Avnel Acquisition June 2017 AVNEL TRANSACTION TRANSACTION - PowerPoint PPT Presentation

Avnel Acquisition › June 2017

AVNEL TRANSACTION TRANSACTION HIGHLIGHTS Endeavour to acquire Avnel, which owns the Kalana Gold project in Mali › An all-share transaction values Avnel at 1 2 US$122m (C$159m), representing a 48% FITS OUR premium to Avnel’s closing price on 28 FILLS OUR June 2017 STRATEGIC › Kalana is a high-quality project that fits PROJECT PORTOFLIO Endeavour’s strategic portfolio criteria PIPELINE › Strengthens Endeavour’s construction CRITERIA pipeline following the completion of the Hounde and Ity CIL projects and leverages its operational synergies in the region 3 4 › With robust project economics, the CORPORATE transaction will be value accretive on a Net Asset Value basis to Endeavour VALUE & OPERATING shareholders ACCRETIVE SYNERGIES › The Boards of Directors of both Endeavour and Avnel have unanimously approved the transaction 2

AVNEL TRANSACTION FITS OUR STRATEGIC PORTOFLIO CRITERIA 1 Kalana is a high-quality project GENERAL INFORMATION › Feasibility-stage project Ownership 80% Avnel; 20% Mali government M&I Resources (inclusive of reserves) 3.10Moz @ 4.07g/t › 1.2Mtpa CIL plant Reserves 1.96Moz @ 2.80g/t › Single open-pit reserve of 1.96Moz at Mine Type Open Pit 2.8 g/t Processing Rate 1.2mtpa LIFE OF MINE PRODUCTION › 18-year mine life Strip ratio, w:o 9.9 Tonnes of ore processed, Mt 21.7 › Low AISC cost operation with $730/oz Grade processed, Au g/t 2.80 over life of mine Gold content processed, Koz 1,964 Gold recovery, % 93% › After-tax NPV 5% of $321m and after-tax Gold production, Moz 1,821 Mine life, years 18 IRR of 50% based on a gold price of Average gold production, koz pa 101 koz $1,200/oz AISC, $/oz US$730/oz CAPITAL COST › Endeavour intends to re-design the Upfront capital cost, $m US$171m current feasibility study Sustaining capital cost, $m US$122m ECONOMIC RETURNS (US$1,200/oz) › Significant exploration upside After-tax Project NPV 5%, $m US$321m After-tax Project IRR, % 50% Payback, years (undiscounted) 1.1 3 Numbers presented are Based on Anvel’s the Optimised Feasibility Study dated Jan. 9, 2017

AVNEL TRANSACTION FITS OUR STRATEGIC PORTOFLIO CRITERIA 1 Kalana has potential to increase annual production to c.150kozpa › Production profile based on the Reserve life of mine plan Optimised Feasibility Study: Production AISC ‒ Average over first 5 years: 148koz 203koz at an AISC of $561/oz ‒ Average over mine life: 101koz at 170koz an AISC of $730/oz Potential for a +150kozpa operation › Endeavour intends to re-design and optimize the current feasibility 123koz 123koz 119koz study: $976/oz ‒ Expanding the plant capacity $865/oz 88koz ‒ Increase the average annual $703/oz $689/oz $676/oz $598/oz production and shorten the mine 66koz life $446/oz 53koz ‒ Integrate synergies ‒ Integrating exploration upside Pre- Year 1 Year 2 Year 3 Year 4 Year 5 Avg. years Avg. Years production 6-10 11-17 4 Numbers presented are Based on Anvel’s the Optimised Feasibility Study dated Jan. 9, 2017

AVNEL TRANSACTION FITS OUR STRATEGIC PORTOFLIO CRITERIA 1 Kalana has significant exploration upside › Kalana Main deposit still fully open at depth › The high-grade Kalanako prospect, located 2.5km northeast of the Kalana Main Project, provides potential for a satellite deposit (already hosts an Indicated resource of 119koz at 3.34 g/t) › Kalana concession covers 387km 2 and contains 27 exploration prospects with multiple geochemical anomalies › Strong regional exploration potential with multiple prospects outside of Kalana › Currently have a small unclassified resource at Djirlia 5

AVNEL TRANSACTION FITS OUR STRATEGIC PORTOFLIO CRITERIA 1 Kalana Fits Well in our “Magic Box” AISC, US$/oz $1,200/oz $1,150/oz $1,100/oz $1,050/oz Youga Cut-back SOLD $1,000/oz Tabakoto $950/oz (150-160koz) Nzema $900/oz (100-110koz) $850/oz Houndé $800/oz +250koz starting Q4-2017 Kalana Ity HL Potential $750/oz (75-80koz) Karma (125-150koz) (100-110koz) $700/oz Agbaou (175-180koz) $650/oz $600/oz $550/oz Ity CIL 165koz $500/oz starting 2019 Bubble size represents production $450/oz 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 Mine life, years Côte d’Ivoire Burkina Faso Ghana Mali 6

AVNEL TRANSACTION STRENGHTENS ENDEAVOUR’S PROJECT PIPELINE 2 Kalana will be developed after the Hounde and Ity CIL projects Proj oject con onstructio ion pi pipeli line urkina Faso Houndé - Construction period Côte d'Ivoire Ity CIL, Côte d’Ivoire - Construction period Kalana, Mali - Exploration and optimisation Kalana, Mali - Construction period Kalana, Mali Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2017 2018 2019 ise Cons Co nstructio ion team expertis › Core construction team has successfully developed projects together for +10 years › 7 projects built, $2.4B in capex › All projects delivered on time and within budget ‒ Agbaou ‒ Nzema ‒ Karma expansion ‒ Houndé (85% completed ) 7

AVNEL TRANSACTION CORPORATE & OPERATING SYNERGIES 3 Second mine in the country and 6 th in West-Africa › Endeavour’s West African presence will benefit Kalana and provide opportunities to draw on operating synergies in a country where Endeavour already has a producing mine › Synergies from operating the Kalana with the current team in Abidjan › Removal of Avnel corporate costs 8

AVNEL TRANSACTION VALUE ACCRETIVE 3 Meets equity hurdle rates and is accretive on an NAV basis NA NAV pe per sha hare acc accretio ion › Due diligence demonstrates that Av Avnel NAV AV End Endeavour r NAV AV the acquisition meets minimum hurdle rate returns when Average NAV of US$1,414m (P/NAV of Average NAV of US$253m 2,061 1.21x) (P/NAV of 0.33x) 1,834 accounting for the acquisition cost, 1,573 1,329 1,199 1,136 1,122 the initial construction costs, and 1,058 272 263 the holding / integration costs prior 223 to production › Strong returns based on current (2-May-16) (5-Jun-17) (10-Jan-17) (9-May-17) (24-May-17) (11-May-17) (30-May-17) (29-May-17) Raymond James (22-May-17) (7-Mar-17) Haywood Canaccord Cormark Haywood Peel Hunt Mackie (9-May-17) BMO Clarus Scotia RBC feasibility study with further potential to optimize the study, unlock exploration, and benefit NAV AV Ac Accr cretion to o End Endeavour from synergies NA NAV V anal alysis at US US$120 $120m Acqu quisi sition on Cost st › Strongly accretive on a NAV per Equi uity off ffer US$m US 122 Shares issued m 7.0 share basis es PF Endea deavou our sha hares m m 103.5 PF NA NAV V US US$m 1,667 Endeavour NAV / share US$ 14.65 PF NAV / share US$ 16.10 NAV per share accretion / (dilution) % 9.87% 9 Source: Market data as per 28 June 2017

AVNEL TRANSACTION TRANSACTION TERMS Transaction closing by 13 Sept 2017 › 0.0187 Endeavour shares for each Avnel share, implying a value of C$0.42 per Avnel share › Implied aggregate consideration of US$122m Offer › Offer will be conducted through a Guernsey Scheme of Arrangement › 75% present and voting, and a majority in number requirement Implied premia › 48% premium to spot › 52% premium to 20 day VWAP › Avnel shareholders will make up 6.8% of Endeavour register New › Major Avnel shareholder, Elliott, is expected to hold 4.3% of Endeavour shareholders › Total irrevocable undertakings of 72.3% Shareholder › Irrevocable undertakings to support the transaction from Fern Trust (8.9% approvals and percent), from Elliott (63.4% percent) and from Avnel’s Directors and support Officers › Shareholder approval expected on 31 August 2017 Indicative › Transaction closing by 13 Sept 2017 timeline 10 Source: Market data as per 28 June 2017