specifically tied to anti-corruption violations.
Furthermore, the investigation has revealed that Crestfield was selected without any competitive bidding process or alternative-vendor evaluation. Renard was personally introduced to TGH by Marcus Delacroix; no documentation of the selection rationale, no comparative vendor analysis, and no compliance review of the Crestfield engagement have been identified in Torchlight's corporate records. The absence of any documented selection process is a significant red flag, particularly given the government-facing nature of the services to be provided.
B. Crestfield Payment Analysis
Total payments from TGH to Crestfield over the period from 2019 through October 2024 amounted to $3,210,000, paid across 24 invoices over six years. The annual breakdown of these payments is as follows:
All payments were wired from TGH's account at Meridian Commercial Bank (BVI), Account No. 7740-2281-0056, to Crestfield's bank accounts in Mauritius. The specific Crestfield account details are set forth in the Crestfield Invoice Register attached as Appendix A to this report.
Based on Pinnacle's forensic accounting analysis, which has traced a substantial portion of the payment flows from Crestfield's Mauritius accounts, an estimated $2,410,000 — approximately 75% of the $3,210,000 total — was diverted to Ganaran government officials or their associated accounts. The remaining approximately $800,000 appears to represent compensation retained by Renard and the legitimate operating costs of Crestfield, though this allocation remains under further analysis and may be revised as additional tracing data becomes available.
The investigation has identified significant deficiencies in the invoice approval chain. Under Torchlight's Delegation of Authority Policy, any invoice exceeding $50,000 requires dual approval — that is, sign-off by at least two authorized signatories. Of the 24 Crestfield invoices, 14 exceeded the $50,000 threshold, with individual invoice amounts ranging from $55,000 to $185,000 for those above the threshold. Multiple invoices in this category were approved solely by Osei-Bonsu without secondary authorization. No escalation or exception report was generated by Torchlight's systems or compliance function to flag this circumvention of the dual-approval requirement.
An additional pattern of concern is the strong timing correlation between Crestfield invoices and permit issuances. Pinnacle's timeline correlation analysis, which mapped the dates of Crestfield invoices against the dates of permit issuances, confirmed that Crestfield invoice activity spiked in the 30 to 60 days preceding each permit issuance date. This clustering strongly suggests that the payments were linked to specific permit outcomes rather than to ongoing advisory services, and is consistent with the payment of bribes in anticipation of favorable government action.
C. Crestfield — Entity Red Flags
Crestfield Advisory Partners Ltd. was incorporated in the Republic of Mauritius in 2016. Its registered address is 7th Floor, Nexus Tower, Ebène Cybercity, Port Louis, Mauritius — a registered-agent office that does not constitute operational premises. Calderwood & Harkness's investigation has revealed that Crestfield has no website, no employees other than Renard himself, and no discernible operational infrastructure — no office space, no support staff, no published marketing materials, and no verifiable track record of advisory engagements other than the TGH engagement.
The sole beneficial owner and operator of Crestfield is Jean-Philippe Renard, a former diplomat with personal connections to Ganaran government officials established during his prior diplomatic service. Renard's personal relationships with the very officials to whom payments are alleged to have been directed is a critical red flag that should have been identified through even a basic due diligence process.
No due diligence file on Crestfield exists in Torchlight's compliance records. Despite the government-facing nature of Crestfield's engagement, the Mauritius incorporation, Renard's diplomatic background, and the magnitude of the fees involved, Torchlight conducted no background check, no beneficial ownership verification, no sanctions screening, no reference check, and no risk assessment prior to or at any point during the six-year engagement. This represents a fundamental failure of Torchlight's third-party due diligence obligations.
V. FINDINGS TO DATE — DIRECT AND IN-KIND PAYMENTS FROM TGM
A. Cash Withdrawals (GL 7450 — "Community Relations Expenses")
Between 2019 and 2024, TGM made cash withdrawals totaling $890,000 from its account at Regency International Bank (Ganara), Account No. GAN-4419-8837. These withdrawals were booked under general ledger code 7450, which is described in Torchlight's chart of accounts as "Community Relations Expenses" — a broadly defined, catch-all category used across multiple Torchlight subsidiaries for expenditures related to community engagement, local development initiatives, and similar activities.
Pinnacle's forensic review of the GL 7450 entries has not identified corresponding community development programs, event records, vendor invoices, third-party receipts, or other supporting documentation that would substantiate these expenditures as legitimate community relations activities. In many instances, the only documentation supporting individual cash withdrawal entries is a one-line description such as "community liaison" or "stakeholder engagement" and Osei-Bonsu's authorization signature. The absence of supporting documentation for nearly $900,000 in cash withdrawals over a five-year period is, in itself, a significant indicator of potential misuse.
The cash withdrawals were authorized primarily by Osei-Bonsu and were processed operationally by Thomas Achebe, Finance Director of TGM. As described in Section VII below, Achebe has confirmed in his interview that he processed the withdrawals on Osei-Bonsu's direction and that he raised concerns about the lack of documentation with Osei-Bonsu on at least two occasions — approximately in mid-2021 and again in early 2023 — but was instructed to continue processing the withdrawals. Achebe stated that he did not personally witness the delivery of cash to government officials.
B. In-Kind Benefits
In addition to the cash withdrawals, TGM provided approximately $630,000 in in-kind benefits between 2019 and 2024. These expenditures were booked across two general ledger codes — GL 7200 (Vehicle and Equipment Expenses) and GL 7310 (Travel and Entertainment) — and were recorded as though they were legitimate TGM operational expenses.
The in-kind benefits include, but are not limited to, the purchase of vehicles and the provision of travel expenses to Ganaran government officials. Procurement records reviewed during the investigation, and confirmed during the interview of Kwame Mensah (Procurement Manager, TGM), indicate that vehicles were purchased through TGM's ordinary procurement process but were delivered to addresses associated with government officials rather than to TGM operational sites. Specifically, Mensah identified Northpoint Enterprises Land Cruiser vehicles procured in 2020 and 2022, with delivery addresses matching the personal residences of Col. Ibrahim Konaté (former Regional Prefect, Kousseri Province) and at least one other unidentified provincial official. Travel arrangements — including international flights and hotel accommodations — were also procured by TGM for the benefit of government officials, again recorded as TGM operational expenses.
As with the cash withdrawals, the in-kind benefits were provided on the instruction of Osei-Bonsu, who directed the procurement process. No gift or hospitality log for TGM was produced during the investigation, and the in-kind benefits were not captured in any tracking system or reported to Torchlight's compliance function.
C. Total Suspected Improper Payments — Summary
The total suspected improper payments identified to date are summarized as follows:
Calderwood & Harkness notes that the $4,730,000 figure represents the total amount of payments for which the investigation has identified evidence of potential impropriety. Of the $3,210,000 paid to Crestfield, approximately $2,410,000 is estimated to have been diverted to government officials, with the balance retained by Renard or applied to Crestfield's operations. However, for purposes of financial exposure calculations, the full $3,210,000 is relevant to the books and records analysis, as the entire amount was improperly recorded and inadequately documented regardless of the ultimate disposition of the funds.
D. Identified Government Officials — Recipient Analysis
Based on the investigation to date, including forensic accounting tracing and witness interview testimony, the following Ganaran government officials have been identified as the primary recipients of the suspected improper payments:
Hon. Boubacar Diallo, who served as Minister of Mines and Natural Resources of the Republic of Ganara from 2018 through 2023, received approximately $1,850,000. Diallo was the senior government official with authority over the issuance of mining licenses during the critical period when the Kousseri and Dembélé permits were obtained. Payments to Diallo were channeled primarily through Crestfield and intermediary accounts identified by Pinnacle's downstream tracing analysis. Diallo left government service in 2023 and is believed to reside in the Republic of Ganara.
Amadou Traoré, who has served as Director of Environmental Permitting at the Ministry of Environment since 2017, received approximately $620,000. Traoré was the senior official responsible for the issuance of the Kousseri Environmental Impact Approval (Certificate No. ENV-KCC-2020-113). Payments to Traoré were made through a combination of Crestfield payments and direct wire transfers.
Col. Ibrahim Konaté, who served as Regional Prefect of Kousseri Province from 2019 through 2023, received approximately $340,000 in cash and in-kind benefits, including the vehicle purchases described in Section V.B above. Konaté, as Regional Prefect, exercised administrative authority over the Kousseri Province where the Kousseri Copper-Cobalt Complex is located.
The remaining approximately $1,920,000 was directed to other officials or unidentified recipients. The identification and tracing of payments to these additional recipients is an active work stream, and Pinnacle's downstream tracing analysis is ongoing.
VI. SUMMARY OF RED FLAGS IDENTIFIED
The investigation has identified nine principal red flags associated with the Crestfield engagement and the direct TGM payments. These red flags are catalogued below and are cross-referenced to the detailed discussion in other sections of this report. A summary table is also provided as Appendix C.
1. Excess payments without contract amendment. Crestfield invoices totaled $3,210,000, exceeding the contractual maximum of $2,040,000 by $1,170,000. No contract amendment, addendum, or other formal authorization for payments in excess of the contractual maximums has been identified in corporate records. See Section IV.A.
2. No competitive selection process. Crestfield was engaged without any competitive bidding, alternative-vendor evaluation, or documented selection rationale. Renard was personally introduced by Delacroix, and the engagement was approved without compliance review. See Section IV.A.
3. Lack of legitimate operating indicia. Crestfield lacked the indicia of a legitimate operating entity. The entity had no website, no employees other than Renard, no operational office (only a registered-agent address in Mauritius), and no discernible track record of advisory services beyond the TGH engagement. See Section IV.C.
4. Circumvention of dual-approval threshold. Fourteen of the twenty-four Crestfield invoices exceeded the $50,000 single-approval threshold under Torchlight's Delegation of Authority Policy, yet were approved solely by Osei-Bonsu without the required dual authorization. No exception report or escalation was triggered. See Sections IV.B and IX.B.
5. Unsupported cash withdrawals under vague GL code. TGM cash withdrawals totaling $890,000 over five years were booked under GL code 7450 ("Community Relations Expenses"), a broadly defined category, with no supporting documentation, community program records, or third-party receipts. See Section V.A.
6. Timing correlation between payments and permits. Crestfield invoice activity spiked in the 30 to 60 days preceding each of the five permit issuances, strongly suggesting that the payments were tied to specific, anticipated government actions rather than ongoing advisory services. See Section IV.B.
7. Use of personal email to circumvent corporate recordkeeping. Delacroix used his personal (non-company) email account in at least 37 identified communications with Renard, thereby circumventing Torchlight's corporate email system and recordkeeping controls. The content of these communications is partially available through Renard's responses found in company custodian files. See Section VII.
8. Absence of due diligence file. No due diligence file on Crestfield exists in Torchlight's compliance records. Despite the government-facing nature of the engagement, no background check, beneficial ownership verification, sanctions screening, or risk assessment was conducted at any point during the six-year relationship. See Sections IV.C and IX.B.
9. In-kind benefits delivered to government officials. Vehicles and travel benefits procured through TGM's procurement process were delivered to personal addresses of government officials rather than to TGM operational sites, and were recorded as though they were legitimate TGM operational expenses. See Section V.B.
These red flags, considered individually and collectively, paint a picture of a payment scheme that was facilitated by significant gaps in Torchlight's internal controls and compliance infrastructure at the subsidiary level, and that was enabled by the actions of specific individuals who exploited those gaps.
VII. WITNESS INTERVIEW SUMMARIES
A. Interview Protocols
All witness interviews in connection with this investigation have been conducted in accordance with Upjohn / corporate Miranda protocols. Prior to the commencement of each interview, the witness was advised of the following:
(a) Calderwood & Harkness LLP represents Torchlight Mining Corp. and does not represent the individual witness;
(b) The purpose of the interview is to gather information in connection with the internal investigation being conducted at the direction of the Audit Committee;
(c) The interview is protected by the attorney-client privilege, which belongs to the Company — not to the individual witness;
(d) The Company may, in its sole discretion, choose to waive the attorney-client privilege and disclose the contents of the interview to third parties, including government authorities; and
(e) The witness is encouraged to be truthful and forthcoming, and the witness has the right to consult with personal legal counsel at any time.
Each witness was asked to confirm his or her understanding of these advisements before the interview proceeded. A two-attorney requirement was observed for all interviews — that is, at least two Calderwood & Harkness attorneys were present for each interview. Interview memoranda were prepared promptly following each interview and are maintained as attorney work product in Calderwood & Harkness's investigation files.
B. First Wave — Toronto (April 7–11, 2025)
1. Nadia Berenson, VP Compliance and Ethics (April 7, 2025)
Nadia Berenson, Vice President of Compliance and Ethics for Torchlight, was interviewed on April 7, 2025, in Calderwood & Harkness's Toronto conference facilities. The interview was conducted by Conrad Ashby (Responsible Partner) and Steven Hollander (Lead Associate). Berenson was not represented by individual counsel.
Berenson confirmed receipt of the anonymous whistleblower complaint (Report ID: SCH-2024-08-4417) on August 19, 2024, through the Sentinel Compliance Solutions ethics hotline. She described the complaint as specific enough to warrant immediate escalation and stated that she forwarded the complaint to Audit Committee Chair Dr. Eleanor Fiske on August 26, 2024, consistent with Torchlight's established whistleblower response protocols. Berenson noted that the complaint was unusual in its level of specificity — it referenced a "fake consulting company in Mauritius" and identified the "country manager and VP from Toronto" as participants — which elevated her concern.
Berenson stated that she had no prior direct knowledge of the Crestfield engagement or the specific payments at issue. She described Torchlight's global anti-corruption compliance program, which she has overseen since her appointment to the VP Compliance and Ethics role in 2021. The program includes a Code of Conduct, an Anti-Corruption Policy, Third-Party Due Diligence Procedures, a Delegation of Authority Policy, gift and hospitality tracking mechanisms, the Sentinel ethics hotline, and periodic training. Berenson characterized the program as robust at the corporate level but acknowledged that implementation and enforcement at the subsidiary level — particularly in West Africa — had been uneven.
With respect to training, Berenson acknowledged that the West African operations had not received in-person anti-corruption training since 2022. Subsequent training was delivered through online modules only, and she conceded that completion rates for TGM staff were not systematically tracked. She expressed concern that the transition to online-only training, which was driven in part by pandemic-related travel restrictions that persisted into 2022 and were not revisited thereafter, may have contributed to a diminished compliance culture at TGM.
Berenson expressed particular concerns about two aspects of the subsidiary-level operations: first, Delacroix's apparent circumvention of compliance review processes in West African matters, which she characterized as a pattern rather than an isolated event; and second, Osei-Bonsu's degree of autonomy in approving local expenditures, which she described as exceeding what she understood to be the norm for other Torchlight country managers. She stated, however, that she did not have visibility into the specific Crestfield payments or TGM cash withdrawals prior to the whistleblower complaint.
2. Diane Fournier, VP Finance (April 8, 2025)
Diane Fournier, Vice President of Finance for Torchlight, was interviewed on April 8, 2025. The interview was conducted by Steven Hollander (Lead Associate) and Jasmine Thornton (Working Associate). Fournier was not represented by individual counsel.
Fournier is responsible for the consolidation of TGH/TGM financial data into Torchlight's consolidated financial statements. She stated that she was aware of the recurring Crestfield invoices, which appeared in TGH's financial records as consulting fees for government relations services in West Africa. Fournier understood these to be legitimate advisory fees and did not flag them for further review. She explained that her consolidation process relied upon subsidiary-level approval processes and that she did not independently verify whether subsidiary-level invoices had received the required dual approval.
When asked about the $1,170,000 excess over the contractual maximum, Fournier stated that she was not aware that the cumulative Crestfield payments had exceeded the contractual cap. She explained that her office does not routinely compare cumulative payments to individual third parties against contractual maximums; rather, she relies on subsidiary-level management to ensure that contractual limits are observed and that any amendments or overages are properly documented and approved.
Fournier confirmed that GL code 7450 ("Community Relations Expenses") is a broadly defined category used across multiple Torchlight subsidiaries for a range of community-engagement expenditures. She stated that TGM's GL 7450 entries were not separately flagged for enhanced review and were consolidated into Torchlight's financial statements in the ordinary course. She acknowledged that the vague nature of the GL 7450 description provided limited visibility into the underlying transactions.
Finally, Fournier confirmed that no contract amendment was on file authorizing payments to Crestfield above the $2,040,000 contractual cap, and that she had no explanation for how payments of $3,210,000 were processed without triggering an internal review.
3. Patricia Sung, General Counsel and Corporate Secretary (April 9, 2025)
Patricia Sung, General Counsel and Corporate Secretary of Torchlight, was interviewed on April 9, 2025. The interview was conducted by Conrad Ashby (Responsible Partner) and Steven Hollander (Lead Associate). Sung was not represented by individual counsel for purposes of this interview but was advised of her right to retain personal counsel.
Sung described her role in the Company's initial response to the whistleblower complaint and the subsequent Audit Committee review. She stated that she became aware of the Crestfield engagement in general terms when it was initiated in 2019 but did not review the Agreement in detail at that time. She noted that the engagement was managed at the subsidiary level by Delacroix and Osei-Bonsu and that it did not come to her attention for legal review, which she acknowledged was itself a process gap.
Sung confirmed that she recommended the retention of external investigation counsel following the SEC's issuance of the formal order of investigation on January 22, 2025. She described the process by which the Audit Committee selected Calderwood & Harkness for the engagement.
With respect to Delacroix's departure, Sung stated that Delacroix was informed of the existence of the preliminary internal review and subsequently submitted his resignation via written notice on November 15, 2024. Sung characterized the departure as voluntary, noting that the Company did not terminate Delacroix's employment. However, she observed that Delacroix did not provide a substantive exit interview and declined to discuss the matters under review. Sung stated that the timing and circumstances of Delacroix's departure — immediately upon learning of the internal review — raised concerns.
Sung also discussed Torchlight's response to the SEC subpoena and DOJ preservation request, including the decision to file the 8-K on February 7, 2025, disclosing the SEC investigation. She stated that the decision to disclose was made in consultation with outside securities counsel and reflected the Company's assessment that the investigation was material to investors.
C. Second Wave — Ganara, via Video (April 28 – May 2, 2025)
4. Thomas Achebe, Finance Director, TGM (April 28, 2025)
Thomas Achebe, Finance Director of TGM, was interviewed via video conference on April 28, 2025. The interview was conducted by Steven Hollander (Lead Associate) and Jasmine Thornton (Working Associate). Achebe was not represented by individual counsel but was advised of his right to consult with personal counsel.
Achebe is responsible for the day-to-day financial operations of TGM, including processing invoices, managing TGM's bank accounts at Regency International Bank (Account No. GAN-4419-8837), and preparing TGM's financial reports for consolidation at the parent level. He stated that he processed Crestfield invoices upon receipt of approved payment requests from Osei-Bonsu, and that he processed cash withdrawals under GL 7450 on Osei-Bonsu's direction.
With respect to the cash withdrawals, Achebe confirmed that Osei-Bonsu directed him to process withdrawals for purposes described as "community liaison" and "local stakeholder engagement." Achebe stated that he did not personally witness the delivery of cash to government officials and did not have direct knowledge of the ultimate use of the funds. He did, however, acknowledge that some of the cash withdrawal requests lacked supporting documentation — no vendor invoices, no event records, no receipts — and that this troubled him.
Achebe stated that he raised concerns with Osei-Bonsu on at least two occasions — approximately in mid-2021 and again in early 2023 — regarding the lack of documentation for the GL 7450 cash withdrawals. On both occasions, Achebe stated, Osei-Bonsu instructed him to process the withdrawals, assuring him that the expenditures were authorized and legitimate. Achebe stated that he did not escalate his concerns beyond Osei-Bonsu — to Torchlight's compliance function, to the VP Finance, or to any other corporate-level officer — because Osei-Bonsu was his direct supervisor and the senior company representative in the country.
Achebe stated that he was not involved in the negotiation or execution of the Crestfield Advisory Agreement and had no direct knowledge of the terms of that agreement or of Renard's identity or background.
5. Kwame Mensah, Procurement Manager, TGM (April 29, 2025)
Kwame Mensah, Procurement Manager of TGM, was interviewed via video conference on April 29, 2025. The interview was conducted by Steven Hollander (Lead Associate) and Jasmine Thornton (Working Associate). Mensah was not represented by individual counsel.
Mensah described his role in procuring goods and services for TGM's mining operations, including vehicles, equipment, and travel arrangements. He confirmed that he had processed procurement requests for vehicles and travel that were characterized as TGM operational needs but were, in fact, delivered to or provided for the benefit of government officials rather than for TGM operations.
Specifically, Mensah identified Northpoint Enterprises Land Cruiser vehicles procured in 2020 and 2022. In each case, the purchase order described the vehicles as being procured for TGM operational use, but Mensah confirmed that the delivery addresses specified on the purchase orders matched the personal residences of Col. Ibrahim Konaté (former Regional Prefect, Kousseri Province) and at least one other unidentified provincial official. Mensah stated that he received the procurement instructions from Osei-Bonsu and understood them to be authorized by management. He did not independently verify whether the deliveries were consistent with the stated operational purpose.
When asked about Torchlight's policies regarding gifts to government officials, Mensah stated that he was not aware of any written policy specifically prohibiting such gifts, though he acknowledged general awareness of Torchlight's Code of Conduct. He stated that he had not received specific training on anti-corruption policies as they relate to procurement activities.
D. Interviews Declined
Marcus Delacroix. Calderwood & Harkness requested a voluntary interview with Delacroix by formal correspondence addressed to his counsel, Helen Whitmore of Whitmore & Sharpe LLP (Washington, D.C.), dated March 25, 2025. By email dated April 2, 2025, Whitmore declined the interview request on behalf of Delacroix, stating that Delacroix "respectfully declines to participate in a voluntary interview at this time, citing potential criminal exposure and concerns under the Fifth Amendment to the United States Constitution." Whitmore stated that Delacroix "reserves all rights." Calderwood & Harkness notes that Delacroix's invocation of Fifth Amendment concerns, while not itself evidence of wrongdoing, is consistent with the position of an individual who faces potential personal criminal liability.
Raymond Osei-Bonsu. Calderwood & Harkness requested a voluntary interview with Osei-Bonsu by formal correspondence addressed to his counsel, Barrister Emeka Okoro of Okoro Law Chambers (Ganara), dated March 26, 2025. As of the date of this report, Okoro has not provided a formal written response to the interview request. However, informal indications received by Calderwood & Harkness through multi-jurisdictional counsel suggest that Osei-Bonsu will also decline to participate in a voluntary interview. Calderwood & Harkness will continue to monitor this matter and will report any change in status to the Audit Committee.
VIII. FORENSIC ACCOUNTING STATUS
Pinnacle Forensic Advisory LLC ("Pinnacle"), under the direction of engagement partner Dr. Leonard Strauss, CPA, CFF, was retained on March 12, 2025, to conduct a comprehensive forensic accounting review of TGH and TGM financial records in connection with the investigation. Set forth below is a summary of the forensic accounting work completed to date and the work remaining.
Work Completed to Date: