C A N A D A PROVINCE OF QUÉBEC S U P E R I O R C O U R T DISTRICT OF MONTRÉAL (Commercial Division) No.: 500-11- IN THE MATTER OF A PROPOSED ARRANGEMENT CONCERNING SEMAFO INC. PURSUANT TO SECTION 414 OF THE BUSINESS CORPORATIONS ACT , CQLR c S-31.1 (the “ QBCA ” ): SEMAFO INC. , a legal person duly continued under the laws of Québec, having its registered office at 100 Alexis- Nihon Blvd., 7th Floor, Saint-Laurent, Province of Québec, H4M 2P3, in the district of Montréal Applicant -and- ENDEAVOUR MINING CORPORATION , a legal person incorporated under the laws of the Cayman Islands, having its registered office at 27 Hospital Road, Georgetown, Grand Cayman, Cayman Islands KYI-9008 -and- ACQUISITION SEMAFO INC. , a legal person incorporated under the laws of Québec, having its registered office at 1000 rue de la Gauchetière Ouest, Suite 2500, Montréal, Province of Québec, H3B 0A2, in the district of Montréal -and- AUTORITÉ DES MARCHÉS FINANCIERS , a legal person established by the Act respecting the regulation of the financial sector, CQLR c E-6.1, having its principal place of business at 800 rue du
- 1 - Square-Victoria, 22 nd Floor, Place Victoria, Montréal, Province of Québec, H4Z 1G3, in the district of Montréal Impleaded Parties APPLICATION FOR INTERIM AND FINAL ORDERS IN CONNECTION WITH A PROPOSED ARRANGEMENT (Section 414 and ff. of the QBCA) TABLE OF CONTENTS I. INTRODUCTION ....................................................................................................... 2 II. THE PARTIES ........................................................................................................... 4 A. SEMAFO ............................................................................................................. 4 B. ENDEAVOUR ...................................................................................................... 4 III. THE CONTEMPLATED TRANSACTION .............................................................. 5 A. BACKGROUND TO THE ARRANGEMENT ........................................................ 5 B. THE EXCHANGE OF SEMAFO SHARES FOR ENDEAVOUR SHARES ............ 5 C. SEMAFO SHAREHOLDER SUPPORT ............................................................... 6 D. ENDEAVOUR SHAREHOLDER SUPPORT ........................................................ 7 IV. THE PLAN OF ARRANGEMENT .......................................................................... 8 V. DISSENT RIGHTS ............................................................................................... 12 VI. GROUNDS FOR THE ISSUANCE OF INTERIM AND FINAL ORDERS ............. 12 A. THE PLAN OF ARRANGEMENT IS AN “ARRANGEMENT” .............................. 12 B. SEMAFO IS NOT INSOLVENT AND IS ABLE TO PAY ITS LIABILITIES ........... 12 C. THE ARRANGEMENT IS THE ONLY PRACTICABLE WAY ............................. 12 VII. FAIRNESS AND REASONABLENESS OF THE ARRANGEMENT ................... 13 A. UNANIMOUS RECOMMENDATION OF THE SEMAFO SPECIAL COMMITTEE AND UNANIMOUS APPROVAL BY THE SEMAFO BOARD ...................................... 13 B. FAIRNESS OPINIONS FROM MAXIT CAPITAL AND NATIONAL BANK FINANCIAL ................................................................................................................ 14 C. THE SIGNIFICANT PREMIUM TO THE SEMAFO SHAREHOLDERS .............. 15 VIII. NECESSITY TO HOLD THE SEMAFO MEETING IN A VIRTUAL-ONLY FORMAT ....................................................................................................................... 15 A. THE PANDEMIC AND CURRENT GOVERNMENTAL GUIDELINES, DECREES AND ORDERS ........................................................................................................... 16
- 2 - B. GROUNDS FOR THE SEMAFO MEETING TO BE HELD IN A VIRTUAL- FORMAT ONLY.......................................................................................................... 16 C. THE COURT’S PERMISSION IS REQUIRED ................................................... 17 D. THE VIRTUAL-ONLY FORMAT PROPOSED BY SEMAFO .............................. 17 IX. NOTICE TO THE AMF ......................................................................................... 19 X. THE ORDERS SOUGHT ..................................................................................... 19 TO THE HONOURABLE MARIE-ANNE PAQUETTE, J.S.C., SITTING IN THE COMMERCIAL DIVISION IN AND FOR THE DISTRICT OF MONTRÉAL, THE APPLICANT RESPECTFULLY SUBMITS AS FOLLOWS: I. INTRODUCTION 1. On March 23, 2020, the Applicant SEMAFO Inc. (“ SEMAFO ”) and the Impleaded Party Endeavour Mining Corporation (“ Endeavour ”) announced that they entered into a definitive agreement whereby Endeavour has agreed to acquire all of the issued and outstanding common shares in the share capital of SEMAFO (the “ SEMAFO Shares ”), by way of a plan of arrangement under the QBCA (the “ Arrangement ”). 2. Pursuant to the Arrangement, SEMAFO Shares will be exchanged at a ratio of 0.1422 of an Endeavour ordinary share (each whole such share, an “ Endeavour Share ”) for one SEMAFO Share (the “ Exchange Ratio ”). 3. The Exchange Ratio represents a premium of approximately 27% based on the 20-day volume weighted average price of both companies for the period ended March 20, 2020, with an implied equity value of SEMAFO equal to $1.0 billion based on the Endeavour Share’s closing price on March 20, 2020. 4. Immediately following the Arrangement, the current Endeavour Shareholders (as defined below) and the current SEMAFO Shareholders (as defined below) will own approximately 70% and 30%, respectively, of the combined entity on a fully-diluted in-the-money basis. 5. The contemplated transaction will be consummated through an orderly sequence of transactions, which includes a statutory plan of arrangement pursuant to Section 414 of the QBCA proposed by SEMAFO to the holders of the SEMAFO Shares (the “ SEMAFO Shareholders ”) at the SEMAFO Meeting (as defined below) on May 28, 2020, which is the subject of the present Application. 6. On the same day, the holders of the Endeavour Shares (the “ Endeavour Shareholders ”) will be asked to vote upon and approve, among other things, the Endeavour Share Issuance Resolution (as defined below) to allow for the issuance
- 3 - of Endeavour Shares. The issuance of Endeavour Shares is not subject to Court approval and is not subject to the present Application. 7. As such, in connection with the Arrangement, SEMAFO seeks the following Orders from this Court: (a) as a first step, an interim order pursuant to Section 414 of the QBCA (the “ Interim Order ”) governing various procedural matters, including the conduct of the SEMAFO Meeting where the SEMAFO Shareholders will be asked to vote upon and approve the SEMAFO Arrangement Resolution (as defined below) in favour of the Arrangement; (b) as a second step, a final order pursuant to Section 414 of the QBCA (the “ Final Order ”) approving and sanctioning the Arrangement; and (c) such other orders as counsel may request and this Court deems appropriate. 8. SEFAMO files as Exhibit P-1 , en liasse , a draft Notice of Special Meetings of Shareholders of SEMAFO Inc. and Shareholders of Endeavour Mining Corporation and Joint Management Information Circular and attachments thereto (collectively, the “ Circular ”), which includes the following related documents and materials (in draft form): (a) the Notice of the Special Meeting of Shareholders of SEMAFO Inc.; (b) the Circular, including the following appendices thereto: Appendix “A” SEMAFO Arrangement Resolution; Appendix “B” Endeavour Share Issuance Resolution; Appendix “D” Interim Order; Appendix “F” Plan of Arrangement; Appendix “G” Fairness Opinion of Maxit Capital LP; Appendix “H” Fairness Opinion of National Bank Financial; Appendix “M” Extracts of Chapter XIV of the QBCA; Appendix “N” Comparison of Rights under the QBCA and the Cayman Companies Law 9. The terms and conditions of the contemplated transaction are set out in the arrangement agreement dated March 23, 2020 entered into between SEMAFO and Endeavour, together with Schedules “A” to “D” (collectively, the “ Arrangement Agreement ”), attached as Exhibit P-2 , en liasse . The terms and conditions of the Arrangement are set out in the plan of arrangement attached as Appendix "F" of the Circular (the “ Plan of Arrangement ”). 10. For purposes of this Application, all capitalized terms used, but not otherwise defined herein, shall have the same meaning as set out in the Glossary contained in the Circular (Exhibit P-1, en liasse , at pages 135 to 149).
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