(expressed in thousands of united states dollars) (unaudited)september 30, 2016, with associated...

Three and nine months ended September 30, 2016 and 2015 (Expressed in Thousands of United States Dollars) (Unaudited)

ENDEAVOUR MINING CORPORATION Management’s Discussion and Analysis of Results of Operations and Financial Condition for the three and nine months ended September 30, 2016

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Contents

I. BUSINESS OVERVIEW ............................................................................................................... 3

A. Operations description .................................................................................................................... 3

B. Strategy summary ............................................................................................................................ 4

II. THIRD QUARTER CORPORATE HIGHLIGHTS ............................................................................... 4

A. Corporate highlights ........................................................................................................................ 4

B. Quarterly highlights for operating assets ........................................................................................ 6

III. GUIDANCE ............................................................................................................................... 7

IV. OPERATIONS REVIEW ............................................................................................................... 8

A. Heath, Safety, Environment and Corporate Responsibility ............................................................. 8

B. Consolidated reserves and resources .............................................................................................. 8

C. Continuing operations ..................................................................................................................... 9

1. Agbaou Gold Mine, Côte d’Ivoire ........................................................................................... 9

2. Nzema Gold Mine, Ghana ................................................................................................... 10

3. Tabakoto Gold Mine, Mali ................................................................................................... 12

4. Ity Gold Mine, Côte d’Ivoire ................................................................................................. 14

D. Discontinued operations ............................................................................................................... 16

1. Youga Gold Mine, Burkina Faso .......................................................................................... 16

E. Pre‐production review ................................................................................................................... 17

1. Karma Gold Mine, Burkina Faso .......................................................................................... 17

F. Development project review ......................................................................................................... 18

1. Houndé Project, Burkina Faso ............................................................................................. 18

2. Ity CIL Project, Côte d’Ivoire ................................................................................................. 20

G. Exploration Review ........................................................................................................................ 21

1. Agbaou, Côte d’Ivoire .......................................................................................................... 21

2. Tabakoto Gold Mine, Mali ................................................................................................... 22

3. Ity Gold Mine, Côte d’Ivoire ................................................................................................. 23

4. Karma Gold Mine, Burkina Faso .......................................................................................... 25

5. Houndé Project, Burkina Faso ............................................................................................. 25

6. Nzema Gold Mine, Ghana ................................................................................................... 25

V. RESULTS FOR THE PERIOD ...................................................................................................... 26

A. Statement of comprehensive income ........................................................................................... 26

B. Cash flow ....................................................................................................................................... 27

C. Balance sheet ................................................................................................................................. 29

1. Working Capital ................................................................................................................... 29

2. Net Debt Position ................................................................................................................. 30


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3. Equity and Capital ............................................................................................................... 30

4. Project financing .................................................................................................................. 31

5. Financial instruments .......................................................................................................... 31

6. Provisions ............................................................................................................................. 32

D. Accounting policies ........................................................................................................................ 32

1. Accounting policies overview .............................................................................................. 32

2. Critical accounting policies and estimates .......................................................................... 32

3. Key sources of estimation uncertainty ................................................................................ 33

VI. NON‐GAAP MEASURES ........................................................................................................... 35

A. All‐in sustaining margin and Operating EBITDA ............................................................................ 35

B. Cash cost per ounce of gold sold ................................................................................................... 36

C. Adjusted net earnings and adjusted net earnings per share ......................................................... 37

D. Free cash flow ................................................................................................................................ 38

E. Net debt and Net debt/OEBITDA ratio .......................................................................................... 39

VII. QUARTERLY AND ANNUAL FINANCIAL AND OPERATING RESULTS ......................................... 39

VIII.RISK FACTORS ....................................................................................................................... 40

A. Operational risks ............................................................................................................................ 40

1. Political risks ........................................................................................................................ 40

2. Mineral Reserves and Resources ......................................................................................... 41

3. Outside contractor risks ....................................................................................................... 41

B. Financial Risks ................................................................................................................................ 41

1. Credit risk ............................................................................................................................. 41

2. Liquidity risk ......................................................................................................................... 42

3. Currency risk ........................................................................................................................ 42

4. Interest rate risk .................................................................................................................. 42

5. Price risk .............................................................................................................................. 43

IX. CONTROLS AND PROCEDURES ................................................................................................ 43

A. Disclosure controls and procedures .............................................................................................. 43

B. Internal controls over financial reporting ...................................................................................... 43

C. Limitations of controls and procedures ......................................................................................... 44

APPENDIX A : DETAILED RESERVES AND RESOURCES ......................................................................... 45


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This Management’s Discussion and Analysis (“MD&A”) should be read in conjunction with Endeavour Mining Corporation’s (“Endeavour Mining” or the “Corporation”) audited consolidated financial statements for the years ended December 31, 2015 and 2014, prepared in accordance with International Financial Reporting Standards (“IFRS”) and the unaudited condensed interim consolidated financial statements of the Corporation for the three and nine months ended September 30, 2016 and 2015 (prepared in accordance with International Accounting Standard 34 ‐ Interim Financial Reporting (“IAS 34”)). This Management’s Discussion and Analysis contains “forward‐looking statements” that are subject to risk factors set out in a cautionary note contained herein. The reader is cautioned not to place undue reliance on forward‐looking statements. All figures are in United States Dollars, unless otherwise indicated. Tabular amounts are in thousands of United States Dollars, except per share amounts and where otherwise indicated. This Management’s Discussion and Analysis is prepared as of October 31, 2016. Additional information relating to the Corporation, including the Corporation’s Annual Information Form, is available on SEDAR at www.sedar.com.

I. BUSINESS OVERVIEW

A. Operations description

Endeavour Mining is a Canadian listed intermediate gold producer with five operating mines and one project under construction in West Africa. The Corporation’s operating assets for the three and nine months ended September 30, 2016 comprised of the Agbaou and Ity Gold Mines in Côte d’Ivoire, the Nzema Gold Mine in Ghana, the Tabakoto Gold Mine in Mali and the Karma Gold Mine in Burkina Faso. Endeavour Mining’s shares are listed on the Toronto Stock Exchange (symbol EDV) and quoted in the United States on the OTCQX International (symbol EDVMF). On January 11, 2016, Endeavour Mining announced that it had successfully been removed from the official list of the Australian Securities Exchange.


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B. Strategy summary

Endeavour’s medium term aim is to increase group production to over 900,000 ounces per annum and decrease its average all‐in sustaining costs (“AISC”) to approximately $800 ounces by 2018, with all mines having remaining production lives greater than 10 years.

To reach that objective, Endeavour is focused on four strategic levers to achieve this:

Driving operational excellence through a safety first approach to optimizing operations, increasing production and reducing AISC.

Developing high value projects, including the Houndé Project in Burkina Faso and the Ity Mine Carbon in Leach (“CIL”) Project in Côte d'Ivoire.

Unlocking exploration value associated with one of the largest exploration packages in West Africa.

Taking an opportunistic approach to mergers and acquisitions (“M&A”) in order to increase average life of mine, decrease AISC, secure exploration potential, improve cash‐flow per share and access cluster synergies in West Africa.

II. THIRD QUARTER CORPORATE HIGHLIGHTS

A. Corporate highlights

On July 11, 2016 the Corporation issued a total of 7,187,500 ordinary shares at a price of C$20.00 per share, which included the exercise of the underwriters’ over‐allotment option for aggregate gross proceeds of C$143.8 million ($109.7 million). The net proceeds of the offering are intended to fund Endeavour’s increased exploration strategy, the potential development of the Ity CIL project and general corporate purposes.

Since the last MD&A and the appointment of Mr. Sébastien de Montessus as CEO following the


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Corporation’s AGM in June, the Corporation has announced a number of board and executive changes. On August 2, 2016 the Corporation announced that Frank Giustra was stepping down from the board. On October 3, 2016 the Corporation announced that Livia Mahler and Olivier Colom have joined the Corporation as non‐executive directors. On October 4, 2016 the Corporation announced further streamlining of its organisational structure with the appointment of Vincent Benoit as Executive Vice President, Chief Financial Officer and Corporate Development. Additionally, the Group’s Corporate offices in Monaco, Vancouver and Paris are being consolidated into one new office in London and the Corporation has migrated its tax residency to Monaco.

On September 6, 2016, the Corporation announced that excellent progress was being made at its Houndé Gold Project in Burkina Faso. The Corporation provided an update on the signing of the mining fleet equipment financing, completion of water harvest dam construction, signing of the power offtake agreement with Sonabel, the construction of the 300‐person permanent accommodation village and detailed engineering of the processing facility.

On September 14, 2016, Endeavour Mining announced a significant discovery at its Ity mine in Cote d’Ivoire. The high‐grade Bakatouo discovery is located in proximity to the current Ity mining complex, and is considered to be the extension of the Zia Northeast and Walter deposits. It is envisaged that this deposit has the potential to supply ore to the existing heap leach operation and the potential CIL expansion project.

Also on September 14, 2016, Endeavour announced that it has consolidated an 80km underexplored corridor on‐trend with its Ity mine in Côte d’Ivoire, significantly increasing its holdings in the Ity Birimian district from 178km² to 664 km². The new Floleu (104km²) and Toulepleu (382km²) exploration tenements were obtained on a 100% ownership basis, while the previously 55%‐held Tiepleu tenement (153 km²) was re‐obtained on a 100% basis.


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B. Quarterly highlights for operating assets

The following table summarises data for the operating entities for the quarter and year to date. The gold ounces produced figures include the Youga and Karma mines (disposed in the first quarter and acquired in the second quarter, respectively), whereas these mines are excluded from all other financial data (due to Karma being in pre‐commercial production until October 1, and the Youga mine treated as discontinued operations, both of which under IFRS rules preclude them from the revenue and operating cost lines on the consolidated income statement).

Table 1: Quarterly & YTD key figures for operating entities

1. All operating data for the three and nine month periods ended September 30, 2015 include the results of the Youga mine. For the 2016 periods the only Key Performance Indicator (“KPI’“) containing the results of the Youga gold mine is gold production for the nine months ended September 2016 as the mine was sold on February 28, 2016 and therefore classified as a discontinued operation from that date onwards. Gold production subsequent to the acquisition of the Karma mine on April 26, 2016 has been included for the three and nine months ended September 30, 2016, however as the mine remains in pre‐production at September 30, 2016 all costs have been capitalized and excluded from gold sales. 2. Throughout this MD&A, cash costs, all‐in sustaining costs, operating EBITDA, adjusted earnings attributable to shareholders, all‐in sustaining margin, non‐sustaining capex, free cash flow, net debt and net debt/EBITDA are non‐GAAP financial performance measures with no standard meaning under IFRS, further discussed in the section Non‐GAAP Measures.

Gold sales were 127,507 in the third quarter of 2016 and 375,886 ounces for the nine months ended September 30, 2016, with associated revenue of $169.3 million and $473.6 million, respectively. The primary driver for increased sales compared to last year are the acquisition of the Ity mine in November 2015, improved throughput and production at Agbaou, and improved realized prices. The Karma mine declared commercial production on October 1, 2016, and has sold 34,141 ounces since the acquisition on April 27 through to September 30, 2016.

AISC per ounce decreased slightly from the previous quarter at $898 per ounce in the third quarter of 2016 and $896 per ounce for the nine months ended September 30, 2016 reflecting management’s continued commitment and focus on reducing AISC through operational excellence. The evolution of AISC is in the graph that follows.

Free cash flow before working capital, interest, taxes and project spend was $41.1 million for the third quarter of 2016 and $99.8 million nine months ended September 30, 2016

Net debt was $13.8 million as at September 30, 2016, compared with $82.8 million as at June 30, 2016 and $242.4 million as at September 30, 2015.

Colonne1September 30, 2016 June 30, 2016 September 30, 2015 September 30, 2016 September 30, 2015

Operating Data1:

Gold ounces produced 146,425 138,487 124,893 416,480 379,802

Gold ounces sold 127,507 127,602 123,002 375,886 377,468

Realized gold price ($/ounce) 1,328 1,257 1,121 1,260 1,178

Cash cost per gold ounce sold ($/ounce)2 682 698 710 690 712

All-in sustaining costs per gold ounce sold ($/ounce)2 898 901 908 896 917

Profit and Loss ($'000')

Revenues 169,313 160,373 121,826 473,644 385,073

Operating EBITDA2 61,861 55,938 32,280 166,159 110,178

Net Earnings 24,253 (15,416) 6,706 16,693 57,244

Basic earnings (loss) per share attributable to shareholders 0.16 (0.30) 0.08 (0.07) 1.04

Net adjusted earnings (loss) attributable to shareholders 2 22,909 14,090 (8,272) 51,035 28,908

Net adjusted earnings (loss) attributable to shareholders

($/share) 2 0.25 0.18 (0.20) 0.67 0.70

Cash Flow Data ($'000)

All-in sustaining margin2 54,792 45,372 23,573 136,689 82,792

Non-sustaining capex (includes exploration) 2 (57,630) (37,201) (12,185) (112,569) (25,252)

Free cash flow before Houndé, Karma, working capital,

interest and taxes2 41,078 28,914 13,642 99,796 72,500

Net debt2 13,799 82,800 242,429 - -

Net Debt / EBITDA (LTM) ratio 2 0.06 0.50 1.72

Three months ended Nine months ended


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Figure 1: AISC quarterly history

Figures are as presented in prior reporting. The Youga Gold Mine is excluded in 2016, following reclassification to discontinued operation. The data also does not include the Karma mine, which has not yet entered commercial production.

III. GUIDANCE

Following the acquisition of the Karma mine management provided updated 2016 guidance in the second quarter MD&A. Management has reviewed this guidance and has concluded that this assessment remains valid and is therefore unchanged as at September 30, 2016. An outlook for each mine is provided as part of the Operations Review that follows.

$920

$870

Guidance

$1,137

$1,059

$1,021$991 $995

$946

$898 $908

$934

$889$901

$898

$850

$900

$950

$1,000

$1,050

$1,100

$1,150

$1,200

Full year2013

Q1‐14 Q2‐14 Q3‐14 Q4‐14 Q1‐15 Q2‐15 Q3‐15 Q4‐15 Q1‐16 Q2‐16 Q3‐16


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IV. OPERATIONS REVIEW

A. Heath, Safety, Environment and Corporate Responsibility

The Corporation’s values and business principles on safety and health underpin its safety and health policy and represent the minimum guidelines for the Corporation and its employees. The Corporation has a zero harm policy which is applied at all sites, and continuous efforts are made to reduce the lost time injury frequency rate (“LTIFR”) at all the operations. The following table shows the safety statistics for the nine months ended September 30, 2016.

Table 2: 2016 EHS Statistics for year to date September 30, 2016

On July 10, 2016, an operator at the Tabakoto underground mine suffered a fall and subsequently passed away. Additionally, on August 25, a Tabakoto employee died after stepping from a slow moving bus. Management has undertaken detailed analysis of the root cause of these incidents, as well as co‐operating with the local authorities, to ensure that such events are prevented from recurring. In addition, Endeavour Mining is re‐emphasizing to all staff and management that the Corporation puts the highest priority on safe, healthy and environmentally sound work practices and systems, under the guiding principle that no job is so important that it cannot be done safely, and everyone is accountable for their own safety and for that of those around them. Endeavour Mining views itself as an integral part of the communities in which it operates, as well as a responsible development partner. Endeavour Mining works in collaboration with, and engages government, local communities and outside organizations to ensure it supports economic sustainability and social development, with projects including skills training and educational scholarships, healthcare, water and sanitation, public infrastructure maintenance, institutional capacity building and livelihood programs.

B. Consolidated reserves and resources

Detailed information regarding reserves and resources is contained in the Corporations Annual Information Form for the year ended December 31, 2015. There have been no changes in estimates since publication of this data and a summary of this information is provided in appendix A.

Incident Category Tabakoto Agbaou Nzema Karma Ity Total

Fatality 2 - - - - 2

Lost Time Injury (LTI) 1 - - - 2 3

Total Man Hours 3,072,719 1,848,749 2,146,165 2,383,115 1,713,513 11,164,261

LTIFR1 0.33 0.00 0.00 0.00 1.17 0.27

1 Lost Time Injury Frequency Rate= (Number of LTIs in the Period X 1,000,000)/ (Total man hours worked for the period)


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C. Continuing operations

1. Agbaou Gold Mine, Côte d’Ivoire

The following table summarizes the operating results of the Agbaou Gold Mine for the three months ended September 30, 2016; June 30, 2016, and September 30, 2015, and the nine months ended September 30, 2016, and September 30, 2015.

Table 3: Agbaou key performance indicators

1. Sustaining capital, cash cost per ounce sold, sustaining capital, all‐in sustaining costs, all‐in sustaining margin and “all‐in” sustaining costs per ounce are non‐GAAP financial performance measures with no standard meaning under IFRS. Refer to the Non‐GAAP Measures section for further details.

Q3‐2016 Insights:

Gold produced and sold increased by 7% and 8% respectively in the third quarter of 2016 compared with the previous quarter despite the negative impact of the rainy season.

The successful commissioning of the secondary crusher in July provided the flexibility to process higher grade transitional ore, which represented 15% of total ore processed during the quarter.

The aforementioned higher gold grades and gold‐in‐circuit balance optimization compensated for lower processed tonnage and recovery rate.

Revenues of $68.1 million increased by 13% during the period compared with the previous quarter due to increased gold sales of 3,670 ounces at a realized gold price of $1,327 in comparison with $1,262 realised in the prior quarter.

Sustaining capital of $3.3m in the quarter consisted primarily of $2.4m in waste capitalization and $0.3m spent on the Tailings Storage Facility (“TSF“) lift which commenced in the current quarter.

Unit September 30, 2016 June 30, 2016 September 30, 2015 September 30, 2016 September 30, 2015

Operating Data

Tonnes mined Kt 6,877 5,918 5,037 18,864 15,331

Tonnes of waste mined Kt 6,226 5,264 4,331 16,741 13,266

Open pit strip ratio w:o 9.56 8.05 6.13 7.89 6.42

Tonnes milled Kt 709 743 746 2,106 1,917

Average gold grade milled (grams/tonne) 2.21 2.15 2.00 2.20 2.19

Recovery (%) 96% 97% 96% 97% 97%

Gold ounces produced: 49,384 46,295 43,802 138,444 129,633

Gold ounces sold (A): 51,308 47,638 43,304 139,380 128,921

Financial Data ($'000')

Revenues 68,068 60,131 48,592 176,483 152,299

Mining costs-open pit 15,550 11,008 13,189 40,883 40,098

Processing cost 5,043 5,312 4,504 14,143 12,998

G&A cost 3,382 3,396 3,385 9,813 11,866

Waste capital (2,413) (1,158) (683) (4,525) (4,626)

Inventory adjustments and other 587 2,196 1,900 (348) (251)

Total Cash Cost (B) 22,149 20,754 22,295 59,966 60,085

Royalties 2,761 2,037 1,748 6,531 5,431

Sustaining capital1 3,324 2,206 1,187 7,973 10,801

Total All-In Sustaining Costs1 (C) 28,234 24,997 25,230 74,470 76,317

All-In Sustaining Margin1 39,834 35,134 23,362 102,013 75,982

Unit cost analysis

Realized gold price $/oz 1,327 1,262 1,122 1,266 1,181

Open pit mining cost per tonne mined $/t 2.26 1.86 2.62 2.17 2.62

Processing cost per tonne milled $/t 7.11 7.15 6.04 6.72 6.78

G&A cost per tonne milled $/t 4.77 4.57 4.54 4.66 6.19

Cash cost per ounce sold1 D=B/A $/oz 432 436 515 430 466

Mine All-In Sustaining Costs 1 E=C/A $/oz 550 525 583 534 592



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Cash costs slightly decreased from $436 to $432/oz over the previous quarter while AISC increased by 5% to $550/oz due to greater waste capitalization.

Q4‐2016 Outlook

Production is expected to increase due to the improved operating conditions following the end of the rainy season and the benefit of mixing greater quantities of higher grade transitional ore.

2. Nzema Gold Mine, Ghana

The following table summarizes the operating results of the Nzema Gold Mine for the three months ended September 30, 2016; June 30, 2016, and September 30, 2015, and the nine months ended September 30, 2016, and September 30, 2015.

Table 4: Nzema key performance indicators

1. Sustaining capital, cash cost per ounce sold, sustaining capital, all‐in sustaining costs, all‐in sustaining margin and “all‐in” sustaining costs per ounce are non‐GAAP financial performance measures

with no standard meaning under IFRS. Refer to the Non‐GAAP Measures section for further details.


Operating Data:

Tonnes mined Kt 2,848 1,852 1,323 6,410 6,707

Tonnes of waste mined Kt 2,626 1,639 1,092 5,698 5,676


Purchased Ore processed Kt 141 112 185 332 370

Purchased Ore grade (grams/tonne) 3.23 2.97 3.13 3.11 4.06

Tonnes milled Kt 424 450 450 1,333 1,337


Recovery (%) 82% 86% 85% 85% 87%




Revenues 31,391 24,906 31,454 79,987 103,407

Mining costs-open pit 11,857 9,992 6,996 30,958 30,702

Processing cost 6,032 5,541 6,309 17,151 19,790

G&A cost 2,620 2,837 2,748 8,746 8,992

Purchased Ore 7,817 5,574 8,490 17,162 26,250

Waste capital (5,055) (3,735) (841) (10,531) (7,337)

Inventory adjustments and other 1,144 3,065 841 6,247 (2,303)

Total Cash Cost (B) 24,415 23,274 24,543 69,733 76,094

Royalties 1,651 1,322 1,768 4,198 5,890

Sustaining capital1 670 506 2,083 1,212 9,942


All-In Sustaining Margin 1 4,655 (196) 3,060 4,844 11,481

Unit cost analysis





Cash cost per ounce sold1 D=B/A $/oz 1,038 1,174 874 1,099 866

Mine All-In Sustaining Costs 1 E=C/A $/oz 1,136 1,266 1,011 1,184 1,046



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Q3‐2016 Insights:

The Nzema Gold Mine concluded on an improved third quarter with an increase in gold production and sales of 23% and 19% from the prior quarter.

Both the production and AISC profile improved during the quarter due to the continued ramp‐up of purchased ore with better grades from more suppliers, improved grades from the Adamus pit ahead of the cut‐back completion and contribution of the Nugget Hill deposit.

Revenues were 26% higher than the previous quarter as a result of the improved gold prices and the additional 3,699 ounces sold.

AISC per ounce was 10% lower than the previous quarter as a result of increased ounces sold and a focus on cost management. Mining costs of $4.16 cost per tonne mined compared to $5.40 in the previous quarter on account of optimized grade control activities, shallow depth of Nugget Hill ore, and volume benefit of accelerating the push back mining. Processing costs were affected by cyclical maintenance spend.

AISC has improved but remains high due to the impact of processing lower grade stockpiles to help fill the mill while the Adamus cut‐back is still in progress.

The Adamus pit push‐back is progressing on budget and on schedule with 3Mt out of a planned 4.5Mt already completed for a total spend of $10.5 million classified as non‐sustaining capital.

Q4‐2016 Outlook

Both production and AISC are expected to improve due to higher expected grades from the Adamus pit and the continued purchased ore tonnage and grade ramp‐up.

The Nugget Hill satellite deposit is expected to continue to further complement production, although its recovery rate is lower than that of the Adamus pit.


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3. Tabakoto Gold Mine, Mali

The following table summarizes the operating results of the Tabakoto Gold Mine for the three months ended September 30, 2016; June 30, 2016, and September 30, 2015, and the nine months ended September 30, 2016, and September 30, 2015.

Table 5: Tabakoto key performance indicators

1.Sustaining capital, cash cost per ounce sold, sustaining capital, all‐in sustaining costs, all‐in sustaining margin and “all‐in” sustaining costs per ounce are non‐GAAP financial performance measures


Q3‐2016 Insights:

Gold produced and sold was 6% and 5% lower in the third quarter of 2016 compared to the previous quarter predominantly due to to a reduction in mill throughput caused by maintenance shutdowns and a decrease in grade at Segala as foreseen by the mine plan which is expected to increase in Q4‐2016.

Improved equipment availability and underground mining efficiency resulted in a 7% increase in total ore tonnes mined, marking the first time in over a year that mine extraction was greater than mill throughput.

Revenues were 1% higher than the previous quarter due to the improvement in the gold price environment.

AISC per ounce were in line with the previous period as a lower strip ratio and reduced sustaining capital expenditures counterbalanced the decrease in average grade processed while unit costs remained consistent.


Operating Data

Tonnes mined- Open pit Kt 1,569 1,704 2,129 5,505 6,909

Tonnes of waste mined - Open pit Kt 1,409 1,556 2,006 5,051 6,526


Tonnes mined- Underground Kt 302 315 377 977 1,227

Ore tonnes mined - Underground Kt 238 221 255 691 794

Tonnes milled Kt 381 399 408 1,186 1,195


Recovery (%) 95% 95% 93% 94% 93%




Revenues 49,482 49,086 41,780 143,815 129,367

Mining costs- Open pit 5,892 6,527 7,541 19,107 18,327

Mining costs- Underground 15,880 15,740 18,727 47,356 49,407

Processing cost 8,600 8,470 9,957 25,377 27,344

G&A cost 4,680 4,519 7,815 14,568 20,159

Waste capital (2,700) (4,154) (17,875) (13,007) (27,462)

Inventory adjustments and other 1,034 1,339 1,539 3,335 2,970

Total Cash Cost (B) 33,386 32,441 27,704 96,736 90,745

Royalties 2,962 2,951 2,493 8,613 7,731

Sustaining capital1 3,610 6,134 8,302 17,112 17,024


All-In Sustaining Margin 1 9,524 7,560 3,281 21,354 13,867

Unit cost analysis



Underground mining cost per tonne mined $/t 52.58 49.97 49.67 48.47 40.27



Cash cost per ounce sold1 D=B/A $/oz 894 829 743 843 823

Mine All-In Sustaining Costs 1 E=C/A $/oz 1,071 1,061 1,032 1,067 1,048



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Sustaining capital expenditures in the quarter were primarily related to underground mining development of $2.4 million with the remaining spend on other machinery rebuilds.

Q4‐2016 Outlook

In the fourth quarter of 2016 management expects higher production with the end of the rainy season, higher grades from Segala and increased mill throughput.


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4. Ity Gold Mine, Côte d’Ivoire

Endeavour Mining acquired the Ity Gold Mine in Côte d’Ivoire in November 2015 as part of the strategic partnership with La Mancha and the Sawiris family. The following table summarizes the operating results of the Ity Gold Mine for the three months ended September 30, 2016 and June 30, 2016, and the nine months ended September 30, 2016.

Table 6: Ity key performance indicators

1. Sustaining capital, cash cost per ounce sold, sustaining capital, all‐in sustaining costs, all‐in sustaining margin and “all‐in” sustaining costs per ounce are non‐GAAP financial performance measures


2. The greater than 100% recovery rate in the second quarter reflects the cyclical nature of heap leach processing recovery rates.

Q3‐2016 Insights:

Gold produced and sold decreased by 26% and 27% during the current quarter compared with the previous period largely due to heavy seasonal rains which significantly effected mining, evident by the 40% decrease in mined tonnes quarter over quarter along with an 11% decrease in tonnes stacked.

Additionally, in line with expectations production and AISC were also impacted by decreased grades due to the processing of lower‐grade stockpiles during the rainy season and higher mining costs related primarily to having to pump more water out of the mines. Revenue decreased by 22% from the

Nine months ended

Unit September 30, 2016 June 30, 2016 September 30, 2016

Operating Data:

Tonnes mined Kt 948 1,584 4,630

Tonnes of waste mined Kt 748 1,201 3,760

Open pit strip ratio w:o 3.74 3.14 4.32

Tonnes of ore stacked Kt 271 304 878

Average gold grade stacked (grams/tonne) 1.90 2.10 2.20

Recovery (%) 91% 101%2 94%

Gold ounces produced: 15,334 20,729 58,387

Gold ounces sold (A): 15,349 20,981 58,294


Revenues 20,372 26,251 73,359

Mining costs-open pit 3,878 4,450 13,998

Processing cost 3,588 4,841 13,382

G&A cost 3,538 2,154 8,955

Waste capital (3,149) - (3,149)

Inventory adjustments and other (854) 1,187 (168)

Total Cash Cost (B) 7,001 12,632 33,018

Royalties 832 919 2,683

Sustaining capital1 3,276 2,709 7,270

Total All-In Sustaining Costs 1 (C) 11,109 16,260 42,971

All-In Sustaining Margin 1 9,263 9,991 30,388

Unit cost analysis

Realized gold price $/oz 1,327 1,251 1,258

Open pit mining cost per tonne mined $/t 4.09 2.81 3.02

Processing cost per tonnes stacked $/t 13.24 15.92 15.24

G&A cost per tonnes stacked $/t 13.06 7.09 10.20

Cash cost per ounce sold1 D=B/A $/oz 456 602 566

Mine All-In Sustaining Costs 1 E=C/A $/oz 724 775 737

Three months ended


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comparable second quarter as a result of the 27% decrease in gold sales partially offset by the 7% increase in the realized gold price.

Despite the rainy season, AISC per ounce decreased by 7% to $724 compared to $775 in the previous quarter due to a lower operating strip ratio and the classification of pre‐strip mining costs related to the new Zia pit as non‐sustaining capital ($0.7m). Rainy season mitigation measures including increased pumping activities offset some of the cost decreases.

Sustaining capital of $3.3 million at Ity was primarily a result of $2.4 million of waste capitalization.

Q4‐2016 Outlook

Production is expected to increase in line with its historical cyclical pattern after the rainy season.


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D. Discontinued operations

1. Youga Gold Mine, Burkina Faso

On February 29, 2016 the Corporation announced that it had sold the Youga Gold Mine in Burkina Faso for $22.1 million ($25.3 million gross proceeds net of $3.2 million cash disposed of with the mine) whilst retaining a 1.8% Net Smelter Royalty (“NSR”) on production realized beyond the mineral reserve as at December 31, 2015 from the property sold and with the inclusion of a buyback provision for the NSR, in favour of the purchaser. The Corporation, in accordance with IFRS, has classified Youga as discontinued operations in the current and comparable periods. The following table summarizes the abbreviated operating results of the Youga Gold Mine for the two months ended February 29, 2016, the three months ended September 30, 2015, and the nine months ended September 30, 2015.

Table 7: Youga key performance indicators

1.Sustaining capital, cash cost per ounce sold, sustaining capital, all‐in sustaining costs, all‐in sustaining margin and “all‐in” sustaining costs per ounce are non‐GAAP financial performance measures


Colonne1 Unit

Period ended

February 29, 2016

Three months ended

September 30, 2015

Nine months ended

September 30, 2015

Operating Data

Tonnes mined Kt 1,145 2,529 6,249

Tonnes of waste mined Kt 950 2,219 5,188

Open pit strip ratio w:o 4.87 7.16 4.89

Tonnes milled Kt 181 277 783

Average gold grade milled (grams/tonne) 1.50 2.13 2.27

Recovery (%) 89% 90% 91%

Gold ounces produced: 8,179 17,313 53,422

Gold ounces sold (A): 6,578 14,328 50,442


Revenues 7,457 16,033 59,480

Mining costs-open pit 3,717 8,382 24,125

Processing cost 3,398 5,137 15,947

G&A cost 1,487 2,303 6,914

Waste capital - - -

Inventory adjustments (1,976) (3,275) (6,250)

Other 285 270 1,045

Total Cash Cost (B) 6,911 12,817 41,781

Royalties 327 641 2,258

Sustaining capital1 5 186 760

Total All-In Sustaining Costs (C) 7,243 13,644 44,799

All-In Sustaining Margin 214 2,389 14,681

Unit cost analysis

Realized gold price $/oz 1,134 1,119 1,179

Open pit mining cost per tonne mined $/t 3.25 3.31 3.86

Processing cost per tonne milled $/t 18.77 18.55 20.37

G&A cost per tonne milled $/t 8.22 8.31 8.83

Cash cost per ounce sold1 D=B/A $/oz 1,051 895 828

Mine All-In Sustaining Costs 1 E=C/A $/oz 1,101 952 888


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The Youga mine recovered a total of over 600,000 ounces of gold since operations commenced in 2008.

E. Pre‐production review

1. Karma Gold Mine, Burkina Faso

Table 8: Karma key performance indicators

On March 4, 2016, Endeavour announced that it had entered into a definitive arrangement agreement to acquire True Gold Mining. This transaction was completed on April 26, 2016. The primary asset acquired as part of this transaction was the Karma mine. Key features of the Karma mine are as follows:

The mine is located in north‐central Burkina Faso, near the city of Ouahigouya. The Corporation owns a 90% interest, with the remaining 10% owned by the Burkina Faso government.

The mine includes nine identified gold deposits and has reserves of 0.9 million ounces, measured and indicated resources (inclusive of reserves) of 2.6 million ounces and additional inferred resources of 2.4 million ounces.

The mine is a shallow open pit with a low strip ratio and free dig ore. Ore is processed using heap leach facilities with an expected rate of gold recovery of 87%, as per the published feasibility study.

Karma hosts a target‐rich landscape with the essential hallmarks of a multi‐deposit environment. The property consists of nine contiguous exploration permits (Goulagou, Rambo, Kao, Rounga, Youba, and Tougou) totaling more than 856 km2 and includes more than 45 high‐priority targets with high‐grade rock values associated with gold‐in‐soil anomalies and historical workings that remain untested to date.

Project update at September 30, 2016

On April 11, 2016, the Karma mine announced that it achieved its first gold pour, a few weeks after the start of leaching of ore.

Production continued to ramp up during Q3‐2016 and is currently at the annual run‐rate of approximately 90koz of gold per annum.

Commercial production was declared at Karma on October 1, 2016.

Lower production costs to date confirm operations have the potential to be in line with the investment case target within the low $700’s per ounce for AISC.

Three months ended Post acquistion period ended

Unit September 30, 2016 September 30, 2016

Operating Data:

Tonnes mined Kt 3,040 4,730

Tonnes of waste mined Kt 2,390 3,634

Open pit strip ratio w:o 3.68 3.32

Tonnes of ore stacked Kt 570 927

Average gold grade stacked (grams/tonne) 1.21 1.18

Recovery (%) 90% 90%

Gold ounces produced: 20,409 32,701

Gold ounces sold: 19,476 34,141


Gold proceeds capitalised 14,647 34,146

Operating expenses capitalized 11,948 21,522

Non-sustaining capital spend 3,877 13,315


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Recovery rates have reached 90% which is higher than the forecast recovery rates of 87% in the DFS for Karma.

Costs are currently benefiting from low maintenance costs due to the mine just starting operations, favourable energy costs, favourable administrative costs as the mine transitions from construction to operations, and current capital costs being primarily non‐sustaining, project completion capital. Mining costs remain below the feasibility costs due to proximity of the pits and shallow depth of current mining.

Mining was primarily from the Goulagou II pit, but late in September mining began in the Rambo pit and is expected to continue through the fourth quarter.

Mining and processing costs during the quarter amounted to respectively $1.30/t moved and $8.81/t stacked, favorable comparing to DFS assumptions. Production is expected to increase in the fourth quarter with an increase in ore stacking capacity and other ongoing optimizations as the mine ramps up. Capacity at the process is expected to increase to 4.0mtpa by the middle of 2017 following the replacement of the front‐end and other mill optimization activities. The capex for mill improvements is expected to be $32 million with plans to incur these costs over the next nine months.

A 50‐man temporary camp has been completed while a 200‐man permanent camp construction project is underway, with expected completion in the first half of 2017.

Pre‐commercial production revenue and costs have been offset against the mineral interest on the balance sheet. As a result of continuing construction activity, $15.8 million and $34.8 million of costs were capitalized as pre‐production costs and capital for the three and nine months ended September 30, 2016. Commercial production is only deemed to have commenced when a mining interest is capable of operating at levels intended by management. As these conditions were not met during the current quarter the Karma mine was classified as a construction project for reporting purposes, and expenditure incurred on the Karma mine are capitalized accordingly. With the optimization of the front‐end facilities in progress and the operations well analyzed, commercial production was declared effective October 1, 2016.

F. Development project review

1. Houndé Project, Burkina Faso

Endeavour’s 90%‐owned Houndé project is an open pit mine with a 3.0Mt per annum gravity circuit Carbon‐In‐Leach plant. During 2015 and early 2016, a thorough review and optimization of the Houndé Project was completed and an implementation plan was established. The mining and ore processing schedules remained unchanged since February 2015, while the operating and capital costs were fully scoped and optimized. Construction began in April 2016 and is progressing on‐time and on‐budget with the first gold pour expected during the fourth quarter of 2017. The initial capital cost is estimated at $328 million, inclusive of $47 million for the owner‐mining fleet. During the nine months ended September 30, 2016, $61.1 million ($45.2 million on project development and $15.9 million incurred through capital project working capital) was incurred on the project and work was focused on the following areas.

Construction is progressing on‐time and on‐budget. Procurement is approximately 60% complete with total capital commitments incurred amounting to $170 million (inclusive of expenditures made to date).

Full back‐up power station has been tendered with CAT 26MW of redundancy. Financing negotiations are currently underway and are expected to conclude during Q4‐2016.

CIL ring beam concrete pour was achieved in early August, two weeks ahead of schedule.

Mining fleet equipment financing was signed with Komatsu Ltd., with some deliveries already on‐site, and machinery commissioned and operational.

Water harvest dam construction has been completed and water is already being pumped to the water


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storage dam two months ahead of schedule.

Construction of the 300‐person permanent accommodation village is 52% complete and on‐schedule for completion in Q1‐2017.

Procurement has been completed for the 38km long 91kv overhead power line and clearing commenced as scheduled in October 2016.

Detailed engineering of the processing facility is progressing ahead of schedule and is 65% complete, and is scheduled to be completed in mid‐November 2016.

1,058 personnel including contractors are currently employed on‐site of which over 96% are Burkinabe.

Over 800,000 man‐hours have been worked without a Lost Time Injury (LTI) or Medical Treatment Injury (MTI).

The land compensation process has been successfully completed and resettlement is underway, with all approvals in place.

Once in production, the Houndé Project will become the Company’s flagship low‐cost mine, ranking amongst West Africa’s top tier cash generating mines, with an average annual production of 190,000 ounces at an AISC of $709 per ounce over an initial 10‐year mine life based on reserves. Moreover, in its first four years, the average annual production is expected to be 235,000 ounces at an AISC of $610 per ounce. Endeavour will employ up to 1,800 people during Houndé’s construction phase and 470 once the project reaches commercial production, with an objective of employing 90% Burkinabe nationals and a focus on increasing female employment in the region.

Table 9: Houndé Project Highlights

Ownership 90% Endeavour, 10% Burkina Faso

Reserve and Resources

P+P Reserves 31Mt at 2.1 g/t Au for 2.1Moz

M+I Resources (inclusive of reserves) 38Mt at 2.1 g/t Au for 2.5Moz

Inferred Resources 3Mt at 2.6 g/t Au for 0.3Moz

Mine type Open pit

Mill type Gravity / CIL plant

Production

Mine life, current plan 10 years

Strip ratio, W:O 8.4

Processing rate 3.0 Mtpa

Average LOM Recovery rate 93%

Total LOM gold production 1,906 koz

Average annual production 190 koz

Average LOM AISC $709/oz

Upfront Capital $328m, inclusive of $47m for owner mining fleet


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Table 10: Hounde Project Economics

2. Ity CIL Project, Côte d’Ivoire

Endeavour Mining acquired the Ity CIL Project in Côte d’Ivoire in 2015, as part of the strategic partnership with La Mancha and the Sawiris family. In 2014, a pre‐feasibility study (“PFS”) to replace the current heap leach plant with a greenfields CIL plant was completed using a processing rate of 1.5 Mt per annum based on indicated mineral resources at the time. Following the positive PFS results, in late 2014 and early 2015, the La Mancha Group conducted drilling programs at the Daapleu, Zia NE and Mont Ity deposits that were designed to upgrade all inferred material from the latest resource estimate to Indicated, as well as to delineate each deposit further along strike. The resulting resource estimate update yielded a significant increase in indicated mineral resources for all three areas, increasing measured and indicated mineral resources to 3.1 million ounces. An updated PFS was completed in July 2015 for the CIL Project using a processing rate of 2.0 Mt per annum. During 2016, Endeavour’s Projects Group, together with Lycopodium Minerals and alongside Endeavour’s other trusted consultants, such as Knight Piesold, Kalsta, Peter O’Brien & Associates and ECG Engineering, focused on undertaking a definitive feasibility study focusing on the following key areas.

Completion of the Geological Resource models

Further metallurgical testing of the 12 different rock types of the Ity project

Hydrogeological modelling

Assessing the current infrastructure design and location and the life of mine plans

Revising the mining methods and fleet to be utilized

Assessment and optimization of the operating costs

Reviewing opportunities of common synergy with Agbaou and Houndé

Establishing power supply options

During the nine months ended September 30, 2016 Endeavour spent $1.8 million on the Ity CIL project, primarily associated with design and Definitive Feasibility Study (“DFS”) works, project management and site related study costs. Endeavour has continued to perform further work on the project and expects to complete the Ity CIL DFS early in the fourth quarter of 2016.

Gold Price (US$/oz.) $1 150 $1 200 $1 250 $1 300 $1 350

After-tax Project NPV5% $230 $286 $342 $398 $437

After-tax Project IRR 24% 28% 32% 36% 39%

Payback, years 2.7 2.4 2.2 2.0 1.8


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G. Exploration Review

A global strategic exploration review was performed during the first half of 2016, and all producing and exploration properties have been analyzed and ranked, and a strategic exploration plan is being finalized. Following the first phase of this strategic review, additional funding has been allocated to boost and accelerate the resources definition for Tabakoto, the greater Ity Area and regional Cote d’Ivoire exploration in the second half of 2016. As a result, the exploration budget has been increased from $20 million to $28 million in the full year 2016. Total exploration spend for the three and nine months ended September 30, 2016 was $11.2 million and $22.8 million. Exploration activity for the nine months to date focused on the following activities:

1. Agbaou, Côte d’Ivoire

The 2016 exploration campaign is focused on the North pit and South pit extensions, the Agbaou South target, and on generating targets beyond the current resource boundaries. The drill program commenced in April based on previous geophysics and soil geochemistry results.

More than 12,900 meters had been drilled by the end of September, representing approximately 25% of the exploration program which is expected to be completed by mid‐2017.

Initial drill results suggest the extension of mineralized zones, which will be followed up with further drilling.

Agbaou Drilling Program


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2. Tabakoto Gold Mine, Mali

A first exploration program on open‐pit targets, consisting of 72,900 meters of RC and DD drilling and 1,311 Auger holes was completed in Q3‐2016.

At the Kofi North open‐pit target, a drilling program consisting of 244 RC and 1,311 Auger holes was completed, with drill results currently being analyzed.

At the Tabakoto, Fougala and Kreko open‐pit targets, an initial shallow RC program totaling 344 holes was completed during Q3‐2016 which confirmed two mineralized trends. A second phase drill program was then launched to follow‐up.

Underground exploration programs are ongoing with 22,400 meters of diamond drilling completed to date at the Tabakoto and Segala underground mines.

Tabakoto Mine Area


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3. Ity Gold Mine, Côte d’Ivoire

In 2016 exploration is focused on drilling previously identified oxide targets to prolong the life of the heap leach operation, and drill new targets with the aim of delineating additional resources for the CIL project.

Since the start of 2016, a total of 44,000 meters have been drilled and the Bakatouo and Colline Sud discoveries have been announced in recent weeks.

A maiden resource estimate is expected for the Bakatouo and Colline Sud discoveries, both of which have the potential to extend mine life at the existing heap leach operations and to improve the economics of the Ity CIL project.

Endeavour intends to resume exploration in and around the Ity mine after the end of the rainy season in November, with up to six drill rigs expected to be operational. A follow‐up 3,700 meter RC and DD drilling program is planned on Colline Sud to test the extensions and conduct infill drilling. In addition, an 8,000 meter DD drilling campaign is also planned on Bakatouo.

A 21,400m Auger drilling program was also completed in Q3‐2016 which identified several new targets within five kilometers of the exiting mill, which are also being explored.

Ity Mine Area Target


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In September 2016, an 80km underexplored portion of the Birimian corridor along the Ity trend was secured for future exploration, as shown in the map below.

Ity Mine Birimian corridor


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4. Karma Gold Mine, Burkina Faso

Exploration at Karma is underway with a target of increasing mine life to beyond 10 years by the end of 2016.

A 60,000 meter program at Kao North began in July 2016 with the goal of extending mineralization and mine life by up to 2.5 years. This drilling program is expected to be completed by the end of 2016.

Karma Site Map

5. Houndé Project, Burkina Faso

Exploration expects to resume in 2017.

6. Nzema Gold Mine, Ghana

No significant exploration activity is underway.


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V. RESULTS FOR THE PERIOD

A. Statement of comprehensive income

Table 11: Statement of comprehensive income

The explanations for the key variances are as follows:

Revenues were $169.3 million in the third quarter of 2016 and $473.6 million for the year to date. The primary driver for these increases are the purchase of the Ity mine in November 2015 and improving throughput at Agbaou, combined with improving commodity prices.

Operating expenses for the third quarter of 2016 were $87.9 million and $259.3 million for the year to date. The upward trend since 2015 reflects increased volumes.

Depreciation and depletion for the third quarter of 2016 was $21.6 and $69.6 million for the year to date. The upward trend since 2015 is due to the increased mining which directly contributes to the depreciation expense.

Corporate costs for the third quarter of 2016 were $6.0 million and $16.4 million for the year to date, and remain in line with guidance. The increase in corporate costs from 2015 is primarily due to increased activity levels following the two recent acquisitions but expected to stabilize with the drive by management in transitioning to a more streamlined management structure.

Transaction and restructuring costs for the third quarter of 2016 were $6.6 million and $24.6 million for the year to date. These costs are associated with the purchase of True Gold ($6.2 million), combined with Board and executive level restructuring costs, as well office consolidations ($18.3 million).

Share based payments expense were $2.9 million for the third quarter of 2016 and $ 8.6 million for the year to date. The consistent upward trend in this item quarter over quarter reflects the increase in the share price, combined with a higher level of instruments outstanding compared to the 2015 periods.

Exploration costs were $2.5 million for the third quarter of 2016 and $4.4 million for the year to date reflecting the portion of this activity which was not allocated to capital expenditure. The increase from 2015 is due to increased levels of early stage greenfield exploration programs.

Gains on financial instruments for the third quarter of 2016 were $3.6 million and a loss of $ 20.4 million

Colonne1 September 30, 2016 June 30, 2016 September 30, 2015 September 30, 2016 September 30, 2015

Gold Revenue 169,313 160,373 121,826 473,644 385,073

Operating expenses (87,856) (87,496) (76,265) (259,337) (229,151)

Depreciation and depletion (21,607) (21,781) (19,057) (69,612) (53,923)

Royalties (8,206) (7,229) (6,009) (22,025) (19,052)

Earnings from mine operations 51,644 43,867 20,495 122,670 82,947

Corporate costs (5,984) (5,595) (4,744) (16,405) (13,177)

Transaction and restructuring costs (6,558) (16,773) - (24,580) -

Share based expenses (2,886) (3,162) (660) (8,603) (2,900)

Exploration (2,520) (953) (106) (4,388) (1,171)

Earnings from operations 33,696 17,384 14,985 68,694 65,699

(Losses)/gains on financial instruments 3,608 (21,135) (869) (20,403) 2,988

Finance costs (6,049) (6,304) (7,077) (19,197) (23,704)

Other income (expenses) - 180 (515) 270 (379)

Earnings (loss) from continuing operations before taxes

31,255 (9,875) 6,524 29,364 44,604

Current income tax (3,835) (2,975) (699) (9,152) (2,426)

Deferred taxes recovery (expense) (3,167) (2,566) (880) (246) 5,622

Net (loss)/earnings from discontinued operations - - 1,761 (3,273) 9,444

Total net and comprehensive earnings (loss) 24,253 (15,416) 6,706 16,693 57,244



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for the year to date. The key reason for these charges in unrealized losses for the year to date are primarily associated with increased gold prices leading to losses on the legacy hedge instruments, as well the gold revenue protection program entered into in April 2016 associated with the Hounde construction decision and movements on balances denominated in foreign currency.

Finance costs were $6.0 million for the third quarter of 2016 and $19.2 million for the year to date. The primary elements of this charge in the quarter relates to $1.6 million of loan interest and $3.6 million related to finance related expenses, and the decrease from 2015 is due to lower drawn credit line balances.

The current income and deferred tax expense for the third quarter of 2016 was $7.0 million and a $9.4 million expense for the year to date. The current tax increase year to date in 2016 is on account of the tax paying and profitable Ity mine added to the group portfolio. The key reason for the deferred tax movements are primarily due to temporary differences between the accounting and tax treatment of depreciation as well certain expenditures.

B. Cash flow

The following table reconciles the AISC margin and free cash flow to the year over year and quarterly change in cash.

Table 12: Free cash flow1

1. Free cash flow is a non‐GAAP financial performance measures with no standard meaning under IFRS. Refer to the Non‐GAAP Measures section for further details.

2. Restructuring costs do not equal the value in the statement of comprehensive income as the amount in the free cash flow statement reflects only cash paid and does not include amounts accrued.

$(000's) September 30, 2016 June 30, 2016 September 30, 2015 September 30, 2016 September 30, 2015

Revenue 169,313 160,373 121,826 473,644 385,073

Total cash costs (86,951) (89,122) (74,542) (259,453) (226,925)

Royalties (8,206) (7,229) (6,009) (22,025) (19,052)

Corporate costs (5,984) (5,595) (4,744) (16,405) (13,177)

Sustaining capex (10,880) (11,555) (11,758) (33,572) (38,527)

Sustaining exploration (2,500) (1,500) (1,200) (5,500) (4,600)

AISC costs (114,521) (115,001) (98,253) (336,955) (302,281)

AISC Margin 54,792 45,372 23,573 136,689 82,792

Less: Non-sustaining capital (4,994) (10,868) (8,863) (19,581) (17,409)

Less: Non-sustaining exploration (8,720) (5,590) (1,177) (17,312) (4,383)

Operating cash flow from Youga discontinued operation - - 108 - 11,499

Free cash flow (before Hounde, Karma, working capital, tax & financing costs)

41,078 28,914 13,642 99,796 72,500

Hounde project costs (30,610) (12,029) (2,252) (45,227) (4,632)

Karma proceeds from sales, less mining costs capitalized and capital expenditure

1,420 (2,111) - (691) -

Change in capital project working capital (7,555) - - (24,284) -

Free cash flow (before working capital, tax & financing costs)

4,333 14,774 11,390 29,594 67,868

Operating working capital changes as per statement of cash flows

(16,908) 1,365 (4,301) (19,244) (20,605)

Taxes paid (3,254) (6,157) (1,226) (12,035) (6,051)

Interest paid (2,924) (6,343) (383) (9,698) (8,952)

Cash settlements on hedge programs, gold collar prremiums and share appreciation rights

(9,550) - - (15,175) (4,386)

Other (foreign exchange gains/losses and other) 6,986 (15,021) (5,608) (4,209) (15,889)

Free Cash Flow before other items (21,317) (11,382) (128) (30,767) 11,985

Cash received for Youga mineral property interests (net) - - - 22,086 -

Bridge loan advanced to True Gold - - - (15,000) -

True Gold cash acquired, less acquisition COC payments, less acquisition expenses

(5,659) 3,690 - (1,969) -

Restructuring costs2 (11,468) (5,617) - (18,334) -

La Mancha anti-dilution proceeds with True Gold, Bought Deal proceeds, share option exercise, net of equity linked payments (SARs and PSUs)

107,504 72,257 - 180,300 -

RCF, debt and lease repayments (65,951) (41,967) (20,785) (108,741) (42,369)

Cash inflow (outflow) for the period 3,109 16,980 (20,913) 27,575 (30,384)



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Free cash flow (before working capital, tax & financing costs) for the third quarter of 2016 was $41.1 million, and $99.8 million for the year to date. The upward trend in this variable reflects increasing production, associated with the acquisition of the Ity mine and optimization of throughput at Agbaou. Sustaining capital expenditure of $33.6 million for the year to date relates to ongoing capital projects at the operating mines, as described in more detail for each mine in the Operating Review section of this MDA. Non‐sustaining capital ($19.6 million) and exploration expenditure ($17.3 million) for the year to date, relates to construction of the secondary crusher at Agbaou ($9.5 million), waste capitalization of the pit push back project at Nzema ($10.5 m), and non‐ sustaining exploration activity as described in the Exploration Review section.

Free cash flow before other items for the third quarter and year to date was ($21.3) million and ($30.8) million, respectively, reflecting net Karma related cash flows, taxes paid primarily associated with the Ity mine, working capital movements (explained in the working capital section below), most notably related to the ramp up of activity at Hounde and Karma, and other items, including increased hedge payments on account of the higher gold price and net foreign exchange gains and losses, and interest payments on the revolving credit facility.

Net cash inflow over the third quarter and year to date for 2016 was $3.1 million and $27.6 million, respectively, positively affected by the issue of shares in the Bought Deal and La Mancha’s participation in the True Gold acquisition and the Bough Deal, along with share options exercised, and proceeds from the Youga sale. Outflows included the net impact of the True Gold acquisition (cash acquired less acquisition day change of control payments to True Gold management and all acquisition related costs), the True Gold bridge loan prior to the acquisition, transaction and restructuring costs, and voluntary Revolving Credit Facility (“RCF”) debt repayments.


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C. Balance sheet

Table 13: Balance sheet

1. Working Capital

The explanations for the key variances in working capital are as follows:

Trade and other receivables were $13.8 million on September 30, 2016 compared to $7.3 million at June 30, 2016 and $13.0 million as at December 31, 2015. The increase during the third quarter is due to primarily to the increase in timing induced VAT receivables expected to be recovered in the short term.

$'(000's) September 30, 2016 June 30, 2016 December 31, 2015

ASSETS

Cash 137,094 133,985 109,519

Cash-restricted 5,222 5,205 4,824

Trade and other recievables 13,844 7,319 13,045

Income taxes receivable 148 169 2,945

Inventories 85,776 82,005 93,939

Prepaid expenses and other 36,885 18,626 12,640

CURRENT ASSETS 278,969 247,309 236,912

Mining interests 1,066,539 1,032,739 740,756

Deferred income taxes 69,077 72,976 70,116

Other long term assets 6,109 5,803 6,310

LONG TERM ASSETS 1,141,725 1,111,518 817,182

TOTAL ASSETS 1,420,694 1,358,827 1,054,094

LIABILITIES

Trade and other payables 145,667 143,656 127,581

Current portion of finance lease obligations 4,315 4,315 4,394

Current portion of derivative financial liabilities 8,671 16,265 5,463

Income taxes payable 10,689 14,177 16,061

CURRENT LIABILITIES 169,342 178,413 153,499

Finance lease obligations 6,578 7,440 9,025

Long-term debt 128,402 192,295 225,582

Other long term liabilities 42,231 40,990 38,862

Deferred income taxes 45,994 46,725 30,014

LONG TERM LIABILITIES 223,205 287,450 303,483

TOTAL LIABILITIES 392,547 465,862 456,982

Share capital 1,481,745 1,367,919 1,071,088

Equity reserve 41,001 43,720 41,966

Retained earnings (554,276) (569,134) (548,951)

Non-controlling interest 59,677 50,460 33,009

TOTAL EQUITY 1,028,147 892,964 597,112

TOTAL EQUITY AND LIABILITIES 1,420,694 1,358,827 1,054,094


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Income taxes receivable have remained stable and were $0.1 million at September 30, 2016 compared to $0.2 million at June 30, 2016 and $2.9 million as at December 31, 2015.

Inventories were $85.8 million at September 30, 2016 compared to $82.0 million at June 30, 2016 and $93.9 million as at December 31, 2015. The decrease from December 31, 2015 is primarily due to the disposal of the Youga Mine (December 31, 2015 $19.8 million related to the Youga Mine). This mine was sold during the first quarter. The increase in the third quarter primarily relates to consumables at the Karma mine of $9.2 million. The Corporation completed the acquisition of True Gold on April 26, 2016, and therefore, from that date Karma balances are included in the consolidated group balance sheet.

Prepaid expenses and other were $36.9 million at September 30, 2016 compared to $18.6 million at June 30, 2016 and $12.6 million as at December 31, 2015. This increase in the current quarter is primarily due the additional prepayments of $10.1 million associated with the Houndé project ramping up the construction phase in the third quarter.

Trade and other payables were $145.7 million at September 30, 2016 compared to $143.7 million at June 30, 2016 and $127.6 million as at December 31, 2015. The increase over the year is due to the inclusion of the Karma mine as the mine ramped up activity heading into commercial production on October 1, 2016, Hounde construction balances increase, offset by the disposal of Youga’s balances.

2. Net Debt Position

The Corporation has a $350 million senior secured revolving corporate loan facility (the “Facility”) with a syndicate of leading international banks, which is scheduled to be repaid between September 2018 and March 2020. The interest rate is LIBOR plus a margin of between 3.75% and 5.75% per annum, based on the actual Net Debt to EBITDA ratio. The Facility is secured by shares in the Corporation’s material gold mining subsidiaries and certain material assets and includes standard Interest Cover, Net Debt to EBITDA and Minimum Tangible Net Worth covenants. The following table summarizes the Corporation’s net debt position as at September 30, 2016, June 30, 2016 and September 30, 2015.

Table 14: Net debt/(Cash)position

3. Equity and Capital

Endeavour Mining’s authorized capital is $200,000,000 divided into 100,000,000 ordinary shares with a par value of $0.10 each and 100,000,000 undesignated shares; no undesignated shares have been issued. The table below summarizes Endeavour Mining’s share structure at September 30, 2016.

Table 15: Outstanding shares

On July 11, 2016, the Corporation issued a total of 7,187,500 ordinary shares at a price of C$20.00 per Share. As at October 31, 2016, the Corporation had 93,326,128 shares issued and outstanding, as well as 1,425,102 stock options outstanding.

$'(000's) September 30, 2016 June 30, 2016 September 30, 2015

Cash 137,094 133,985 31,795

Less: Auramet loan - 5,030 -

Less: Equipment finance lease 10,893 11,755 14,224

Less: Drawn portion of $350 million RCF 140,000 200,000 260,000

Net Debt/(Cash) position 13,799 82,800 242,429

Colonne1 September 30, 2016 June 30, 2016 December 31, 2015

Shares issued and outstanding 92,063,075 85,405,242 59,019,942

Stock options 1,790,677 2,827,406 2,734,404


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4. Project financing

Endeavour Mining announced in April that its 90%‐owned Houndé Project in Burkina Faso has entered the construction phase of its development. This project is expected to require initial capital investment of $328 million, of which $61.1 million was incurred in the nine months ended September 30, 2016. The Corporation intends to finance the Houndé Project using a combination of existing cash balances, free cash flow generated from Endeavour’s existing operating mines and equipment financing arrangements. On June 9, 2016, the Corporation entered into a financing arrangement with the Komatsu Group to purchase mining fleet equipment for the Houndé project. The Corporation made an initial down‐payment of $7.1 million on July 1, 2016. Delivery of the mining fleet is expected to commence from the fourth quarter of 2016 and seventeen quarterly payments to be made between the first quarter of 2018 and the first quarter of 2022, totaling $46.9 million. In addition, Endeavour Mining closed a bought deal financing arrangement for aggregate net proceeds of $104.0 million on July 11, 2016. The net proceeds of this financing are primarily intended to be used to accelerate Endeavour's organic growth potential by significantly expanding the current exploration programs by leveraging Endeavour's high‐quality West‐African exploration portfolio and for the potential development of the Ity carbon‐in‐leach gold process plant.

5. Financial instruments

Prior to its acquisition by Endeavour Mining, Adamus Resouces implemented a gold price protection program as part of the initial project financing of the Nzema Gold Mine. The gold price protection program consisted of gold forward contracts initially covering 290,000 ounces at a forward price of $1,075 per ounce and was subsequently amended to $1,061 per ounce. The program required no cash or other margin. On July 29, 2013 Endeavour re‐distributed a portion of the 96,163 ounces of remaining forward contracts to several new lenders. The amended strike price has increased from $1,061 per ounce to a weighted average strike price $1,332 per ounce. On the close out of the former hedge under the Nzema project financing, a $300 per ounce increase in the strike price gave rise to a crystallized loss; this crystallized loss will be allocated and paid over the remaining hedge deliveries, resulting in the net proceeds to be received of $1,032 per ounce ($1,332 per ounce less the loss of $300 per ounce). Other terms and conditions remain the same. The settlements of the forward contracts are in cash as there is no exchange of physical gold between the Corporation and the buyer. During the three and nine months ended September 30, 2016, the Corporation settled the remaining 7,062 and 20,101 ounces of gold resulting in a realized loss of $3.3 million and $8.7 million, respectively (September 30, 2015, $0.8 million and $3.1 million, respectively). Unrealized gains of $3.3 million and $4.0 million were recognized in the same periods.

On June 1, 2015, Endeavour initiated a 12‐month fuel price protection program approximately equal to 50% of the diesel fuel requirement at the Tabakoto Mine in the form of a cash‐settled commodity swap transaction with Societe Generale. The strike price of the swap is $572 per metric tonne of Gas Oil, with monthly settlements of 1,268 Mt. During the nine months ended September 30, 2016, the Corporation settled the remaining 6,341 Mtonnes of Gas, resulting in a realized loss of $Nil and $1.5 million, for the three and nine months, respectively (September 30, 2015, $0.04 million in the three and nine months). Unrealized gains of $Nil and $1.5 million was recorded in the same periods.

In the nine months ended September 30, 2016, the Corporation has implemented a deferred premium collar strategy (“collar”) using written call options and bought put options for the 15‐months period from April 2016 to September 2017. The program covers a total of 400,000 ounces, representing approximately 50% of Endeavour’s total estimated gold production for the period, with a floor price of $1,200 per ounce and ceiling price of $1,400 per ounce. This derivative instrument was not designated as a hedge by the Corporation and


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is recorded at its fair value at the end of each reporting period with changes in fair value recorded in the consolidated comprehensive statement of (loss) earnings. As at September 30, 2016, 266,667 ounces remain outstanding with a fair value of $8.7 million (December 31, 2015 ‐ $nil). An unrealized gain of $4.3 million and an unrealized loss of $8.7 million were recorded as in the comprehensive statement of earnings (loss) in the three and nine months ended September 30, 2016, respectively. The total premium payable for entering into this program is $9.2 million, included as part of the collar fair value, and cash‐settled on a net basis as monthly contracts mature. In the three and nine months ended September 30, 2015, the Corporation incurred $1.8 million and $3.7 million in premium costs (2015 ‐ $nil), respectively, included in losses on derivative financial instruments in the consolidated statements of comprehensive earnings (loss).

6. Provisions

In early 2009, Endeavour launched its gold investment strategy (“Gold Strategy”), which is the basis of the Corporation’s gold mining business. In order to retain, attract, and motivate a group of specialist professional employees with the skills and experience necessary to significantly enhance the profitability and growth of Endeavour’s gold business, a long term bonus policy (the “Gold LTI Policy”) was established concurrently with the implementation of the Gold Strategy. An award under the Gold LTI Policy (a “Gold LTI Award”) is crystalized and becomes payable upon the sale of a material gold asset, completion of a corporate transaction, and certain other events. The Gold LTI Award is calculated as 10% of the difference between the market value of the transaction and the equity cost base of the Corporation. The equity cost base is the accumulation of the values at which the shares were issued by Endeavour to build the gold company. As of September 30, 2016, was equivalent to approximately C$16.93 per issued share.

The Gold LTI Award payable on a crystallization event would be determined based on the nature of the crystallization event at the date of the transaction and may vary significantly from an estimate derived from Endeavour’s market capitalization at September 30, 2016. No crystallization event has occurred at September 30, 2016.

D. Accounting policies

1. Accounting policies overview

The Company’s unaudited condensed interim consolidated financial statements have been prepared in accordance with International Accounting Standard 34 – Interim Financial Reporting ("IAS 34") as issued by the IASB. Accordingly, certain disclosures included in annual financial statements prepared in accordance with IFRS have been condensed or omitted. These unaudited condensed interim consolidated financial statements should be read in conjunction with the Company’s audited consolidated financial statements for the year ended December 31, 2015. The accounting policies applied in the preparation of these unaudited condensed interim consolidated financial statements are consistent with those applied and disclosed in the Company’s audited consolidated financial statements for the year ended December 31, 2015.

2. Critical accounting policies and estimates

The Corporation’s management has made critical judgments and estimates in the process of applying the Corporation’s accounting policies to the consolidated financial statements that have significant effect on the amounts recognized in the Corporation’s consolidated financial statements. The most critical accounting policies follow: (a) Commencement of commercial production Prior to a mine being capable of operating at levels intended by management, costs incurred are capitalized as part of the costs of related mining properties and proceeds from mineral sales are offset against costs


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capitalized. The Corporation defines the commencement of commercial production as the date that a mine has achieved a consistent level of production. Management considers several factors in determining when a mining interest is capable of operating at levels intended by management. Depletion of capitalized costs for mining properties begins when the mine is capable of operating at levels intended by management. (b) Determination of economic viability Management has determined that exploratory drilling, evaluation, development and related costs incurred which have been capitalized are economically recoverable. Management uses several criteria in its assessments of economic recoverability and probability of future economic benefit including geologic and metallurgic information, history of conversion of mineral deposits to proven and probable reserves, scoping and feasibility studies, accessible facilities, existing permits and life of mine plans. (c) Functional currency The functional currency for each of the Corporation’s subsidiaries, and investments in associates, is the currency of the primary economic environment in which the entity operates. Determination of functional currency may involve certain judgments to determine the primary economic environment and the Corporation reconsiders functional currency of its entities if there is a change in events and conditions which determined the primary economic environment. (d) Business combinations Determination of whether a set of assets acquired and liabilities assumed constitute a business may require the Corporation to make certain judgements, taking into account all facts and circumstances. If an acquired set of assets and liabilities includes goodwill, the set is presumed to be a business. (e) Capitalization of waste stripping Capitalization of waste stripping requires the Corporation to make judgments and estimates in determining the amounts to be capitalized. These judgments and estimates include and rely on the expected stripping ratio for each separate open pit, the determination of what defines separate pits, and the expected ounces to be extracted from each component of a pit, amongst others.

3. Key sources of estimation uncertainty

The preparation of consolidated financial statements in conformity with IFRS requires the Corporation’s management to make judgments, estimates and assumptions that affect the amounts reported in the consolidated financial statements and related notes to the consolidated financial statements. Estimates and assumptions are continually evaluated and are based on management’s experience and other factors, including expectations of future events that are believed to be reasonable under the circumstances. The significant assumptions about the future and other major sources of estimation uncertainty as at the end of the reporting period that have a significant risk of resulting in a material adjustment to the carrying amounts of the Corporation’s assets and liabilities are as follows: (a) Value Added Tax (“VAT”) Included in trade and other receivables are recoverable VAT balances owing by the fiscal authorities in Burkina Faso, Ghana, Côte d’Ivoire, and Mali. The Corporation is following the relevant process in each country to recoup the VAT balances owing and continues to engage with authorities to accelerate the repayment of the outstanding VAT balances. (b) Impairment of mining interests and goodwill The Corporation considers both external and internal sources of information in assessing whether there are any indications that mining interests and goodwill are impaired. External sources of information the Corporation considers include changes in the market, economic and legal environment in which the Corporation operates that are not within its control and affect the recoverable amount of mining interests


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and goodwill. Internal sources of information the Corporation considers include the manner in which mining properties and plant and equipment are being used or are expected to be used and indications of economic performance of the assets. In determining the recoverable amounts of the Corporation’s mining interests and goodwill, the Corporation’s management makes estimates of the discounted future cash flows expected to be derived from the Corporation’s mining properties, costs to sell the mining properties and the appropriate discount rate. The projected cash flows are significantly affected by changes in assumptions about gold’s selling price, future capital expenditures, reductions in the amount of recoverable reserves, resources, and exploration potential, production cost estimates, discount rates and exchange rates. Reductions in gold price forecasts, increases in estimated future costs of production, increases in estimated future non‐expansionary capital expenditures, reductions in the amount of recoverable reserves, resources, and exploration potential, and/or adverse current economics can result in a write‐down of the carrying amounts of the Corporation’s mining interests and/or goodwill. These factors moving in the opposite direction could result in full or partial reversals of previous write‐downs to mining interests. (c) Estimated recoverable ounces The carrying amounts of the Corporation’s mining interests are depleted based on recoverable ounces. Changes to estimates of recoverable ounces including changes from revisions to the Corporation’s mine plans and changes in gold price forecasts can results in a change to future depletion rates. (d) Mineral reserves Mineral reserves and mineral resources are determined in accordance with Canadian Securities Administrator’s national Instrument 43‐101 Standards of Disclosure for Mineral Projects. Mineral reserve and resource are calculated based on numerous estimates. Such estimation is a subjective process, and the accuracy of any mineral reserve or resource estimate is a dependent on the quantity and quality of available data and of the assumptions made and judgments used in engineering and geological interpretation. Differences between management’s assumptions including economic assumptions such as gold prices and market conditions could have a material effect in the future on the Corporation’s financial position and results of operation. (e) Environmental rehabilitation costs The provisions for rehabilitation of mine and project sites and the related accretion expense are based on the expected costs of environmental rehabilitation and inputs used to determine the present value of such provisions using the information available at the reporting date. To the extent the actual costs differ from these estimates, adjustments will be recorded and the profit or loss may be impacted. (f) Deferred income taxes In assessing the probability of realizing income tax assets recognized, management makes estimates related to expectations of future taxable income, applicable tax opportunities, expected timing of reversals of existing temporary differences and the likelihood that tax positions taken will be sustained upon examination by applicable tax authorities. In making its assessments, management gives additional weight to positive and negative evidence that can be objectively verified. Estimates of future taxable income are based on forecasted cash flows from operations and the application of existing tax laws in each jurisdiction. Forecasted cash flows from operations are based on life of mine projections internally developed and reviewed by management. Weight is attached to tax planning opportunities that are within the Corporation’s control, and are feasible and implementable without significant obstacles. The likelihood that tax positions taken will be sustained upon examination by applicable tax authorities is assessed based on individual facts and circumstances of the relevant tax position evaluated in light of all available evidence. Where applicable tax laws and regulations are either unclear or subject to ongoing varying interpretations, it is reasonably possible that changes in these estimates can occur that materially affect the amounts of income tax assets recognized. At the end of each reporting period, the Corporation reassesses unrecognized and recognized income tax


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assets. (g) Share‐based payments Significant assumptions are made when accounting for share‐based payments. Changes to these assumptions may alter the resulting accounting and ultimately the amount charged to profit or loss. (h) Contingencies Due to the nature and complexity of the Corporation’s operations, various legal and tax matters are ongoing at any given time. In the event that the circumstances surrounding these matters change or the Corporation’s outlook for the outcomes of these matters changes, the effects will be recognized in the consolidated financial statements.

VI. NON‐GAAP MEASURES

A. All‐in sustaining margin and Operating EBITDA

The Corporation believes that, in addition to conventional measures prepared in accordance with GAAP, certain investors use the all‐in sustaining margin and operating earnings before interest, tax, depreciation and amortization (“operating EBITDA”) to evaluate the Corporation’s performance and ability to generate cash flows and service debt. These do not have a standard meaning and are intended to provide additional information and should not be considered in isolation or as a substitute for measures of performance prepared in accordance with GAAP. The following tables provide the illustration of the calculation of this margin and operating EBITDA, for the three months ended September 30, 2016, June 30, 2016 and September 30, 2015.

Table 16: All‐In Sustaining Margin1

1Data does not include Youga.


($'000)

Revenues1 169,313 160,373 121,826 473,644 385,073

Less: royalties1 (8,206) (7,229) (6,009) (22,025) (19,052)

Less: total cash costs1 (86,951) (89,122) (74,542) (259,453) (226,925)

Less: corporate G&A1 (5,984) (5,595) (4,744) (16,405) (13,177)

Subtotal 68,172 58,427 36,531 175,761 125,919

Less: sustaining capital (table 20) (10,880) (11,555) (11,758) (33,572) (38,527)

Less: sustaining exploration (2,500) (1,500) (1,200) (5,500) (4,600)

All-in sustaining margin 54,792 45,372 23,573 136,689 82,792



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Table 17: Operating EBITDA calculation

1Found on the consolidated statement of comprehensive earnings.

B. Cash cost per ounce of gold sold

The Corporation reports cash costs on the basis of ounces sold. Therefore, the Corporation believes that, in addition to conventional measures prepared in accordance with GAAP, certain investors may find this information useful. However, there is no standardized meanings, and therefore this additional information and should not be considered in isolation, or as a substitute for measures of performance prepared in accordance with GAAP. The following table provides a reconciliation of cash costs per ounce of gold sold (including the ounces sold from ore purchased), for the three months ended September 30, 2016, June 30, 2016 and September 30, 2015 and the nine months ended September 30, 2016 and September 30, 2015.

Table 18: Cash costs

The Corporation is reporting all‐in sustaining costs per ounce sold. The methodology for calculating all‐in sustaining costs per ounce was developed internally and is calculated below. This non‐GAAP measure provides investors with transparency regarding the total cash cost of producing an ounce of gold, in a given period. Readers should be aware that this measure does not have a standardized meaning. It is intended to provide additional information and should not be considered in isolation, or as a substitute for measures of performance prepared in accordance with GAAP.


($'000)

Earnings(loss) before tax1 31,255 (9,875) 6,524 29,364 44,604

Add back: Depreciation and depletion1 21,607 21,781 19,057 69,612 53,923

Add back: Acquisiton and restructuring costs1 6,558 16,773 - 24,580 -

Deduct: Non recurring mineral property and other assets sales1 - (180) 515 (270) 379

Add: Net earnings (loss) from discontinued operations and loss on disposal

- - (1,761) 3,273 (9,444)

Add back: Finance costs1 6,049 6,304 7,077 19,197 23,704

Add back: (Gains) losses on financial instruments1 (3,608) 21,135 869 20,403 (2,988)

Operating EBITDA 61,861 55,938 32,280 166,159 110,178



$'000's except ounces sold

Operating expenses from mine operations 87,127 87,496 75,544 258,608 228,430

Non-cash and other adjustments (176) 1,626 (1,002) 845 (1,505)

Cash costs from continuing operations 86,951 89,122 74,542 259,453 226,925

Total cash costs for the Youga Mine - - 12,817 6,910 41,781

Total cash cost 86,951 89,122 87,359 266,363 268,706

Divided by ounces of gold sold 127,507 127,602 123,002 382,464 377,468

Total cash cost per ounce of gold sold including Youga 682 698 710 696 712

Cash costs from continuing operations 86,951 89,122 74,542 259,453 226,925

Divided by ounces of gold sold (continuing operations) 127,507 127,602 108,674 375,886 327,026

Total cash cost from continuing operations 682 698 686 690 694



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Table 19: All‐In Sustaining Costs

1 Figures include Youga mine.

Table 20: Sustaining and non‐sustaining capital

C. Adjusted net earnings and adjusted net earnings per share

Net earnings have been adjusted for items considered exceptional in nature and not related to Endeavour Mining’s core operation of mining assets. The presentation of adjusted net earnings may assist investors and analysts to understand the underlying operating performance of our core mining business. However, adjusted net earnings and adjusted net earnings per share do not have a standard meaning under IFRS. They should not be considered in isolation, or as a substitute for measures of performance prepared in accordance with IFRS, and are not necessarily indicative of operating profit or cash flow from operations as determined under IFRS. The following table reconciles these non‐GAAP measures to the most directly comparable IFRS measure.


($'000 except ounces)

Total cash cost for ounces sold1 86,951 89,125 87,358 266,363 268,706

Royalties1 8,206 7,229 6,650 22,352 21,310

Corporate G&A 5,984 5,595 4,744 16,405 13,177

Sustaining capital 10,880 11,555 11,758 33,572 38,527

Sustaining exploration 2,500 1,500 1,200 5,500 4,600

All-in sustaining costs 114,521 115,002 111,710 344,192 346,320

Divided by gold ounces sold1 127,507 127,602 123,002 382,464 377,468

All‐in sustaining cost per ounce sold 898 901 908 900 917

Excluding discontinued operations

All-in sustaining costs from Youga Mine - - 13,644 7,237 44,799

All-in sustaining costs excluding discontinued operations 114,521 115,002 98,066 336,955 301,521

Divided by gold ounces sold1 127,507 127,602 108,674 375,886 327,026

All‐in sustaining costs per ounce sold from continuing

operations898 901 902 896 922



($'000 )

Expenditures and prepayments on mining interests 71,009 50,257 25,143 151,641 68,379

Non-sustaining capital spend (4,994) (10,868) (8,863) (19,581) (17,409)

Non-sustaining exploration (6,200) (4,636) (1,071) (12,924) (3,212)

Sustaining exploration (2,500) (1,500) (1,200) (5,500) (4,600)

Capital spend at Karma (15,825) (9,669) - (34,837) -

Project capital spend at Houndé (30,610) (12,029) (2,252) (45,227) (4,632)

Sustaining Capital 10,880 11,556 11,758 33,572 38,527



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Table 21: Adjusted net earnings

D. Free cash flow

The Corporation believes that, in addition to conventional measures prepared in accordance with GAAP, certain investors use free cash to assess the Corporation’s ability generate and manage liquid resources. These terms do not have a standard meaning and are intended to provide additional information. They should not be considered in isolation or as a substitute for measures of for measures of performance prepared in accordance with GAAP. The calculation of these items is detailed in table 12.

($'000) September 30, 2016 June 30, 2016 September 30, 2015 September 30, 2016 September 30, 2015

Total net earnings 24,253 (15,416) 6,706 16,693 57,244

Youga discontinued operations (Gain) loss - - (1,761) 3,273 (9,444)

(Gain) loss on financial instruments (3,608) 21,135 869 20,403 (2,988)

Other expenses (income) - (180) 515 (270) 379

Stock-based payments 2,886 3,162 660 8,603 2,900

Acquisition and restructuring costs 6,558 16,773 - 24,580 -

Deferred income tax expense (recovery) 3,167 2,566 880 246 (5,622)

Adjusted net earnings after tax 33,256 28,039 7,870 73,528 42,469

Attributable to non-controlling interests 10,347 13,949 8,458 22,493 13,561

Attributable to shareholders of the Corporation 22,909 14,090 (8,272) 51,035 28,908

Weighted average number of outstanding shares 92,063,075 77,860,700 41,314,367 76,324,976 41,314,367

Adjusted net earnings (loss) per share (basic) from continuing operations 0.25 0.18 (0.20) 0.67 0.70



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E. Net debt and Net debt/OEBITDA ratio

The Corporation is reporting net debt and net debt/Operating EBITDA ratio. This non‐GAAP measure provides investors with transparency to regarding the liquidity position of the Corporation. It is intended to provide additional information and should not be considered in isolation or as a substitute for measures of performance prepared in accordance with GAAP. The calculation of net debt is shown in table 14, calculated as nominal undiscounted debt including leases, less cash. The following table explains the calculation of net debt/Operating EBITDA ratio using the last twelve months of Operating EBITDA.

Table 22: Net Debt/ OEBITDA ratio

VII. QUARTERLY AND ANNUAL FINANCIAL AND OPERATING RESULTS

The following tables summarize the Corporation’s financial and operational information for the last eight quarters and three fiscal years. The significant factors affecting results in the quarters presented below are volatility of realized gold prices, the commencement of operations at the Agbaou Mine in the first quarter of 2014, and non‐cash impairments of mineral interests. The Ity Mine was added during the fourth quarter of 2015. The Youga financial results have been removed for quarterly periods after 2014.

Table 23: 2016/2015 Quarterly Key Performance Indicators

$'(000's) September 30, 2016 June 30, 2016 September 30, 2015

Net Debt/(Cash) position (Table 14) 13,799 82,800 242,429

Operating EBITDA 213,580 167,001 141,162

Net Debt / OEBITDA ratio 0.06 0.50 1.72

($'000' except ounces sold) Colonne1 Colonne2 September 30, 2016 June 30, 20162 March 31, 2016 December 31, 2015

Gold ounces sold 127,507 127,602 120,777 142,342

Gold revenues 169,313 160,373 143,958 137,579

Cash flows from coninuing operations 23,466 30,187 20,147 39,769

Earnings from mine operations 51,644 43,867 27,158 13,119

Net earnings (loss) and total comprehensive earnings (loss)

24,253 (15,416) 7,858 (21,643)

Net earnings (loss) attributable to shareholders of Endeavour Mining Corporation

13,361 (28,039) 956 (24,670)

Basic earnings (loss) per share 0.16 (0.36) 0.02 (0.51)

Diluted earnings (loss) per share 0.16 (0.36) 0.02 (0.51)

For the three months ended:


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Table 24: 2015/2014 Quarterly Key Performance Indicators

Table 25: Annual Key Performance Indicators1

1 The results of the Youga mine have been included in all figures above as presented in the 2015 and prior year Annual Financial Statements.

VIII. RISK FACTORS

Readers of this Management’s Discussion and Analysis should give careful consideration to the information included or incorporated by reference in this document and the Corporation’s audited consolidated financial statements and related notes for the year ended December 31, 2015. Significant risk factors for the Corporation are metal prices, government regulations, foreign operations, environmental compliance, dependence on management, title to the Corporation’s mineral properties and litigation. For further details of risk factors, please refer to the most recent Annual Information Form filed on SEDAR at

http://www.sedar.com/, the 2015 year‐end audited consolidated financial statements, and the below discussions.

A. Operational risks

1. Political risks

The majority of Endeavour Mining's assets are located in West Africa. Endeavour Mining believes that the

($'000' except ounces sold) Colonne1 Colonne2 September 30, 2015 June 30, 2015 March 31, 2015 December 31, 2014

Gold ounces sold 123,002 129,614 124,850 123,354

Gold revenues 121,826 132,797 130,449 147,744

Cash flows from operations 31,846 40,511 31,425 58,017



6,706 32,997 12,951 (340,157)

Net earnings (loss) attributable to shareholders of Endeavour Mining Corporation

3,504 26,678 9,045 (280,576)

Basic earnings (loss) per share 0.08 0.60 0.22 (6.80)

Diluted earnings (loss) per share 0.08 0.60 0.22 (6.80)

For the three months ended:

(US dollars in thousands except per share amounts)Year Ended December 31,

2015Year Ended December 31,

2014Year Ended December 31,

2013

Gold ounces sold 519,812 467,887 318,505

Gold revenues 601,376 583,576 443,314

Cash flows from operations 147,301 127,438 43,834

Earnings from mine operations 106,947 75,897 11,136


35,601 (328,200) (371,715)

Net earnings (loss) attributable to shareholders 18,227 (273,650) (332,456)

Basic loss per share 0.42 (6.62) (8.10)

Diluted loss per share 0.42 (6.62) (8.10)

Total assets 1,054,094 963,875 1,273,993

Total long term financial liabilities 273,469 343,468 327,411

Total attributable shareholders' equity 564,103 464,352 737,057

Adjusted earnings (loss) per share 0.99 0.34 (0.60)


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governments of the countries that the Corporation holds assets in support the development of their natural resources by foreign companies. There is no assurance however that future political and economic conditions of these countries will not result in their governments adopting different policies respecting foreign ownership of mineral resources, taxation, rates of exchange, environmental protection, labour relations, repatriation of income or return of capital, restrictions on production, price controls, export controls, local beneficiation of gold production, expropriation of property, foreign investment, maintenance of claims and mine safety. The possibility that a future government in any of these countries may adopt substantially different policies, which might include the expropriation of assets, cannot be ruled out. There is also a risk of limitations being placed on the ability to repatriate funds.

2. Mineral Reserves and Resources

Mineral reserve and mineral resource estimates are imprecise and depend partially on statistical inference drawn from drilling and other data, which may prove to be unreliable. Estimates, which were valid when made, may change over the course of the mine life. Reserves should not be interpreted as assurances of mine life or of the profitability of current or future production. Furthermore there can be no assurance that those portions of such mineral resources that are not mineral reserves will ultimately be converted into mineral reserves. Mineral resources which are not mineral reserves do not have demonstrated economic viability. Mining reserves depleted by production must be continually replaced to maintain production levels over the long term. There is no assurance that current or future exploration programs will result in any new commercial mining operations or yield new reserves to replace or expand current reserves.

3. Outside contractor risks

It is common for certain aspects of mining operations, such as drilling, blasting and hauling to be conducted by an outside contractor. The mining operations at the Youga Gold Mine, the Nzema Gold Mine and the Agbaou Gold Mine are undertaken by contactors and as a result, the Corporation is subject to a number of risks, including reduced control over the aspects of the operations that are the responsibility of the contractor, failure of a contractor to perform under its agreement with the companies, inability to replace the contractor if either party terminates the contract, interruption of operations in the event the contractor ceases operations due to insolvency or other unforeseen events, failure of the contractor to comply with applicable legal and regulatory requirements and failure of the contractor to properly manage its workforce resulting in labour unrest or other employment issues.

B. Financial Risks

The Corporation’s activities expose it to a variety of risks that may include currency risk, credit risk, liquidity risk, interest rate risk and other price risks, including equity price risk. The Corporation examines the various financial instrument risks to which it is exposed and assesses any impact and likelihood of those risks.

1. Credit risk

Credit risk is the risk that the counterparty to a financial instrument will cause a financial loss for the Corporation by failing to discharge its obligations. There has been no change in the Corporation’s objectives and policies for managing this risk in the three months ended September 30, 2016. The Corporation’s maximum exposure to credit risk is as follows:


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Table 26: Exposure to credit risk

2. Liquidity risk

Liquidity risk is the risk that the Corporation will encounter difficulty in meeting obligations associated with its financial liabilities that are settled by delivering cash or another financial asset. The Corporation has a planning and budgeting process in place to help determine the funds required to support the Corporation’s normal operating requirements.

3. Currency risk

Currency risk relates to the risk that the fair values or future cash flows of the Corporation’s financial instruments will fluctuate because of changes in foreign exchange rates. Exchange rate fluctuations may affect the costs that the Corporation incurs in its operations including its capital expenditures. Gold is sold in US dollars and the Corporation’s costs are incurred principally in CFA Franc, Canadian dollars, Euros, Ghana Cedi, and US dollars. The Corporation also holds cash and cash equivalents, marketable securities, and other receivables that are denominated in non‐US dollar currencies which are subject to currency risk. The Corporation has not hedged its exposure to foreign currency exchange risk. The Corporation has not hedged its exposure to foreign currency exchange risk. The table below highlights the net assets (liabilities) held in foreign currencies:

Table 27: Net assets in foreign currencies

The effect on earnings and other comprehensive earnings before tax as at September 30, 2016, of a 10% appreciation or depreciation in the foreign currencies against the US dollar on the above mentioned financial and non‐financial assets and liabilities of the Corporation is estimated to be $2.9 million (March 31, 2016, $5.8 million), assuming that all other variables remained constant. The calculation is based on the Corporation’s statement of financial position as at September 30, 2016.

4. Interest rate risk

Interest rate risk is the risk that future cash flows from, or the fair values of, the Corporation’s financial instruments will fluctuate because of changes in market interest rates. The Corporation is exposed to interest rate risk primarily on its long‐term debt. Since marketable securities and government treasury securities held as loans are short term in nature and are usually held to maturity, there is minimal fair value sensitivity to changes in interest rates. The Corporation continually monitors its exposure to interest rates and is comfortable with its exposure given the relatively low short‐term US interest rates and LIBOR.

Colonne1 September 30, 2016 June 30, 2016 December 31, 2015

($'000 )

Cash and cash equivalents 137,094 133,985 109,519 Cash - restricted 5,222 5,205 4,824 Marketable securities 691 665 375

Trade and other receivables 13,844 7,319 13,045

Working capital loan 1,050 1,038 1,017

Long-term receivable 294 - 246

158,195 148,212 129,026

September 30, 2016 June 30, 2016 December 31, 2015

($'000 ) -

Canadian dollar (1,887) (6,282) (2,961)

CFA Francs 39,330 49,699 60,530

Other currencies (989) 3,896 (687)

36,454 47,313 56,882


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The effect on earnings and other comprehensive earnings before tax as at September 30, 2016, of a 10% change in interest rate on the Facility is estimated to be $0.1 million (June 30, 2016 ‐ $0.1 million).

5. Price risk

Price risk is the risk that the fair value or future cash flows of the Corporation’s financial instruments will fluctuate because of changes in market prices. There has been no change in the Corporation’s objectives and policies for managing this risk and no significant changes to the Corporation’s exposure to price risk during the three months ended September 30, 2016.

IX. CONTROLS AND PROCEDURES

A. Disclosure controls and procedures

Disclosure controls and procedures are designed to provide reasonable assurance that all relevant information is gathered and reported on a timely basis to senior management, including the Chief Executive Officer (CEO) and the Chief Financial Officer (CFO). Additionally, these controls and procedures provide reasonable assurance that information required to be disclosed in the Corporation’s annual and interim filings (as such terms are defined under National Instrument 52‐109 Certification of Disclosure in Issuers’ Annual and Interim Filings) and other reports filed or submitted under Canadian securities law is recorded, processed, summarized and reported within the time periods specified by those laws, and that material information is accumulated and communicated to management including the CEO and CFO as appropriate to allow timely decisions regarding required disclosure. As at the end of and for the year ended December 31, 2015, management evaluated the design and operating effectiveness of the Corporation’s disclosure controls and procedures as required by Canadian Securities Law. Based on that evaluation, the CEO and CFO concluded that as of December 31, 2015, the disclosure controls and procedures were effective. There have been no material changes in the Corporation’s disclosure controls and procedures since the year ended December 31, 2015 that have materially affected, or are reasonably likely to materially affect, the Corporation’s disclosure controls and procedures.

B. Internal controls over financial reporting

The Corporation’s management, with the participation of its CEO and CFO, is responsible for establishing and maintaining adequate internal controls over financial reporting. Under the supervision of the CFO, the Corporation’s internal controls over financial reporting are designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with IFRS. As at December 31, 2015, management evaluated the effectiveness of the Corporation’s internal control over financial reporting as required by Canadian securities laws. Endeavour Mining acquired the Ity Gold Mine on November 27, 2015. Therefore, the Corporation was unable to conduct an assessment of the Ity Gold Mine’s internal control over financial reporting in the period between the acquisition date and the date of management’s internal control assessment, due to the timing of the acquisition. Accordingly, management excluded from its assessment the internal control over financial reporting of the Ity Gold Mine. As permitted under National Instrument 52‐109 Certification of Disclosure, the Company will include its assessment of in its 2016 annual management report on internal control. Based on that evaluation, and with the exclusion of the Ity Gold Mine’s internal control over financial reporting, the CEO and CFO have concluded that, as at December 31, 2015, the internal controls over


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financial reporting were effective and able to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with IFRS. On the April 26, 2016 Endeavour Mining acquired the Karma Gold Mine. Therefore, the Corporation has not yet conducted an assessment of the Karma Gold Mine’s internal control over financial reporting. There have been no material changes in the Corporation’s internal controls over financial reporting since the year ended December 31, 2015, (excluding the acquisition of the Karma Gold Mine) that have materially affected, or are reasonably likely to materially affect, the Corporation’s internal controls over financial reporting.

C. Limitations of controls and procedures

The Company’s management, including the Chief Executive Officer and Chief Financial Officer believe that any disclosure controls and procedures or internal control over financial reporting, can provide only reasonable, but not absolute, assurance that the objectives of the control system are met. These inherent limitations include the realities that judgments in decision making can be faulty, and that breakdowns can occur because of simple error or mistake. Additionally, controls can be circumvented by the actions of one individual, by collusion of two or more people, or by unauthorized override of the control. Accordingly, because of the inherent limitations in a control system, misstatements due to error or fraud may occur and not be detected.


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APPENDIX A : DETAILED RESERVES AND RESOURCES

The following table shows the consolidated reserves and resources as at December 31, 2015.

Table 28: Mineral Reserves and Mineral Resources as at December 31, 2015

Resources shown

inclusive of Reserves

Tonnage

(Mt)

Grade

(Au g/t)

Content

(Au koz)

Tonnage

(Mt)

Grade

(Au g/t)

Content

(Au koz)

Agbaou Mine (85% owned)1

Proven Reserves 1.9 2.53 156 1.6 2.53 132

Probable Reserves 11.3 2.40 871 9.6 2.40 741

P&P Reserves 13.2 2.42 1,027 11.2 2.42 873

Measured Resource 1.9 2.67 166 1.6 2.67 141

Indicated Resources 12.5 2.53 1,014 10.6 2.53 862

M&I Resources 14.4 2.54 1,180 12.3 2.54 1,003

Inferred Resources 1.2 1.71 65 1.0 1.71 56

Nzema Mine (90% owned)2

Proven Reserves 3.2 2.25 230 2.9 2.25 207


P&P Reserves 4.7 2.35 356 4.2 2.35 320


Indicated Resources 12.2 1.31 514 11.0 1.31 463

M&I Resources 34.6 1.34 1,490 31.1 1.34 1,341


Tabakoto Mine (80‐90% owned)3

Proven Reserves 2.3 3.19 235 1.9 3.18 190


P&P Reserves 6.4 3.50 725 5.4 3.50 603


Indicated Resources 12.3 3.22 1,270 10.5 3.17 1,068

M&I Resources 18.5 3.09 1,844 15.5 3.07 1,531

Inferred Resources 9.0 3.55 1,023 7.3 3.52 826

Houndé Project (90% owned)4

Proven Reserves 3.7 2.48 296 3.3 2.48 266

Probable Reserves 26.9 2.06 1,779 24.2 2.06 1,601

P&P Reserves 30.6 2.11 2,075 27.5 2.11 1,867



M&I Resources 37.9 2.09 2,551 34.1 2.09 2,296


Ity Mine & CIL Project (55% owned)5

Proven Reserves ‐ ‐ ‐ ‐ ‐ ‐

Probable Reserves 30.4 1.65 1,613 16.7 1.65 887

P&P Reserves 30.4 1.65 1,613 16.7 1.65 887

Measured Resource 27.3 1.35 1,190 15.0 1.35 655


M&I Resources 61.4 1.57 3,106 33.8 1.57 1,708


Karma Mine (90% owned)6



P&P Reserves 33.2 0.89 949 29.9 0.89 854

Measured Resource ‐ ‐ ‐ ‐ ‐ ‐


M&I Resources 75.2 1.08 2,621 67.7 1.08 2,359

Inferred Resources 65.3 1.13 2,362 58.8 1.13 2,126

Total ‐ Endeavour MiningProven Reserves 11 2.57 916 10 2.56 796

Probable Reserves 107 1.69 5,828 87 1.65 4,611

P&P Reserves 119 1.77 6,744 95 1.77 5,405

Measured Resource 62 1.62 3,211 45 1.66 2,411

Indicated Resources 180 1.65 9,581 149 1.63 7,827

M&I Resources 242 1.64 12,793 194 1.64 10,238

Inferred Resources 99 1.47 4,655 83 1.44 3,852

On a 100% basis On an attributable basis


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Notes to Mineral Reserves and Resources:

Gold price and cut‐off grades

Resources Gold

price, Reserves Gold Price,

US$/oz US$/oz

Nzema 1,500 0.5 1,250

Youga 1,500 to 1,600* 0.5 1,150

Agbaou 1,500 0.5 1,350

Tabakoto 1,350 to 1,600* 0.5 to 1.5* 1,250

Houndé 1,500 0.5 1,300

Ity 1,500 0 to 0.5 HL: 1,250 CIL: 1,150*

Karma 1,557 0.2 to 0.5 1,250

3‐ Tabakoto

The breakdown for underground and open pit reserves i s as fol lows:

Underground Reserves Open Pit Reserves

(on a 100% basis) Tonnage (kt) Grade (Au g/t) Content (Au koz) Tonnage (kt) Grade (Au g/t) Content (Au koz)

Proven Reserves 1,753 3.46 195 538 2.29 40

Probable Reserves 1,958 3.86 243 2,195 3.51 248

P&P Reserves 3,711 3.67 438 2,733 3.27 287

K. Harri s CPG (Endeavour) i s Qual i fied Person for Tabakoto and Kofi B, ALinear and Betea minera l resources; E. Puritch, P.Eng (P&E Mining Consul tants Inc.) i s the Qual i fied Person for the Kofi

A, Kofi C, and Blana id mineral resources . M. Alyoshin MAusIMM CP Min (Endeavour) i s Qual i fied Person for open pit mineral reserves ; V. Duke ECSA (Sound Mining) i s Qual i fied Person for

underground minera l reserves . Most recent fi led report i s “Technical Report and Mineral Resource and Mineral Reserve Update for the Tabakoto Gold Mine, Mali , West Africa” effective date

December 31, 2013, prepared by G. de Hert EurGeol (Endeavour); K. Harri s CPG (Endeavour); M. Alyoshin MAusIMM CP Min (Endeavour), V. Duke ECSA (Sound Mining), A.A. Roux

Pr.Sci .Nat.(Endeavour), E. Puritch, P.Eng (P&E Mining Consul tants Inc.), Antoine Yassa, P.Geo (P&E Mining Consul tants Inc.).

6‐ Karma

Minera l Reserves are that portion of the minera l resource that has been identi fied as mineable within a des ign pit and incorporates cri teria such as mining recoveries and waste di lution.

The Minera l Reserves are reported on the bas is of parameters and assumptions defined in True Gold's Feas ibi l i ty Study, which i s publ i shed on SEDAR at www.sedar.com. The Feas ibi l i ty

Study i s based on an open‐pit operation averaging 97,000 ounces of gold per year over 8.5 years and a l l ‐in susta ining cash costs of $720/oz gold, at a US$1250/oz gold price. Cut‐off grades

(COG) vary by pit and materia l type as shown in the Feas ibi l i ty Study.

Minera l Resource estimates were based on a gold price of US$1,557 per ounce, a 90%, 80% and 85% respective process recoveries for oxide, trans ition and sulphide; oxide mining costs of

US$1.61/tonne, $US1.94 per tonne for trans i tion and US$2.05 for sulphide ; process costs of US$7.25/tonne for oxide and trans i tion and US$19 per tonne for sulphide; and General &

Adminis trative costs of US$1.35 per tonne were used to determine the respective 0.20, 0.22 and 0.50 oxide, trans i tion and sulphide open pit cut‐off grades. Mineral resources are reported at

cut‐off grades of 0.20 g/t Au for oxide materia l in a l l depos i ts , 0.22 g/t Au for trans i tion materia l in a l l depos i ts and the sulphide materia l at Rambo and Nami , and at 0.5 g/t Au for the

remaining sulphide materia l at GG1, GG2, Kao and North Kao. Minera l resources are inclus ive of minera l reserves . Mineral resources which are not minera l reserves do not have

demonstrated economic viabi l i ty. The estimate of minera l resources may be materia l ly affected by envi ronmenta l , permitting, lega l , ti tle, taxation, sociopol i ti cal , marketing, or other

relevant i s sues . The quanti ty and grade of reported Inferred mineral resources in this estimation are uncerta in in nature and there has been insufficient exploration to define these

Inferred minera l resources as an Indicated or Measured mineral resource and i t i s uncertain i f further exploration wi l l resul t in upgrading them to an Indicated or Measured mineral

resource category. The mineral resources reported here was estimated us ing the Canadian Ins ti tute of Mining, Meta l lurgy and Petroleum (CIM), CIM Standards on Mineral Resources and

Reserves , Defini tions and Guidel ines prepared by the CIM Standing Committee on Reserve Defini tions and adopted by CIM Counci l . Materia l within optimized pit shel l s have engineering

mining aspects appl ied to the globa l mineral inventory.

For more information on Karma Resources and Reserves, please refer to NI 43‐101 technica l report entitled “Updated Resource Estimate and Feas ibi l i ty Study on the Karma Gold Project,

Burkina Faso, West Africa”, dated December 17, 2013 and fi led on SEDAR on January 27, 2014 at www.sedar.com. For more information on the North Kao Inferred Resource, please see True

Gold's news release dated March 13, 2014, fi led on SEDAR at www.sedar.com

5‐ Ity

The breakdown for the heap leach operation and CIL project reserves i s as fol lows :

Heap Leach Reserves CIL Reserves

(on a 100% bas is ) Tonnage (kt) Grade (Au g/t) Content (Au koz) Tonnage (kt) Grade (Au g/t) Content (Au koz)


Probable Reserves 2,392 2.39 184 27,967 1.59 1,429

P&P Reserves 2,392 2.39 184 27,967 1.59 1,429

K. Body Pr.Sci .Nat. (Coffey) i s the independent Qual i fied Persons for the Aires , Teckraie, Verse Ouest, Daapleu, ZiaNE, Ity Flat and Mont Ity minera l resources and R. Bosc Eur.Geol . (Arethuse)

i s the independent Qual i fied Person for the Walter and Gbeitouo minera l resources . M. Alyoshin MAusIMM CP Min (Endeavour) i s a Qual i fied Person for the Ity Heap Leach minera l reserves

and J. Baker P.Eng. (SNC‐Lava l in) i s a Qual i fied Person for the CIL mineral reserves . Most recent fi led report i s “Technical Report for the Ity Gold Mine, Cote d’Ivoi re, West Africa” effective

date July 31, 2015, prepared by K. Body Pr.Sci .Nat. (Coffey), M. Mudau Pr.Sci .Nat. (Coffey), C. Cunningham Pr.Eng. (Turnberry), R. Bosc Eur.Geol . (Arethuse), P. Perez P.Eng. (SGS), J. Baker P.Eng. (SNC‐

Lava l in), D. Gauthier Eng. (SNC‐Lava l in), P. Larochel le Eng. (SNC‐Lava l in) and H. Sangam Eng. (SNC‐Lava l in).

1‐ Agbaou

Resource updated from 43‐101 technica l report ti tled “Technica l Report Minera l Resource and Reserve Update for the Agbaou Gold Mine Côte d'Ivoi re West Africa” effective December 31,

2014. Update minera l resources estimates effective December 31, 2015 prepared by Kevin Harris (CPG), Qual i fied Person not independent of Endeavour Mining Corporation. Reserve Update

for the Agbaou Gold Mine, Côte d'Ivoi re, West Africa , prepared by Michael Alyoshin MAusIMM CP (Mining), Qual i fied Person Not Independent of Endeavour Mining Corporation.

2‐ Nzema

Minera l resource update prepared by Eric Acheampong (Endeavour) as depletion, effective date December 31, 2015, of minera l resource prepared by N.J. Johnson MAIG (MPR Geologica l

Consul tants Pty Ltd.), Qual i fied Person for the mineral resources; M. Alyoshin MAusIMM CP Min (Endeavour) i s Qual i fied Person for Nzema mineral reserves . Most recent fi led report i s

“Technical Report and Mineral Resource and Reserve Update for the Nzema Gold Mine, Ghana, West Africa”, effective date December 31, 2012, prepared by N.J. Johnson MAIG (MPR

Geological Consul tants Pty Ltd.), Q. De Klerk FAusIMM (Cube Consul ting Pty Ltd.) and W.J.A. Yeo MAIG (Endeavour), A.A. Roux Pr.Sci .Nat. (Endeavour).

4‐ Hounde

M. Zammit MAIG (Cube Consul ting) i s an independent Qual i fied Person for the Vinda loo mineral resources. Kevin Harri s CPG (Endeavour) i s a Qual i fied Person for the Bouéré and Dohoun

minera l resources . R.M. Cheyne FAusIMM (Oreology) i s an independent Qual i fied Person for the Vinda loo minera l reserves and the overa l l mining schedule. Michael Alyoshin MAusIMM CP

Min (Endeavour) i s a Qual i fied Person for the Bouéré and Dohoun minera l reserves. Most recent fi led report i s “Houndé Gold Project ‐ Burkina Faso, Feas ibi l i ty Study NI 43‐101 Technical

Report” effective date October 31, 2013, prepared by M. Zammit MAIG (Cube Consul ting), M. Warren MIEAust CPEng (Lycopodium), R.M. Cheyne FAusIMM (ORELOGY), D. Morgan CPEng (Knight

Piésold), P. O’Bryan MAusIMM (CP) (Peter O’Bryan and Associates).

The fol lowing notes apply to the tables :

• Minera l Resources that are not Mineral Reserves do not have demonstrated economic viabi l i ty.

• Tonnages are rounded to the nearest 100,000 tonnes ; gold grades are rounded to two decimal place; ounces are rounded to the nearest 1,000 ounces . Rounding may resul t in apparent

summation di fferences .

• Tonnes and grade measurements are in metric units ; contained gold i s in troy ounces.

Resource lower cut‐

off grade, g/t Au

*Varies by distance from depos i t to the mil l , ore type and mining method (OP/UG)

0.8 to 1.9

Reserve lower

cut‐off grade,

g/t Au

1

0.6 to 0.8

1.1 to 1.9*

0.4 to 0.8

0.6 to 1.5

0.2 to 0.3


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Additional information relating to the Corporation is available on the Corporation’s web site at www.endeavourmining.com and in the Corporation’s most recently fi led Annual Information Form filed on SEDAR at www.sedar.com. CAUTIONARY NOTE REGARDING FORWARD‐LOOKING STATEMENTS Certain statements in this MD&A and certain information incorporated herein by reference constitute forward‐looking statements. Forward‐looking statements include, but are not limited to, statements with respect to the Corporation’s plans or future financial or operating performance, the estimation of mineral reserves and resources, the realization of mineral reserve estimates, conclusions of economic assessments of projects, the timing and amount of estimated future production, costs of future production, future capital expenditures, costs and timing of the development of new deposits, success of exploration activities, permitting time lines, requirements for additional capital, sources and timing of additional financing, realization of unused tax benefits and future outcome of legal and tax matters. Generally, these forward‐looking statements can be identified by the use of forward‐looking terminology such as “plans”, “expects” or “does not expect”, “is expected”, “budget”, “scheduled”, “estimates”, “forecasts”, “intends”, “anticipates” or “does not anticipate”, “will continue” or “believes”, or variations of such words and phrases or state that certain actions, events or results “may”, “could”, “would”, “might” or “will be taken”, “occur” or “be achieved”. The material factors or assumptions used to develop material forward‐looking statements are disclosed throughout this document. Forward‐looking statements, while based on management’s best estimates and assumptions, are subject to known and unknown risks, uncertainties and other factors that may cause the actual results, level of activity, performance or achievements of Endeavour Mining to be materially different from those expressed or implied by such forward‐looking statements, including but not limited to: risks related to the successful integration of acquisitions; risks related to international operations; risks related to joint venture operations; risks related to general economic conditions and credit availability, actual results of current exploration activities, unanticipated reclamation expenses; changes in project parameters as plans continue to be refined; fluctuations in prices of metals including gold; fluctuations in foreign currency exchange rates, increases in market prices of mining consumables, possible variations in ore reserves, grade or recovery rates; failure of plant, equipment or processes to operate as anticipated; accidents, labour disputes, title disputes, claims and limitations on insurance coverage and other risks of the mining industry; delays in obtaining governmental approvals or financing or in the completion of development or construction activities, changes in national and local government regulation of mining operations, tax rules and regulations, and political and economic developments in countries in which the Corporation operates, actual resolutions of legal and tax matters, as well as those factors discussed in the section entitled “Description of the Business – Risk Factors” in Endeavour Mining’s most recent Annual Information Form available on SEDAR at www.sedar.com. Although Endeavour Mining has attempted to identify important factors that could cause actual results to differ materially from those contained in forward‐looking statements, there may be other factors that cause results not to be as anticipated, estimated or intended. There can be no assurance that such statements will prove to be accurate, as actual results and future events could differ materially from those anticipated in such statements. Accordingly, readers should not place undue reliance on forward‐looking statements. The Corporation’s management reviews periodically information reflected in forward‐looking statements. The Corporation has and continues to disclose in its Management’s Discussion and Analysis and other publicly filed documents, changes to material factors or assumptions underlying the forward‐looking statements and to the validity of the statements themselves, in the period the changes occur.


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CAUTIONARY NOTE REGARDING RESERVES AND RESOURCES Readers should refer to the most recent Annual Information Form of Endeavour Mining and other continuous disclosure documents filed by Endeavour Mining available at www.sedar.com, for further information on mineral reserves and resources, which is subject to the qualifications and notes set forth therein.

ENDEAVOUR MINING CORPORATION Condensed Interim Consolidated Statements of Financial Position (Expressed in Thousands of United States Dollars) (Unaudited)

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September 30, 2016

December 31, 2015

ASSETSCurrent Cash 137,094$ 109,519 Cash - restricted 5,222 4,824 Trade and other receivables 13,844 13,045 Income taxes receivable 148 2,945 Inventories (Note 5) 85,776 93,939 Prepaid expenses and other 36,885 12,640

278,969 236,912

Mining interests (Note 6) 1,066,539 740,756 Deferred income taxes 69,077 70,116 Other long term assets (Note 7) 6,109 6,310

1,420,694$ 1,054,094$

LIABILITIESCurrent Trade and other payables 145,667 127,581 Current portion of finance lease obligations (Note 8) 4,315 4,394 Current portion of derivative financial liabilities (Note 9) 8,671 5,463 Income taxes payable 10,689 16,061

169,342 153,499

Finance lease obligations (Note 8) 6,578 9,025 Long-term debt (Note 10) 128,402 225,582 Other long term liabilities (Note 11) 42,231 38,862 Deferred income taxes 45,994 30,014

392,547 456,982

EQUITYShare capital (Note 12 (a)) 1,481,745 1,071,088 Equity reserve (Note 12) 41,001 41,966 Deficit (554,276) (548,951) Equity attributable to shareholders of the Corporation 968,470 564,103 Non-controlling interests (Note 13) 59,677 33,009 Total equity 1,028,147 597,112

1,420,694$ 1,054,094$

COMMITMENTS AND CONTINGENCIES (NOTE 20)

Approved by the Board: October 31, 2016"Sebastien de Montessus" Director "Wayne McManus" Director

The accompanying notes are an integral part of these condensed interim consolidated financial statements

ENDEAVOUR MINING CORPORATION Condensed Interim Consolidated Statements of Comprehensive Earnings (Loss) (Expressed in Thousands of United States Dollars) (Unaudited)

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2016 2015 2016 2015

Revenues

Gold revenue 169,313$ 121,826$ 473,644$ 385,073$ $ Cost of sales

Operating expenses 87,856 76,265 259,337 229,151 Depreciation and depletion 21,607 19,057 69,612 53,923 Royalties 8,206 6,009 22,025 19,052


Corporate costs 5,984 4,744 16,405 13,177 Acquisition and restructuring costs (Note 3 (c)) 6,558 - 24,580 - Share-based expenses (Note 12 (b)) 2,886 660 8,603 2,900 Exploration costs 2,520 106 4,388 1,171

Earnings from operations 33,696 14,985 68,694 65,699

Gains (losses) on financial instruments (Note 14) 3,608 (869) (20,403) 2,988 Finance costs (6,049) (7,077) (19,197) (23,704) Other expenses - (515) 270 (379)

Other (expenses) income (2,441) (8,461) (39,330) (21,095)

Earnings from continuing operations before taxes 31,255 6,524 29,364 44,604 Current income taxes expense (3,835) (699) (9,152) (2,426) Deferred income taxes recovery (expense) (3,167) (880) (246) 5,622

24,253 4,945 19,966 47,800

- 1,761 (3,273) 9,444

Total net and comprehensive earnings 24,253 6,706 16,693 57,244

Net earnings (loss) from continuing operations attributable to:Shareholders of Endeavour Mining Corporation 15,035 (1,236) (2,052) 34,065 Non-controlling interests (Note 13) 9,218 6,181 22,018 13,735

Net earnings from continuing operations 24,253$ 4,945$ 19,966$ 47,800$

Total net earnings (loss) attributable to:Shareholders of Endeavour Mining Corporation 14,860 3,504 (5,325) 42,897

Non-controlling interests (Note 13) 9,393 3,202 22,018 14,347

Total net earnings 24,253$ 6,706$ 16,693$ 57,244$

Basic earnings (loss) per share 0.16$ (0.03)$ (0.03)$ 0.82$ Diluted earnings (loss) per share 0.16$ (0.03)$ (0.03)$ 0.82$

Net earnings (loss) per share (Note 12 (c))Basic earnings (loss) per share 0.16$ 0.08$ (0.07)$ 1.04$ Diluted earnings (loss) per share 0.16$ 0.08$ (0.07)$ 1.04$

Net earnings (loss) per share from continuing operations (Note 12 (c))

Three months ended September 30, Nine months ended September 30,

Net earnings (loss) from discontinued operations and loss on disposal (Note 4)

Net and comprehensive earnings from continuing operations


ENDEAVOUR MINING CORPORATION Condensed Interim Consolidated Statements of Cash Flows (Expressed in Thousands of United States Dollars) (Unaudited)

51 | P a g e

The accompanying notes are an integral part of these condensed interim consolidated financial statements, supplemental cash flow information is in

note 16.

2016 2015 2016 2015Operating Activities

Earnings before taxes (Note 16 (a)) 31,255$ 8,593$ 26,962$ 55,759$ Adjustments for:

Depreciation and depletion 21,607 20,552 70,871 58,210 Unwinding of reclamation obligation 174 194 541 583 Amortization of financing costs 1,137 1,050 3,385 3,120

(38) (126) (354) (231)

1,289 600 6,894 2,828 Unrealized (gain) loss on derivative financial instruments (Note 9) (7,594) (2,827) 3,209 (6,732) Realized loss on derivative financial instruments (Note 9) 5,128 1,217 13,351 5,341 Pension adjustment 126 - (156) - Loss on disposition of Youga Mine (Note 4) - - 1,025 - Interest expense 2,315 4,016 8,648 12,389 Unrealized foreign exchange (gain) loss (1,538) (196) 522 546

Cash paid on settlement of share appreciation rights (850) - (1,818) - Payment of gold collar premiums (1,829) - (3,712) - Income taxes paid (3,254) (1,226) (12,035) (6,051) Operating cash flows before non-cash working capital 47,928 31,847 117,333 125,762

Changes in non-cash working capital:Trade and other receivables (7,643) (507) (3,988) 5,032

Inventories (365) 2,022 (7,075) 1,925 Prepaid expenses and other (2,241) 6,088 (2,331) (4,986) Trade and other payables (6,659) (12,119) (5,850) (23,314)

Change in working capital related to assets under construction (7,555) - (24,284) - Other - 216 - 738

Cash generated from operating activities 23,465$ 27,547$ 73,805$ 105,157$

Investing ActivitiesExpenditures and prepayments on mining interests (71,009) (25,143) (151,641) (68,379) Cash acquired on acquisition of the Karma Mine (Note 3(b)) - - 10,031 - Bridge loan advanced to True Gold (Note 3(b)) - - (15,000) - Cash received on sale of Youga Mine (net) (Note 4) - - 22,086 - Proceeds from pre-production gold sales 14,647 - 34,146 - Other (712) 393 (1,018) (232)

Cash used in investing activities (57,074)$ (24,750)$ (101,396)$ (68,611)$

Financing ActivitiesProceeds received from the issue of common shares (Note 16 (b)) 111,030 - 183,827 - Cash settlement of hedge programs (Note 9) (6,871) (275) (9,645) (4,386) Payment of financing and other fees - (1,750) - (8,452) Dividends paid to minority shareholders (Note 13) (2,325) - (2,325) (485) Interest paid (2,924) (383) (9,698) (8,952) Repayment of long-term debt (Note 10) (60,000) (20,000) (100,000) (40,000) Repayment of the Auramet Loan (Note 10 (b)) (5,088) - (6,213) -

Repayment of finance lease obligation (Note 8) (863) (785) (2,528) (2,369) Deposit received (paid) on reclamation liability bond 752 - (684) -

Cash used in financing activities 33,711$ (23,193)$ 52,734$ (64,644)$

Effect of exchange rate changes on cash 3,007 (517) 2,432 (2,286)

Increase (decrease) in cash 3,109 (20,913) 27,575 (30,384) Cash, beginning of year 133,985 52,708 109,519 62,179 Cash, end of year 137,094$ 31,795$ 137,094$ 31,795$

Unrealized gain on marketable securities and interest on working capital loan

Nine months ended September 30, Three months ended September 30,

Share-based expense, net of cash paid on settlement of performance share units

ENDEAVOUR MINING CORPORATION Condensed Interim Consolidated Statements of Changes in Equity (Expressed in Thousands of United States Dollars) (Unaudited)

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Number of Common Shares Par Value

Additional Paid in Capital

Number of Exchangeable

SharesPar

ValueAdditional Paid

in CapitalTotal Number of

Shares Total Share

Capital

Equity Reserve Shares Deficit

Total Attributable to Shareholders

Non-Controlling Interests Total

At January 1, 2015 41,248,686 4,119$ 985,746$ 65,680 7$ 1,697$ 41,314,366 991,569$ 39,961$ (567,178)$ 464,352$ (20,982)$ 443,370 Exchangeable shares exchanged into common shares 9,672 1 218 (9,673) (1) (218) - - - - Share based payments - - - - - - - - 1,609 - 1,609 - 1,609 Dividends (Note 13) - - - - - - - - - (485) (485) Net loss and total comprehensive loss - - - - - - - - - 42,897 42,897 14,347 57,244

At September 30, 2015 41,258,358 4,120$ 985,964$ 56,007 6$ 1,479$ 41,314,366 991,569$ 41,570$ (524,281)$ 508,858$ (7,120)$ 501,738$

At January 1, 2016 58,969,264 5,892$ 1,063,876$ 50,678 5$ 1,315$ 59,019,942 1,071,088$ 41,966$ (548,951)$ 564,103$ 33,009$ 597,112$ Shares issued on acquisition of the Karma Mine (Note 3) 17,600,982 1,760 214,679 - - - 17,600,982 216,439 - - 216,439 - 216,439 Shares issued to La Mancha 7,546,775 755 64,353 - - - 7,546,775 65,108 - - 65,108 - 65,108 Shares issued in private placements 7,187,500 719 103,295 7,187,500 104,014 - - 104,014 - 104,014 Assumed on acquisition of the Karma Mine (Note 3) - - - - - - - - 8,771 - 8,771 11,530 20,301 Exchangeable shares exchanged into common shares

24,911 2 249 (24,911) (2) (249) - - - - - - -

Share options exercised 1,928,759 190 24,906 - - - 1,928,759 25,096 (10,392) - 14,704 - 14,704 Amortization of option grants (Note 12 (b)) - - - - - - - - 656 - 656 - 656 Dividends (Note 13) - - - - - - - - - - - (2,597) (2,597) Shares issued to non-controlling interests - - - - - - - - - - - 22 22 Disposal of the Youga Mine (Note 4) - - - - - - - - - - - (4,305) (4,305) Net earnings and total comprehensive earnings - - - - - - - - - (5,325) (5,325) 22,018 16,693

At September 30, 2016 93,258,191 9,318$ 1,471,358$ 25,767 3$ 1,066$ 93,283,958 1,481,745$ 41,001$ (554,276)$ 968,470$ 59,677$ 1,028,147$

Share Capital


ENDEAVOUR MINING CORPORATION Notes to the Unaudited Condensed Interim Consolidated Financial Statements (Expressed in Thousands of United States Dollars, except per share amounts

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1. DESCRIPTION OF BUSINESS AND NATURE OF OPERATIONS

Endeavour Mining Corporation (“Endeavour” or the “Corporation”) is a publicly listed gold mining company that operates five mines in West Africa in addition to having project development and exploration assets. Endeavour is focused on effectively managing its existing assets to maximize cash flows as well as pursuing organic and strategic growth opportunities that benefit from its management and operational expertise. Endeavour’s corporate office is in London, England, and its shares are listed on the Toronto Stock Exchange (“TSX”) (symbol EDV) and quoted in the United States on the OTCQX International under the symbol ‘EDVMF’. The Corporation is incorporated in the Cayman Islands and its registered office is located at 27 Hospital Road, George Town, Grand Cayman KY1-9008, Cayman Islands.

2. BASIS OF PRESENTATION AND SIGNIFICANT ACCOUNTING POLICIES

(a) Statement of compliance

These condensed interim consolidated financial statements have been prepared in accordance with International Accounting Standard (“IAS”) 34, Interim Financial Reporting, using the accounting policies consistent with International Financial Reporting Standards (“IFRS”). These condensed interim consolidated financial statements should be read in conjunction with the most recently issued annual consolidated financial statements of the Corporation, which include information necessary or useful to understanding the Corporation’s business and financial statement presentation. In particular, the Corporation’s significant accounting policies were presented as Note 2 to the consolidated financial statements for the fiscal year ended December 31, 2015, and have been consistently applied in the preparation of these condensed interim consolidated financial statements.

(b) Basis of preparation

These condensed interim consolidated financial statements have been prepared on the historical cost basis, except certain financial instruments that are measured at fair value at the end of each reporting period. The Corporation’s accounting policies have been applied consistently in preparing these condensed interim consolidated financial statements.

(c) Accounting Standards recently adopted Effective January 1, 2016, the Corporation adopted the following new accounting standards:

IAS 1, Presentation of Financial Statements: the amendments clarify guidance on materiality and aggregation, use of subtotals, aggregation and disaggregation of financial statement line items, the order of the notes to the financial statements and disclosure of significant accounting policies. The adoption of this amended standard had no material impact on the Corporation’s condensed interim consolidated financial statements.

IFRS 7, Financial Instruments: Disclosures: the amendments require increased disclosure regarding derecognition of financial assets and the continuing involvement accounting in connection with servicing contracts for annual periods beginning on or after January 1, 2016. The adoption of this amended standard had no material impact on the Corporation’s condensed interim consolidated financial statements.

IAS 34, Interim Financial Reporting: the amendments clarify the requirements relating to information required by IAS 34 that is presented elsewhere within the interim financial report but outside the interim financial statements. The adoption of this amended standard has no impact on the Corporation’s condensed interim consolidated financial statements.


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3. ACQUISITIONS AND RESTRUCTURING

(a) Acquisition of the Ity Mine

On November 27, 2015, the Corporation completed the acquisition of a 55% interest in Société des Mines d'Ity S.A. ("Ity Mine"), in exchange for 17,706,157 million common shares of Endeavour. The consideration and preliminary allocation of the fair value of assets acquired and liabilities assumed was presented in the Corporation’s consolidated financial statements for the year ended December 31, 2015. There has been no change to the consideration and allocation of the fair value of assets and liabilities is still preliminary as at September 30, 2016. In the three and nine months ended September 30, 2016, the Corporation incurred $Nil and $0.2 million (year ended December 31, 2015 - $13.1 million), respectively, in costs related to this acquisition. As of the date of these condensed interim consolidated financial statements, the determination of fair value of assets and liabilities acquired is based on preliminary estimates and has not been finalized. The Corporation is currently in the process of determining the fair values of the net assets acquired, assessing and measuring the associated deferred income tax assets and liabilities and potential goodwill on the acquisition. Non-controlling interest is measured at its proportionate share of the fair value of net assets. The actual fair values of the assets and liabilities may differ materially from the amounts disclosed in the preliminary fair value below and are subject to change. (b) Acquisition of the Karma Mine On April 26, 2016, the Corporation completed the acquisition of True Gold Mining Inc. (“True Gold”) with an issuance of 17,600,982 common shares. In connection with the acquisition, on April 26, 2016, La Mancha Holding S.à.r.l, exercised an anti-dilution right to maintain its 30% stake and invested $65.1 million (C$82.6 million) via an equity placement for 7,546,775 common shares. For the three and nine months ended September 30, 2016, the Corporation incurred $1.7 million and $6.0 million, respectively, in acquisition-related costs, including advisory, legal, valuation and other professional fees. These costs are presented as acquisition costs within the consolidated statements of comprehensive (loss) earnings. On March 22, 2016, as part of the arrangement agreement with True Gold, the Corporation provided a $15.0 million convertible bridge loan (“Bridge Loan”) to True Gold to ensure True Gold remained well funded to continue construction of the Karma Mine. As of the date of these condensed interim consolidated financial statements, the determination of fair value of assets and liabilities acquired is based on preliminary estimates and has not been finalized. The Corporation is currently in the process of determining the fair values of the net assets acquired, assessing and measuring the associated deferred income tax assets and liabilities and potential goodwill on the acquisition. Non-controlling interest is measured at its proportionate share of the fair value of net assets. The actual fair values of the assets and liabilities may differ materially from the amounts disclosed in the preliminary fair value below and are subject to change. The Corporation acquired the Karma Mine in the pre-commercial production stage, shortly after the first gold pour done as part of the mine commissioning. As of September 30, 2016, the mine had not achieved Commercial Production as defined by IFRS and the Corporation’s accounting policy. As such, all pre-commercial production gold sales proceeds and operating costs were included as part of mineral property on the consolidated balance sheet.


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The consideration and preliminary allocation of the fair value of assets acquired and liabilities assumed are as follows:

Karma Gold Stream

On August 11, 2014, True Gold, then the owner of the Karma Mine, entered into a $100 million definitive agreement with Franco-Nevada Corporation and Sandstorm Gold Inc. (the “Syndicate”) to complete funding for the construction of the Karma Project. In exchange for $100 million in funding (the “Deposit”), True Gold is obligated to deliver 100,000 ounces of gold over five years (the “Delivery Period”). During the Delivery Period, which started on March 31, 2016, True Gold has committed to deliver an aggregate of 20,000 ounces of gold each year. The Syndicate will pay True Gold 20% of the spot price of gold (“Ongoing Payment”) for each ounce delivered. The Deposit is reduced on each delivery by the excess of the prevailing market value of the gold delivered over the Ongoing Payment made by the Syndicate. Following the Delivery Period, True Gold has committed to deliver an amount of refined gold equal to 6.5% of the equivalent amount of gold production at the Karma Project for the life of the Project in exchange for Ongoing Payments. The Corporation assumed the gold stream when it acquired the Karma Mine on April 26, 2016. Upon initial recognition, the expected cash flows associated with the sale of gold to the Syndicate at a price lower than market price have been reflected in the fair value of the mining interest recorded upon acquisition of the Karma mine. The Corporation has presented the value of any expected future cash flows from the sale of any future gold production to the Syndicate as part of the mining interest, as the Corporation did not receive any of the upfront payment made by the Syndicate in accordance with the agreement. Gold ounces sold to the Syndicate under the stream agreement recognize as revenue only the actual proceeds received, which per the agreement will be 20% of the spot gold price. (c) Acquisition and restructuring Costs During the three and nine months ended September 30, 2016, the Corporation recognized $1.7 million and $6.2 million in acquisition costs and $4.8 million and $18.3 million in restructuring costs, respectively. These costs related to change in the board of directors, severance, relocation, legal and other fees associated with the changes in senior and executive management and transfer of administrative offices to London, England. At September 30, 2016, $1.6 million in restructuring costs was included in accounts payable (December 31, 2015 - $Nil).

Purchase price:

Fair value of 17,600,982 Endeavour common shares issued as consideration 216,439$

Valuation of stock options (Note 12 (b)(i)) 8,771

Valuation of stock appreciation rights (Note 12 (b)(iv)) 1,529

Bridge loan 15,000

241,739$

Net assets/(liabilities) acquired

Mining interests 281,713

Cash 10,031

Provision for reclamation (2,307)

Long term loan (6,213)

Non-controlling interest (11,530)

Net working capital acquired (excluding cash) (11,743)

Deferred income and mining taxes (18,212)

Net Assets 241,739$


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4. DISPOSITION OF MINING INTERESTS

On February 29, 2016, the Corporation announced and completed the sale of its non-core Youga Mine to MNG Gold for $25.3 million. The sale includes the Youga Mine, Ouaré Project and the related exploration properties and is part of the Corporation’s plan to focus on its core mining operations and assets. The total cash consideration is comprised of $20 million for the asset and $5.3 million for the cash-on-hand. In addition, Endeavour has retained a 1.8% Net Smelter Royalty ("NSR") on production realized beyond the current reserve from the property sold, with the inclusion of a buyback provision. The Corporation recognized a loss on disposition of $1.0 million, net of tax, calculated as follows:

Cash proceeds 25,228$ Transaction costs (934) Total proceeds 24,294 Net assets sold and derecognized:Cash 3,142 Inventories 21,199 Other current assets 12,406 Mining interests 10,826 Other non-current assets 658 Accounts payable and accrued liabilities (12,542) Provisions (4,800) Other non-current liabilities (1,440)

29,449 Non-controlling interest 4,130 Net assets attributable to Endeavour 25,319 Loss on disposition (1,025)$


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The components of net loss from discontinued operation for the three and nine months ended September 30, 2016 and 2015, were as follows:

Three months ended September 30, Nine months ended September 30,2016 2015 2016 2015

Revenue Gold revenue -$ 16,033$ 7,457$ 59,480$ Cost of sales Operating expenses - 12,568 6,911 42,055 Depreciation and depletion - 1,494 1,259 4,286 Royalties - 641 327 2,258 Earnings (loss) from mine operations - 1,330 (1,040) 10,881

Exploration - 66 278 187 Earnings (loss) from operations - 1,264 (1,318) 10,694

Other income (expenses) Gains on financial instruments - 834 - 544 Finance costs - (28) (59) (83) Loss on disposition - - (1,025) -

- 806 (1,084) 461 Earnings (loss) before taxes - 2,070 (2,402) 11,155 Income taxes expense - (309) (871) (1,711)

Net earnings (loss) from discontinued operations - 1,761 (3,273) 9,444

Shareholders of Endeavour Mining Corporation - 1,622 (3,098) 8,832

Non-controlling interest - 139 (175) 612 Total earnings (loss) from discontinued operations -$ 1,761$ (3,273)$ 9,444$

Net earnings (loss) per share from discontinued operationsBasic -$ 0.02$ (0.03)$ 0.12$ Diluted -$ 0.02$ (0.03)$ 0.12$

The net cash flows from discontinued operation for the three and nine months ended September 30, 2016 and 2015, were as follows:

Three months ended September 30, Nine months ended September 30,2016 2015 2016 2015

Net cash (used in) generated from operating activities -$ 4,356$ (3,871)$ 7,420$ Cash generated from (used) in investing activities - (117) 22,086 (691) Total -$ 4,239$ 18,215$ 6,729$


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5. INVENTORIES

September 30,

2016December 31,

2015

Doré bars(1) 1,663$ 1,950$

Gold in circuit(2) 13,912 13,675

Ore stockpiles(3) 18,565 33,547 Spare parts and supplies 51,636 44,767

85,776$ 93,939$ (1) Includes a charge of $Nil to reduce the costs of inventory to net realizable value at the Tabakoto mine (December 31, 2015, recovery of

$0.7 million) and a recovery of $0.01 million at the Nzema mine (December 31, 2015, recovery of $0.4 million). (2) Includes a charge of $Nil to reduce the costs of inventory to net realizable value at the Tabakoto mine (December 31, 2015, recovery of

$0.6 million) and $Nil at the Nzema mine (December 31, 2015, recovery of $0.7 million). (3) Includes a charge of $Nil to reduce the costs of inventory to net realizable value at the Tabakoto mine (December 31, 2015, recovery of

$1.6 million) and recovery of $3.4 million at the Nzema mine (December 31, 2015, $3.6 million).

The $85.8 million inventory balance at September 30, 2016, does not include inventory related to the disposed Youga Mine (December 31, 2015, $19.8 million related to Youga Mine) (Note 4). The cost of inventories recognized as expense for the three and nine months ended September 30, 2016, were $109.3 million and $328.5 million, respectively, and were included in operating expenses (three and nine months ended September 30, 2015 - $94.6 million and $282.3 million, respectively).


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6. MINING INTERESTS

Depletable Non depletablePlant and equipment

Assets under construction

Corporate assets Total

CostBalance as at December 31, 2014 833,155$ 436,205$ 542,924$ -$ 1,862$ 1,814,146$ Acquisition of the Ity Mine (Note 3) 15,823 - 15,361 - 346 31,530 Additions/expenditures 65,950 10,065 19,578 - 477 96,070 Transfers (6,944) - 6,944 - - - Reclamation liability change in estimate (1,671) - - - - (1,671) Disposals - - (142) - - (142) Balance as at December 31, 2015 906,313 446,270 584,665 - 2,685 1,939,933 Acquisition of Karma Mine (Note 3(b)) - - - 281,179 534 281,713 Additions/expenditures 40,649 7,476 25,357 49,240 28 122,750 Transfers - (138,440) (8,307) 146,747 - - Disposal of the Youga Mine (Note 4) (84,837) (19,538) (75,267) - - (179,642) Balance as at September 30, 2016 862,125$ 295,768$ 526,448$ 477,166$ 3,247$ 2,164,754$

Accumulated depreciation and impairmentBalance as at December 31, 2014 573,811$ 212,075$ 328,648$ -$ 1,581$ 1,116,115$ Depreciation/depletion 44,096 - 39,143 - 415 83,654 Depreciation charge included in inventory 1,298 - (1,875) - - (577) Disposals - - (15) - - (15) Balance as at December 31, 2015 619,205 212,075 365,901 - 1,996 1,199,177 Depreciation/depletion 39,359 - 29,818 - 435 69,612 Depreciation charge included in inventory (2,533) - (84) - - (2,617) Disposal of the Youga Mine (Note 4) (79,404) (16,772) (71,781) - - (167,957) Balance as at September 30, 2016 576,627$ 195,303$ 323,854$ -$ 2,431$ 1,098,215$

Carrying amountsAt December 31, 2015 287,108$ 234,195$ 218,764$ -$ 689$ 740,756$ Balance as at September 30, 2016 285,498$ 100,465$ 202,594$ 477,166$ 816$ 1,066,539$

Mining Properties

At September 30, 2016, the carrying amount of plant and equipment included $10.3 million of assets under finance leases (December 31, 2015 - $14.3 million). At September 30, 2016, mineral property additions included $2.1 million in accounts payable (December 31, 2015 - $3.4 million).


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A summary by property of the carrying value is as follows:

Tabakoto Mine

Nzema Mine

Youga Mine

Agbaou Mine

ItyMine

Houndé Project

OuaréProject

Karma Mine

Exploration Properties

Corporateassets Total

Cost Balance as at December 31, 2014 683,315$ 622,375$ 167,511$ 192,415$ -$ 131,870$ 11,629$ -$ 3,169$ 1,862$ 1,814,146$ Acquisition of the Ity Mine (Note 3(a)) - - - - 31,184 - - - - 346 31,530 Additions/expenditures 53,675 11,367 934 19,067 3,980 6,570 - - - 477 96,070 Reclamation liability change in estimate 2,055 (4,546) (289) 1,127 (18) - - - - - (1,671) Disposals - - (142) - - - - - - - (142) Balance as at December 31, 2015 739,045 629,196 168,014 212,609 35,146 138,440 11,629 - 3,169 2,685 1,939,933 Acquisition of Karma Mine (Note 3(b)) - - - - - - - 281,179 - 534 281,713 Additions/expenditures 24,194 12,004 - 24,075 16,559 45,199 - 691 - 28 122,750 Disposal of the Youga Mine (Note 4) - - (168,014) - - - (11,629) - - - (179,642) Balance as at September 30, 2016 763,239$ 641,200$ -$ 236,684$ 51,705$ 183,639$ -$ 281,870$ 3,169$ 3,247$ 2,164,754$

Accumulated depreciation and impairmentBalance as at December 31, 2014 475,408$ 445,162$ 149,439$ 29,727$ -$ -$ 11,629$ -$ 3,169$ 1,581$ 1,116,115$ Depreciation/depletion 29,211 18,032 6,109 29,143 744 - - - - 415 83,654 Depreciation captured in inventory (1,159) (340) 795 (1,035) 1,162 - - - - - (577) Disposals - - (15) - - - - - - - (15) Balance as at December 31, 2015 503,460 462,854 156,328 57,835 1,906 - 11,629 - 3,169 1,996 1,199,177 Depreciation/depletion 22,248 12,007 - 20,481 14,440 - - - - 435 69,612 Depreciation captured in inventory (59) (1,453) - 466 (1,571) - - - - - (2,617) Disposal of the Youga Mine (Note 4) - - (156,328) - - - (11,629) - - - (167,957) Balance as at September 30, 2016 525,649$ 473,408$ -$ 78,782$ 14,775$ -$ -$ -$ 3,169$ 2,431$ 1,098,215$

Carrying amountsAt December 31, 2015 235,585$ 166,342$ 11,686$ 154,774$ 33,240$ 138,440$ -$ -$ -$ 689$ 740,756$ At September 30, 2016 237,590$ 167,792$ -$ 157,902$ 36,930$ 183,639$ -$ 281,870$ -$ 816$ 1,066,539$

Development Projects


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7. OTHER LONG TERM ASSETS Other long term assets are comprised of:

September 30, 2016

December 31, 2015

Working capital loan 1,050$ 1,017$ Investment in associate 2,000 2,000 Long term stockpiles 2,765 3,047 Long term receivable 294 246 Total 6,109$ 6,310$ Investment in associate and working capital loan

The Corporation holds a 15% investment in associate and applies the equity method to account for the investment. The Corporation also has a working capital loan receivable from the associate. Long term stockpiles

Certain low grade stockpiles that are not expected to be processed until the end of mine life are classified as long term assets. In the three and nine months ended September 30, 2016, a charge of $Nil (September 30, 2015, a reversal of prior impairment of $0.2 million) was recorded to adjust the cost to net realizable value.

8. FINANCE LEASE OBLIGATIONS

On March 7, 2014, the Corporation’s Malian subsidiary entered into a five year, $18 million equipment lease financing facility. The equipment lease was used to purchase a portion of the owner-operated mining equipment for the Tabakoto and Segala underground developments. The lease terms have a fixed rate of 9.5% per annum to amortize the principal and there exists a purchase option to buy the equipment outright at the end of the lease life for 0.5% of cost. The equipment lease is treated as a finance lease.

The finance leases were composed of the following obligations: September 30,

2016December 31,

2015

Equipment lease obligations 10,893$ 13,419$ Less: current portion (4,315) (4,394) Long-term equipment lease obligations 6,578$ 9,025$

September 30, 2016

December 31, 2015

Not later than one year 4,540$ 4,540$ Later than one year and not later than five years 9,008 11,278

13,548 15,818 Less future finance charges (2,655) (2,399) Present value of minimum lease payments 10,893$ 13,419$

Minimum lease payments


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Houndé financing arrangement On June 9, 2016, the Corporation entered into a financing arrangement with the Komatsu Group to purchase mining fleet equipment for the Houndé project. The Corporation made an initial down-payment of $7.1 million on July 1, 2016. Delivery of the mining fleet is expected to commence from the fourth quarter of 2016 and seventeen quarterly payments to be made between the first quarter of 2018 and the first quarter of 2022, totaling $46.9 million.

9. DERIVATIVE FINANCIAL INSTRUMENTS Derivative financial liabilities

The following table summarizes the derivative financial liabilities:

September 30, 2016

December 31, 2015

Gold price protection programs (a) -$ 4,005$ Fuel price protection program (b) - 1,458 Gold revenue protection strategy (c) 8,671 - Derivative financial liabilities, current portion 8,671 5,463 Derivative financial liabilities, long term -$ -$ The following table summarizes the gain (loss) on derivative financial liabilities that have been recognized through the consolidated statements of comprehensive earnings (loss):

2016 2015 2016 2015

Realized loss - gold and fuel price protection programs (a)(b)Realized gain on foreign exchange option - - 538 - Realized loss on gold revenue protection strategy premiums (c) (1,829) - (3,712) -

Unrealized (loss) gain on gold price, gold revenue, and fuel price protection programs

7,594 2,827 (3,209) 6,767

Gain (loss) on derivative financial instruments 2,466$ 1,610$ (16,560)$ 1,426$


(10,177)$ (5,341)$ (1,217)$ (3,299)$


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(a) Gold forward contracts

Prior to Endeavour’s acquisition, Adamus implemented a gold price protection program as part of the initial project financing of the Nzema Gold Mine. The gold price protection program consisted of gold forward contracts initially covering 290,000 ounces at a forward price of $1,075 per ounce and subsequently amended to $1,061 per ounce. The program required no cash or other margin. On July 29, 2013, Endeavour re-distributed a portion of the 96,163 ounces of remaining forward contracts to several new lenders. The amended strike price has increased from $1,061 per ounce to a weighted average strike price $1,332 per ounce. On the close out of the former hedge under the Nzema project financing, a $300 per ounce increase in the strike price gave rise to a crystallized loss; this crystallized loss will be allocated and paid over the remaining hedge deliveries, resulting in the net proceeds to be received of $1,032 per ounce ($1,332 per ounce less the loss of $300 per ounce). Other terms and conditions remained the same. The settlements of the forward contracts are in cash as there is no exchange of physical gold between the Corporation and the buyer. During the three and nine months ended September 30, 2016, the Corporation settled the remaining 7,062 and 20,101 ounces of gold resulting in a realized loss of $3.3 million and $8.7 million, respectively (September 30, 2015, $0.8 million and $3.1 million, respectively). Unrealized gains of $3.3 million and $4.0 million were recognized in the same periods.

(b) Fuel Swap Contracts On June 1, 2015, Endeavour initiated a 12-month fuel price protection program approximately equal to 50% of the diesel fuel requirement at the Tabakoto Mine in the form of a cash-settled commodity swap transaction with Societe Generale. The strike price of the swap is $572 per metric tonne (Mtonne) of Gas Oil, with monthly settlements of 1,268 Mtonnes. During the nine months ended September 30, 2016, the Corporation settled the remaining 6,341 Mtonnes of Gas, resulting in a realized loss of $Nil and $1.5 million, for the three and nine months, respectively (September 30, 2015, $0.4 million in the three and nine months). Unrealized gains of $Nil and $1.5 million was recorded in the same periods.

(c) Gold revenue protection strategy

In the nine months ended September 30, 2016, the Corporation implemented a deferred premium collar strategy (“collar”) using written call options and bought put options for the 15-months period from April 2016 to June 2017. The program covers a total of 400,000 ounces, representing approximately 50% of Endeavour’s total estimated gold production for the period, with a floor price of $1,200 per ounce and ceiling price of $1,400 per ounce. This derivative instrument was not designated as a hedge by the Corporation and is recorded at its fair value at the end of each reporting period with changes in fair value recorded in the consolidated comprehensive statement of earnings (loss). As at September 30, 2016, 266,667 ounces remain outstanding with a fair value of $8.7 million (December 31, 2015 - $nil). An unrealized gain of $4.3 million and an unrealized loss of $8.7 million were recorded in the comprehensive statement of earnings (loss) in the three and nine months ended September 30, 2016, respectively.


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The total premium payable for entering into this program is $9.2 million, included as part of the collar fair value, and cash-settled on a net basis as monthly contracts mature. In the three and nine months ended September 30, 2016, the Corporation incurred $1.8 million and $3.7 million in premium costs (2015 - $nil), respectively, included in losses on derivative financial instruments in the consolidated statements of comprehensive earnings (loss).

10. LONG-TERM DEBT

September 30, 2016

December 31, 2015

Corporate loan facility (a) 140,000$ 240,000$ Deferred financing costs (11,598) (14,983) Corporate loan facility 128,402 225,017 Auramet loan (b) - - Other - 565 Total debt 128,402$ 225,582$ (a) Corporate loan facility

On July 24, 2013, the Corporation signed a $350 million amended senior secured revolving corporate loan facility (the “Facility”) with UniCredit Bank AG, BNP Paribas, ING Bank NV, Société Générale and Deutsche Bank AG and utilized $300 million of the amended Facility while completing the expansion of the Tabakoto mine and the construction of the Agbaou mine.

On March 10, 2015, the Corporation renewed its Facility with UniCredit Bank AG, BNP Paribas, ING Bank NV, Société Générale and Investec Bank Plc. The renewed Facility’s key terms include the following:

The maturity date is five years from signing, March 9, 2020, and the available Facility amount declines with four equal semi-annual reductions of $87.5 million commencing September 2018;

The Facility includes standard corporate financial covenants, including: o Interest Cover shall not be less than 3 to 1, calculated on a rolling 12 month basis; o Net Debt to EBITDA shall not exceed 3.5 times, calculated on a rolling 12 month basis; o Minimum Tangible Net Worth shall not be less than US$350 million. o The Corporation was in compliance with these covenants at September 30, 2016.

The interest is based on LIBOR plus a margin ranging between 3.75% and 5.75% per annum (sliding scale based on the actual Net Debt to EBITDA ratio). At September 30, 2016, the interest rate was 4.46%.

The Facility is secured by shares of Endeavour’s material gold mining subsidiaries and certain material assets of those subsidiaries.

On April 28 and August 4, 2016, the Corporation made principal payments of $40.0 million and $60.0 million, respectively, to reduce the drawn amount on the Facility to $140.0 million.


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(b) Auramet loan

In January 2016, True Gold entered into an equipment refinancing facility with Auramet for $10.0 million. The term of the facility is from January 2016 to June 30, 2017, with early repayment option. The facility has an interest rate of LIBOR + 9.75%, commitment for 200,000 gold ounces at a $5 per ounce discount to the spot gold price, and security against the Company’s mobile equipment and a parent company guarantee. The number of ounces at the $5 per ounce discount to the spot gold price will be prorated to the total amount of the $10 million drawn. The facility is flexible with no restrictive financial covenants or hedging requirements, no penalty on early repayment and is repaid over 16 months, starting in March 2016. The Corporation assumed the outstanding loan of $6.2 million on acquisition of the Karma Mine (Note 3). On July 26, 2016, the Corporation repaid the outstanding amount of the loan. The commitment of gold ounces remains outstanding.

11. OTHER LONG TERM LIABILITIES

Provisions are comprised of:

September 30, 2016

December 31, 2015

Environmental rehabilitation provision(1) 32,834$ 35,893$

9,160 2,608 Net pension obligation 237 361 Total 42,231$ 38,862$

Deferred, performance and restricted share liability and SARs (Note 12)

(1) The $32.8 million environmental rehabilitation provision balance at September 30, 2016, does not include the provision related to the

disposed Youga Mine ($4.8 million at the date of disposition (Note 4) and includes $1.9 million current provision related to the Karma Mine acquired on April 26, 2016 (Note 3 (b)).


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12. SHARE CAPITAL

(a) Voting shares

Authorized 100,000,000 voting shares of $0.10 par value 100,000,000 undesignated shares

(b) Share-based expenses The following table summarizes the share-based expenses:

2016 2015 2016 2015

Amortization of option grants 76$ 473$ 656$ 1,609$ Grant and change in fair value of DSUs (149) 16 2,243 349

Grant and change in fair value of PSUs 1,958 171 4,062 942

Grant and change in fair value of RSUs 314 - 314 - Settlement of PSUs and DSUs 687 - 1,328 - Total share-based expenses 2,886$ 660$ 8,603$ 2,900$

Three months ended September 30 Nine months ended September 30,

(i) Options

A summary of the changes in share options is presented below:

Weighted averageOptions exercise price

outstanding (C$)

At December 31, 2014 2,514,127 20.61$ Granted 699,374 6.02 Expired (479,097) 17.33 At December 31, 2015 2,734,404 17.45 Granted 1,700,213 9.23

Exercised (1,928,759) 10.04 Expired (715,181) 22.61

At September 30, 2016 1,790,677 15.58$ On March 11, 2016, the Corporation issued 346,790 options with a strike price of C$10.94 and a fair value of $1.16 million (C$1.8 million), to be expensed over 2 years. The options were valued using the Black-Scholes option pricing model. Assumptions used were a dividend yield of nil, expected volatility of 71.3%, risk free rate of 0.9% and expected life of 3.24 years. On April 26, 2016, the Corporation issued 1,353,423 replacement options to former employees of True Gold, with an average strike price of C$8.79 and a fair value of $8.8 million (C$11.1 million), included as part of purchase consideration (Note 3). Assumptions used were a dividend yield of nil, expected volatility of 66.30 – 68.63%, risk free rate of 0.5% and expected life of 0.75 years.


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The following table summarizes information about the outstanding and exercisable share options outstanding as at September 30, 2016:

Exercise Prices (C$) Outstanding Exercisable

Weighted average exercise price (C$)

Weighted average remaining

contractual life$4.77 - $7.99 487,846 282,938 5.22$ 0.65 years

$8.00 - $14.99 557,586 303,660 10.48 1.40 years$15.00 - $19.99 193,561 193,561 15.25 0.77 years$20.00 - $24.99 175,051 175,051 23.43 0.89 years$25.00 - $29.99 270,692 270,692 26.44 0.17 years$30.00 - $84.99 103,285 103,285 39.85 0.19 years

$85.00 - $449.57 2,656 2,656 336.85 0.64 years

1,790,677 1,331,843 17.93$ 0.73 years The Corporation has established a share option plan whereby the Corporation’s directors may from time to time grant options to directors, employees or consultants. The maximum term of any option is ten years. The exercise price of an option is not less than the volume weighted average trading price of the shares traded on the exchange for the five trading days immediately preceding the grant date. At September 30, 2016, there were 9,328,396 (December 31, 2015 – 5,902,031) options eligible to be granted under the plan, of which 7,537,719 (December 31, 2015 – 3,167,627) are still available for future grants.

(ii) Deferred share units On January 26, 2013, the Corporation established a deferred share unit plan (“DSU”) for the purposes of strengthening the alignment of interests between non-executive directors of the Corporation and shareholders by linking a portion of the annual director compensation to the future value of the Corporation’s common shares. Upon establishing the DSU plan for non-executive directors, the Corporation no longer grants options to non-executive directors.

The DSU allows each non-executive director to choose to receive, in the form of DSUs, all or a percentage of the director’s fees, which would otherwise be payable in cash. Compensation for serving on committees must be paid in the form of DSUs. The plan also provides for discretionary grants of additional DSUs by the Board. Each DSU fully vests upon award, but is distributed only when the director has ceased to be a member of the Board. Vested units are settled in cash based on the common share price at that time. A summary of the changes in DSUs is presented below:

Weighted averageDSUs grant price

outstanding (C$)

At December 31, 2014 96,763 4.54$ Granted 81,321 6.36 At December 31, 2015 178,084 5.37 Granted 26,819 16.76 Exercised/Released (39,199) 7.05 At September 30, 2016 165,704 6.82$


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The total fair value of DSUs at September 30, 2016, was $3.2 million (December 31, 2015 – $1.0 million). The fair value of the DSUs was recognized as share-based payments totaling $0.1 million recovery and $2.2 million expense for the three and nine months ended September 30, 2016 (September 30, 2015, $0.01 million and $0.3 million, respectively), with a corresponding amount recorded as a deferred share unit liability in the consolidated statement of financial position (Note 11). Following the resignation of two of the Corporation’s directors in the three months period ended September 30, 2016, the Corporation settled $0.7 million in outstanding DSUs (2015 - $Nil).

(iii) Performance share units In March 2014, following a comprehensive review of its executive compensation programs and pay practices, the Corporation introduced a change in its long term incentive plan (“LTI Plan”) to include a portion of performance-linked share unit awards (“PSUs”). The PSU program is intended to increase the pay mix in favour of long-term equity-based compensation with 3 year cliff-vesting to serve as an employee retention mechanism. A summary of the changes in PSUs is presented below:

Weighted averagePSUs exercise price

outstanding (C$)

At December 31, 2014 262,700 9.50$ Granted 298,000 6.10 Exercised/Released (1,888) 9.50 Expired (41,012) 8.02 At December 31, 2015 517,800 7.61 Granted 363,364 15.72 Exercised/Released (141,201) 7.91 Expired (188,769) 8.48 At September 30, 2016 551,194 12.58$ The total fair value of outstanding PSUs at September 30, 2016, was $5.7 million (December 31, 2015 - $1.6 million). The fair value of the PSUs was recognized as share-based payment expense totaling $1.0 million and $4.0 million for the three and nine months ended September 30, 2016, (September 30, 2015, $0.2 million and $0.9 million), and reflects additional expense of $Nil and $0.6 million for certain PSUs exercised in the three and nine months periods ended September 30, 2016. Subsequent to September 30, 2016, 758,865 PSUs were granted on October 7, 2016, with a fair value of $2.8 million. The new grant has a 2.2-year vesting period.

(iv) Stock appreciation rights

As part of the Karma Mine acquisition, the Corporation acquired 5,295,000 stock appreciation rights (“SARs”) from True Gold. Each SAR is converted to cash based on the closing price of Endeavour on the day prior to exercise multiplied by the ratio of 0.044, less C$0.19, until February 7, 2017. In the nine months ended September 30, 2016, 3,505,000 SARs were exercised for total proceeds of $1.7 million (2015 - $nil) and 200,000 SARs expired.


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As at September 30, 2016, 510,000 SARs remain outstanding with a fair value of $0.5 million (December 31, 2015 - $Nil).

(v) Restricted share units In July 2016, the Corporation introduced a change in its long term incentive plan (“LTI Plan”) to include a portion of restricted share unit awards (“RSUs”) for certain management and executives. The RSU program is intended to increase the pay mix in favour of long-term equity-based compensation to serve as an employee retention mechanism. As at September 30, 2016, 157,934 RSUs were outstanding with a fair value of $0.3 million (December 31, 2015, $Nil). Share-based payment expense of $0.3 million was recognized in the three and nine months ended September 30, 2016, with a corresponding amount recorded as a restricted share unit liability in the consolidated statement of financial position.

(c) Diluted earnings per share

Diluted net earnings (loss) per share was calculated based on the following:

2016 2015 2016 2015

92,063,075 41,314,367 76,324,976 41,314,367

Effect of dilutive securities Stock options 798,712 2,646 - 1,360 Diluted weighted average number of

shares outstanding 92,861,787 41,317,013 76,324,976 41,315,727

Basic weighted average number of shares outstanding


Due to the loss attributable to the shareholders of the Corporation in the three months ended September 30, 2016, 552,270 stock options were excluded from the computation of diluted earnings per share.

(d) Bought deal On July 11, 2016, the Corporation closed the bought deal financing announced on June 13, 2016. The Company issued a total of 7,187,500 ordinary shares at a price of C$20.00 per Share, which includes the exercise of the underwriters’ over-allotment option in full, for aggregate gross proceeds of $109.7 million (C$143.8 million) and net proceeds of $104.0 million (C$136.4 million) (the "Offering"). As part of the Offering, La Mancha Holding S.àr.l. purchased 1 million shares of the total shares issued, on the same terms and conditions, for $14.0 million (C$20 million).


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13. NON-CONTROLLING INTERESTS

The composition of the non-controlling interests is as follows:

Agbaou Gold Operations SA(Agbaou Mine)

Adamus Resources

Limited (Nzema Mine)

Segala Mining Corporation SA(Tabakoto Mine)

Burkina Mining Company SA(Youga Mine)

Societe des Mines d'Ity(Ity Mine)

Riverstone Karma SA

(Karma Mine) Total

At December 31, 2014 8,958$ (4,772)$ (29,601)$ 4,433$ -$ -$ (20,982)$ Net earnings (loss) 10,384 159 3,191 613 - - 14,347 Dividend distribution - - - (485) - - (485) At September 30, 2015 19,342 (4,613) (26,410) 4,561 - - (7,120) Arising on acquisition of the Ity Mine - - - - 37,102 - 37,102 Net earnings (loss) 3,321 68 (641) (256) 535 - 3,027 At December 31, 2015 22,663 (4,545) (27,051) 4,305 37,637 - 33,009 Arising on acquisition of the Karma Mine - - - - - 11,530 11,530 Net earnings (loss) 12,090 (693) 3,358 - 7,538 (275) 22,018 Dividend distribution (1,310) - - - (1,287) - (2,597) New share issuance 22 - - - - - 22 Disposal of the Youga Mine (Note 4) - - - (4,305) - - (4,305) At September 30, 2016 33,465$ (5,238)$ (23,693)$ -$ 43,888$ 11,255$ 59,677$

14. (LOSSES) GAINS ON FINANCIAL INSTRUMENTS, NET

2016 2015 2016 2015

(Loss) gain on marketable securities (55)$ (93)$ 261$ (427)$ Imputed interest on promissory note and other assets 13 220 38 659 Interest income (loss) 457 (27) 1,308 (199) Loss on derivative financial assets - - - (35) Gain (loss) on derivative financial liabilities (Note 9) 2,466 1,610 (16,560) 1,426 Gain (loss) on foreign currency 727 (2,579) (5,450) 1,564

3,608$ (869)$ (20,403)$ 2,988$


15. INCOME TAXES

The Corporation operates in numerous countries and, accordingly, it is subject to, and pays annual income taxes under, the various income tax regimes in the countries in which it operates. From time to time the Corporation is subject to a review of its income tax filings and in connection with such reviews, disputes can arise with the taxing authorities over the interpretation or application of certain rules to the Corporation’s business conducted within the country involved. If the Corporation is unable to resolve any of these matters favorably, there may be a material adverse impact on the Corporation’s financial performance, cash flows or results of operations. In the event that management’s estimate of the future resolution of these matters changes, the Corporation will recognize the effects of the changes in its consolidated financial statements in the period that such changes occur.


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In the fourth quarter of 2014, the Corporation’s Malian subsidiary, Segala Mining Corporation SA (“Semico”), received a tax assessment from the Malian tax authority of $40.6 million related to the fiscal years 2011 to 2013 and to various taxes. The Corporation and its advisors believe that a significant portion of the assessment’s tax claims are wholly without merit and as such have engaged with the tax authority actively since receiving the assessment in the fourth quarter of 2014 to resolve this matter. The Corporation continues to engage with the highest levels of Malian authorities together with its advisors to resolve this matter and given the response presented to the authorities as well as advice received from its advisors, a vigorous process is underway to refute the notified amounts as well as avoid any additional payments.

If the Corporation is unable to resolve these matters favorably, there may be a material adverse impact on the Corporation’s financial performance, cash flows and results of operations. In the event that management’s estimate of the future resolution of these matters changes, the Corporation will recognize the effects of the changes in its consolidated financial statements in the period that such changes occur. As at September 30, 2016, there has been no update on any of the ongoing taxation matters discussed above.

16. SUPPLEMENTAL CASH FLOW INFORMATION

(a) The earnings before income taxes were determined as:

2016 2015 2016 2015

Earnings before taxes from continuing operations 31,255 6,524 29,364 44,604

- 1,761 (3,273) 9,444 Deferred and current income taxes on discontinued operations - 308 871 1,711 Earnings before income taxes 31,255 8,593 26,962 55,759

Net earnings from discontinued operations and loss on disposal (Note 4)


(b) Proceeds from issue of common shares are composed of:

2016 2015 2016 2015

Share proceeds from bought deal (Note 12 (d)) 89,542 - 89,542 - - - 79,580 -

Share proceeds from exercise of share options (Note 12 (b)(i)) 21,488 - 14,705 - Total proceeds received from the issue of common shares 111,030 - 183,827 -

Share proceeds from private placement to La Mancha Holding S.à.r.l



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17. SEGMENTED INFORMATION

The following is an analysis of the Corporation’s revenue and results by reportable segment. The Youga Mine is no longer included in the Corporation’s operating segments due to its disposition by the Corporation on February 29, 2016, as discussed in Note 4.

Agbaou Mine

Côte d’Ivoire

Nzema Mine

Ghana

Tabakoto MineMali

ItyMine

Côte d’Ivoire

Karma Mine

Burkina FasoExploration Non-Mining Total

Revenue Gold revenue 68,068$ 31,391$ 49,482$ 20,372$ -$ -$ -$ 169,313$ Cost of sales Operating expenses 22,795 24,380 33,409 7,272 - - - 87,856 Depreciation and depletion 7,276 2,805 7,419 3,944 - - 163 21,607 Royalties 2,761 1,651 2,962 832 - - - 8,206 Earnings (loss) from mine operations 35,236 2,555 5,692 8,324 - - (163) 51,644 Corporate costs - - - - - - 5,984 5,984 Acquisition and restructuring costs (Note 3) - - - - - - 6,558 6,558 Share-based payments - - - - - - 2,886 2,886 Exploration - - - - - 2,520 - 2,520 Earnings (loss) from operations 35,236 2,555 5,692 8,324 - (2,520) (15,591) 33,696

Other (expenses) income (Losses) gains on financial instruments (1,455) 127 (553) 3,628 (461) (4) 2,326 3,608 Finance costs (186) (119) (353) (10) - - (5,381) (6,049) Other income - - - - - - - -

(1,641) 8 (906) 3,618 (461) (4) (3,055) (2,441) Earnings (loss) before taxes 33,595 2,563 4,786 11,942 (461) (2,524) (18,646) 31,255 Income taxes expense 1,704 (1,291) (2,519) (3,689) (973) - (234) (7,002)

Net earnings (loss) from continuing operations 35,299 1,272 2,267 8,253 (1,434) (2,524) (18,880) 24,253

Three months ended September 30, 2016


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Agbaou Mine

Côte d’Ivoire

Nzema Mine

Ghana

Tabakoto MineMali

Exploration Non-Mining Total

Revenue Gold revenue 48,592$ 31,454$ 41,780$ -$ -$ 121,826$ Cost of sales Operating expenses 22,295 27,589 25,660 721 - 76,265 Depreciation and depletion 7,192 5,151 6,690 24 19,057 Royalties 1,748 1,768 2,493 - - 6,009 Earnings (loss) from mine operations 17,357 (3,054) 6,937 (721) (24) 20,495 Corporate costs - - - - 4,744 4,744 Share-based payments - - - - 660 660 Exploration - - - 106 - 106 Earnings (loss) from operations 17,357 (3,054) 6,937 (827) (5,428) 14,985

Other income (expenses) (Losses) gains on financial instruments (179) (827) (1,652) 12 1,777 (869)

Finance costs (66) (70) (417) - (6,524) (7,077) Other (expense) income - - (157) (358) - (515)

(245) (897) (2,226) (346) (4,747) (8,461)

Earnings (loss) before taxes 17,112 (3,951) 4,711 (1,173) (10,175) 6,524 Income taxes recovery (expense) (409) 2,721 (3,629) (1) (261) (1,579)

Net earnings (loss) from continuing operations 16,703$ (1,230)$ 1,082$ (1,174)$ (10,436)$ 4,945$

Three months ended September 30, 2015

Agbaou Mine

Côte d’Ivoire

Nzema Mine

Ghana

Tabakoto MineMali

ItyMine

Côte d’Ivoire

Karma Mine

Burkina FasoExploration Non-Mining Total

Revenue Gold revenue 176,483$ 79,987$ 143,815$ 73,359$ -$ -$ -$ 473,644$ Cost of sales Operating expenses 60,610 66,250 98,845 33,632 - - - 259,337 Depreciation and depletion 20,481 12,007 22,248 14,440 - 436 69,612 Royalties 6,531 4,198 8,613 2,683 - - - 22,025 Earnings (loss) from mine operations 88,861 (2,468) 14,109 22,604 - - (436) 122,670 Corporate costs - - - - - - 16,405 16,405 Acquisition and restructuring costs (Note 3) - - - - - - 24,580 24,580 Share-based payments - - - - - - 8,603 8,603 Exploration - - - - - 4,388 - 4,388 Earnings (loss) from operations 88,861 (2,468) 14,109 22,604 - (4,388) (50,024) 68,694

Other (expenses) income (Losses) gains on financial instruments (3,300) (128) (3,171) 3,704 (1,119) 87 (16,476) (20,403) Finance costs (263) (438) (1,124) (31) - - (17,341) (19,197) Other income - - - - - - 270 270

(3,563) (566) (4,295) 3,673 (1,119) 87 (33,547) (39,330)

Earnings (loss) before taxes 85,298 (3,034) 9,814 26,277 (1,119) (4,301) (83,571) 29,364 Income taxes recovery (expense) 2,313 2,717 (5,108) (7,921) (1,521) 811 (689) (9,398)

Net earnings (loss) from continuing operations 87,611 (317) 4,706 18,356 (2,640) (3,490) (84,260) 19,965

Nine months ended September 30, 2016


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Agbaou Mine

Côte d’Ivoire

Nzema Mine

Ghana

Tabakoto MineMali

Exploration Non-Mining Total

Revenue Gold revenue 152,299$ 103,407$ 129,367$ -$ -$ 385,073$

Cost of sales Operating expenses 60,866 80,553 87,011 721 - 229,151 Depreciation and depletion 20,413 12,213 21,223 74 53,923 Royalties 5,431 5,890 7,731 - - 19,052 Earnings (loss) from mine operations 65,589 4,751 13,402 (721) (74) 82,947 Corporate costs - - - - 13,177 13,177 Share-based payments - - - - 2,900 2,900 Exploration - - - 1,171 - 1,171 Earnings (loss) from operations 65,589 4,751 13,402 (1,892) (16,151) 65,699

Other income (expenses) (Losses) gains on financial instruments (174) (658) 1,982 316 1,522 2,988 Finance costs (213) (209) (1,306) - (21,976) (23,704) Other income (expense) - - - (379) - (379)

(387) (867) 676 (63) (20,454) (21,095)

Earnings (loss) before taxes 65,202 3,884 14,078 (1,955) (36,605) 44,604 Income taxes recovery (expense) 2,786 5,665 (4,157) (53) (1,045) 3,196

Net earnings (loss) from continuing operations 67,988$ 9,549$ 9,921$ (2,008)$ (37,650)$ 47,800$

Nine months ended September 30, 2015

Segment revenue reported represents revenue generated from external customers. There were no inter-segment sales during the three and nine months ended September 30, 2016. Geographical information The Corporation’s revenue from continuing operations from external customers by location of operations is presented above and information about its non-current assets by location is detailed below:

Information about major customers The Corporation’s segments have two major customers – Metalor and INTL. The Corporation is not economically dependent on a limited number of customers for the sale of gold because gold can be sold through numerous commodity market traders worldwide.

Non-current assetsSepember 30,

2016December 31,

2015

Côte d’Ivoire 197,839$ 192,529$ Ghana 185,963 180,338 Mali 288,121 290,055 Burkina Faso 465,509 150,127 Other 4,293 4,132

1,141,725$ 817,181$


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Total assets and liabilities

Total assets

Total liabilities

Total assets

Total liabilities

Agbaou Mine 219,521$ 38,162$ 197,977$ 37,063$ Nzema Mine 209,094 35,156 204,185 31,831 Tabakoto Mine 340,113 83,133 342,597 75,465 Youga Mine (Note 4) - - 51,646 20,760 Ity Mine (Note 3) 83,324 20,898 104,739 21,274 Karma Mine (Note 3) 310,294 37,281 - - Houndé Project 204,844 21,806 138,440 - Exploration 1,558 823 857 19,887 Non-Mining 51,946 155,288 13,653 250,702

1,420,694$ 392,547$ 1,054,094$ 456,982$

September 30, 2016 December 31, 2015

18. CAPITAL MANAGEMENT

The Corporation’s objectives of capital management are to safeguard the entity’s ability to support the Corporation’s normal operating requirements on an ongoing basis, continue the development and exploration of its mineral properties and support any expansionary plans. In the management of capital, the Corporation includes the components of equity, short-term borrowings and long-term debt, net of cash and cash equivalents, restricted cash and marketable securities. Capital, as defined above, is summarized in the following table:

The Corporation manages its capital structure and makes adjustments to it in light of changes in its economic environment and the risk characteristics of the Corporation’s assets. To effectively manage the entity’s capital requirements, the Corporation has in place a planning, budgeting and forecasting process to help determine the funds required to ensure the Corporation has the appropriate liquidity to meet its operating and growth objectives.

September 30,2016

December 31, 2015

Equity 1,028,147$ 597,112$ Current and long-term debt 128,402 225,582

1,156,549 822,694 Less: Cash (137,094) (109,519) Cash - restricted (5,222) (4,824) Marketable securities (691) 375

1,013,542$ 708,726$


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19. FINANCIAL INSTRUMENTS

Financial assets and liabilities

The Corporation’s financial instruments consist of cash, cash-restricted, marketable securities, trade and other receivables, other assets, working capital loan, long-term receivable, trade and other payables, derivative financial liabilities and long-term debt. The fair value of these financial instruments approximates their carrying value, unless otherwise noted below. The Corporation has certain financial assets and liabilities that are held at fair value. The fair value hierarchy establishes three levels to classify the inputs to valuation techniques to measure fair value: Classification of financial assets and liabilities Level 1 – quoted prices (unadjusted) in active markets for identical assets or liabilities; Level 2 – inputs other than quoted prices included within level 1 that are observable for the asset

or liability, either directly (that is, as prices) or indirectly (that is, derived from prices); and Level 3 – inputs for the asset or liability that are not based on observable market data (that is,

unobservable inputs). At September 30, 2016, the levels in the fair value hierarchy into which the Corporation’s financial assets and liabilities measured and recognized in the statement of financial position at fair value are categorized are as follows:

Level 1Input

Level 2Input

Level 3Input

AggregateFair Value

Assets: Cash 137,094$ -$ -$ 137,094$ Cash - restricted 5,222 - - 5,222 Marketable securities 691 - - 691

143,007$ -$ -$ 143,007$

Liabilities: Derivative financial liabilities (Note 9) - 8,671 - 8,671

-$ 8,671$ -$ 8,671$

September 30, 2016


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At December 31, 2015, the levels in the fair value hierarchy into which the Corporation’s financial assets and liabilities are measured and recognized in the statement of financial position at fair value are categorized as follows:

There were no transfers between any of the levels in the periods.

Financial instrument risk exposure The Corporation’s activities expose it to a variety of risks that may include credit risk, liquidity risk, currency risk, interest rate risk and other price risks, including equity price risk. The Corporation examines the various financial instrument risks to which it is exposed and assesses any impact and likelihood of those risks. (i) Credit risk

Credit risk is the risk that the counterparty to a financial instrument will cause a financial loss for the Corporation by failing to discharge its obligations. There has been no change in the Corporation’s objectives and policies for managing this risk in the three and nine months ended September 30, 2016.

The Corporation’s maximum exposure to credit risk is as follows:

September 30, 2016

December 31, 2015

Cash 137,094$ 109,519$ Cash - restricted 5,222 4,824 Marketable securities 691 375 Trade and other receivables 13,844 13,045 Working capital loan 1,050 1,017 Long-term receivable 294 246

158,195$ 129,026$

(ii) Liquidity risk

Liquidity risk is the risk that the Corporation will encounter difficulty in meeting obligations associated with its financial liabilities that are settled by delivering cash, physical gold or another financial asset. The Corporation has a planning and budgeting process in place to help determine the funds required to support the Corporation’s normal operating requirements.

Level 1Input

Level 2Input

Level 3Input

AggregateFair Value

Assets: Cash 109,519$ -$ -$ 109,519$ Cash - restricted 4,824 - - 4,824$ Marketable securities 375 - - 375$

114,718$ -$ -$ 114,718$

Liabilities: Derivative financial liabilities (Note 9) - 5,463 - 5,463

-$ 5,463$ -$ 5,463$

December 31, 2015


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The following table summarizes the contractual obligations at September 30, 2016:

Within 1 year

2 to 3 years

4 to 5 years

Over 5 years Total

Trade and other payables 145,667$ -$ -$ -$ 145,667$ Long-term debt - 130,000 10,000 - 140,000 Finance lease obligations 4,540 29,893 21,441 4,840 60,714 Minimum operating lease payments 2,341 4,137 2,846 273 9,597 Derivative financial liabilities 8,671 - - - 8,671

161,219$ 164,030$ 34,287$ 5,113$ 364,649$

Market risk (i) Currency risk

Currency risk relates to the risk that the fair values or future cash flows of the Corporation’s financial instruments will fluctuate because of changes in foreign exchange rates. Exchange rate fluctuations may affect the costs that the Corporation incurs in its operations. There has been no change in the Corporation’s objectives and policies for managing this risk during the three and nine months ended September 30, 2016. The Corporation has not hedged its exposure to foreign currency exchange risk.

The table below highlights the monetary net assets denominated in foreign currencies (in $US):

The effect on earnings and other comprehensive earnings before tax as at September 30, 2016, of a 10% appreciation or depreciation in the foreign currencies against the US dollar on the above mentioned financial and non-financial assets and liabilities of the Corporation is estimated to be $3.6 million (December 31, 2015, $5.7 million), assuming that all other variables remained constant. The calculation is based on the Corporation’s statement of financial position as at September 30, 2016.

(ii) Interest rate risk Interest rate risk is the risk that future cash flows from, or the fair values of, the Corporation’s financial instruments will fluctuate because of changes in market interest rates. The Corporation is exposed to interest rate risk primarily on its long-term debt. Since marketable securities and government treasury securities held as loans are short term in nature and are usually held to maturity, there is minimal fair value sensitivity to changes in interest rates. The Corporation continually monitors its exposure to interest rates and is comfortable with its exposure given the relatively low short-term US interest rates and LIBOR. The effect on earnings and other comprehensive earnings before tax as at September 30, 2016, of a 10% change in interest rate on the Facility is estimated to be $0.1 million (December 31, 2015 - $0.1 million).

September 30, 2016

December 31, 2015

Canadian dollar (1,887)$ (2,961)$ CFA Francs 39,330 60,530 Other currencies (989) (687)

36,454$ 56,882$


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20. COMMITMENTS AND CONTINGENCIES

Contracts and Leases (i) The Corporation has commitments in place at all four of its mines for drill and blasting services, load and

haul services, and supply of explosives and hydrocarbon services.

(ii) The Corporation has various contracts in place at Nzema mine to purchase higher grade ore from third parties for processing that typically do not extend to more than one year.

(iii) The Corporation has various contracts in place for the construction of the Hounde mine.

(iv) The Corporation is subject to operating and finance lease commitments in connection with the purchase of mining equipment, light duty vehicles, operational building facilities and rented office premises.

(v) The Corporation is, from time to time, involved in various claims, legal proceedings and complaints arising in the ordinary course of business. The Corporation cannot reasonably predict the likelihood or outcome of these actions. The Corporation does not believe that adverse decisions in any other pending or threatened proceedings related to any matter, or any amount which may be required to be paid by reason thereof, will have a material effect on the financial condition or future results of operations.

(vi) The Corporation’s mining and exploration activities are subject to various laws and regulations governing

the protection of the environment. These laws and regulations are continually changing and are generally becoming more restrictive. The Corporation believes its operations are materially in compliance with all applicable laws and regulations. The Corporation has made, and expects to make in the future, expenditures to comply with such laws and regulations.

Long-term compensation award – Gold Strategy In early 2009, Endeavour launched its gold investment strategy (“Gold Strategy”), which is the basis of the Corporation’s gold mining business. In order to retain, attract, and motivate a group of specialist professional employees with the skills and experience necessary to significantly enhance the profitability and growth of Endeavour’s gold business, a long term bonus policy (the “Gold LTI Policy”) was established concurrently with the implementation of the Gold Strategy. An award under the Gold LTI Policy (a “Gold LTI Award”) is crystalized and becomes payable upon the sale of a material gold asset, completion of a corporate transaction, and certain other events. The Gold LTI Award is calculated as 10% of the difference between the market value of the transaction and the equity cost base of the Corporation. The equity cost base is the accumulation of the values at which the shares were issued by Endeavour to build the gold company. As of September 30, 2016, the equity cost base was equivalent to approximately C$16.93 per issued share. The Gold LTI Award payable on a crystallization event would be determined based on the nature of the crystallization event at the date of the transaction and may vary significantly from an estimate derived from Endeavour’s market capitalization at September 30, 2016. No crystallization event has occurred at September 30, 2016.

(expressed in thousands of united states dollars) (unaudited)september 30, 2016, with associated...

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