Corporate Governance

Corporate Social Responsibility (CSR) Charter

The Corporation is committed to the highest ethical, environmental and social practices that meet and/or exceed international standards in the countries in which the Corporation operates.

The Corporation defines sustainability not only as a simple measure of the life of a mine and its direct environmental and social impacts but also by the projects and initiatives involving participative implementation of sustainable activities in the surrounding communities leading to a permanent improved standard of living and well-being for the latter communities well beyond the life of the mine.

Our 1% Commitment

The Corporation has made a commitment to contribute at least 1% of our after-tax profits to fund CSR initiatives that benefit the countries and communities associated with our operations.

CSR Policy

The Corporation has a CSR committee that reports directly to the Board on all current and emerging social responsibility issues and oversees the Corporation’s actions and CSR programmes. In particular it focusses on the following points:

• Promote and create shared value with the communities associated with our operations in particular educational opportunities through professional training and educational scholarships.
• Develop and maintain infrastructure such as roads, water supply and electricity that benefit local communities.
• Seek partnership opportunities to enhance local implementation and ensure long term sustainability of the CSR projects that are funded by the Corporation.
• Identification and implementation of appropriate local governance structures to avoid support for political activity, individual sponsorship or programmes that primarily benefit employees.

The CSR committee will also report to the shareholders by producing a yearly report on the CSR projects and initiatives funded by the Corporation’s 1% commitment. This report will be published on the Corporation’s website.

Roles and responsabilities of committee chairs

General

The chair of a committee created by the Company’s Board of Directors is responsible for the management, development and effective performance of the committee. He directs and guides the committee on all aspects of its mandate and takes all reasonable measures to ensure that the committee fulfills its responsibilities.

Description of the functions of a committee chair

In addition to the responsibilities generally associated with the position of a director of the Company, the committee chair also has the following responsibilities, among others:

• prepare the agendas for the committee meetings
• chair all the committee meetings
• plan and organize committee activities in conjunction with the management, including preparing and directing committee meetings and satisfying himself as to the quality, quantity and timeliness of the information provided to the committee
• during the committee meetings, encourage the active participation by the members in the proceedings, facilitate the discussions, promote a consensus and ensure that any decisions that are taken are clear and duly recorded
• ensure that committee members who are not members of the management can hold private discussions, without the members of management being present, on the Company’s activities that are subject to review by the committee
• report to the Company’s Board of Directors on the committee’s activities, decisions and recommendations and distribute the minutes of the committee meetings
• fulfill any other responsibility requested by the committee

Trading Restrictions Policy of the Corporation

The rules set forth in the laws and case law pertaining to transactions in which directors have a personal interest or to the use, by a director, of privileged information received in connection with his or her duties are strict. The Corporation expects directors to comply with these rules.

Directors are, for instance, precluded from :

1. using any property of the Corporation for their own benefit or to the benefit of a third party without paying an adequate consideration or indemnity
2. using for their own benefit or for the benefit of their families or third parties confidential information learned through employment or performance of duties for the purposes of transactions on securities of the Corporation or otherwise, unless such use is permitted by law or the shareholders of the Corporation consent thereto and, in the latter case, only to the extent that using such information does not prejudice the creditors of the Corporation

An insider may not purchase any financial instrument that is designed to cover or compensate the holder against a drop in the value of the Corporation’s shares that has been awarded to an insider or that is held directly or indirectly by an insider. In order to clarify this rule a financial instrument is defined as any forward contract (puts/calls, futures, options or any combination of such instruments), share swaps, forward collar contracts or shares in a fund that is publically traded.

IMPORTANT

The Corporation is a reporting issuer as defined in securities laws. Directors are thus insiders and, as a result, must comply with even more specific rules. These rules are set forth in the following paragraphs. As soon as they become insiders, directors must file insider reports relating to the securities of the Corporation that they hold, directly or through a third party. In addition, insiders are precluded from dealing on securities of the Corporation by using privileged information as defined in the following paragraphs.

Obligation to file an insider report

The Corporation’s insiders must inform securities regulatory authorities in each Canadian province where the Corporation is a reporting issuer (the “Regulators”) of their interest pertaining to the control they exercise over the Corporation securities and of any change in this control.

This obligation to file an insider report is personal to each insider as an individual, regardless of the fact that he or she holds securities personally or indirectly through a third party or corporation. An insider who fails to disclose control or a change in control over securities is liable to an administrative monetary penalty of $100 for each day during which such failure to report occurs or judicial proceedings can be instituted and a fine or a sentence of imprisonment may be imposed.
Insider reports must be filed with the Regulators through the “system for electronic data on insiders” (SEDI).

1. Definition of “insider”
   For the purposes of the obligation to file an insider report, the following persons are deemed to be “insiders”: * the Corporation if it holds any of its securities; * directors and officers of the Corporation, of its subsidiaries and of corporations that are insiders of the Corporation; * any person who exercises control over 10 % or more of the voting rights attached to all outstanding voting securities of the Corporation other than securities underwritten in the course of a distribution. The expression “officer” designates the Chair of the Board, a Vice-Chair, the Chief Executive Officer, the Chief Operating Officer, the Chief Financial Officer, the President, a Vice President, the Secretary, the Assistant-Secretary, the Treasurer, the Assistant-Treasurer, or the General Manager of the Corporation any other individual acting in similar capacity
2. Initial report
   The initial report must be filed through SEDI within 10 days following the date at which a person becomes an insider.
3. Report on subsequent changes
   Reports on changes on the interest of each insider with regard to ownership or control on securities of the Corporation must also be filed with the Regulators within 10 days following the date of such changes. This obligation applies to any purchase or sale of securities of the Corporation. It also applies to any grant and exercise of options under the Stock Option Plan of the Corporation.
4. Special reports
   Where an insider acquires 10 % or more of the shares of the share capital of the Corporation, or, after having reached this first milestone, each time that the insider acquires an additional interest of 2 % in such shares, a press release must be issued and filed with the Regulators immediately (unless the acquisition is made through a formal take-over bid). Within two business days from the issue of this press release, a statement containing the information required by regulation must be filed with the Regulators.
5. False statements
   Every report must be made in good faith and contain all the required information. One must answer all the questions and declare all the relevant facts to make it so that the report is not misleading in the light of the circumstances in which it is made.
6. Fees and publication
   There is no fee for filing an insider report. Once filed, the report becomes a public document, available to anyone.

Prohibition to trade on the basis of privileged information

Anyone who possesses privileged information is precluded from trading in the securities of the Corporation on the basis of such information. The law simply aims at protecting investors who do not have access to privileged information on the Corporation by prohibiting the person who possesses such information from using it for the purposes of trading in the securities of the Corporation.

1. Privileged information
   In this matter, and without restricting the larger definition set out in other documents issued by the Corporation or in undertakings of the insider to the Corporation, an information is considered privileged when:
   * it has not been disclosed to the public; and
   * it could affect the decision of a reasonable investor.It is difficult to give specific examples of what may constitute privileged information, each case having to be analysed in light of the facts. The information pertaining to future possibilities would generally be too uncertain to have a material effect on the market price or value of the shares. An information becomes precise only when the possibilities become “probabilities” or “certainties”.
   The information must also be relevant, meaning that it must be of such a nature that if it was generally known, one could reasonably expect that it would have an impact on the value or the market price of the shares.
   There is no distinction between “corporate” information (i.e., the information from internal sources relating to the business and affairs of the Corporation) and the information “relating to the market” (i.e., the information from external sources concerning the market for the shares of the Corporation).
   For instance, a person may be in possession of privileged information to the effect that the Corporation will, in the near future, enter into an important contract, or that an important client of the Corporation does not intend to do business with the Corporation anymore. An information relating to the market may, for instance, take the form of an information that a person obtains to the effect that a financial analyst will soon publish a favourable report praising the merits of an investment in the shares of the Corporation. The person who obtains such information must abstain from trading securities of the Corporation until such information is publicly announced.
2. Duty to abstain from trading on the basis of privileged information
   Trading in the securities of the Corporation on the basis of privileged information is forbidden until such information has been disclosed to the public (either through press releases of the Corporation, news articles or news disseminated through other publicly accessible means of communication). In addition, this privileged information cannot be used in any other manner, for instance, for trading in securities of another public corporation, if the value or the market price of the shares of this corporation may be affected by the variation of the value or the market price of the Corporation shares.
3. Duty to abstain from divulging privileged information
   If an insider is in possession of privileged information, he is prohibited by law from communicating or divulging such information to anyone unless the insider believes in good faith that the information is generally known, or that such divulgation or communication is in the necessary course of business and, in good faith, nothing leads him to believe that the information will be illegally used or disclosed. This legal prohibition, applicable to insiders, does in no way restrict the scope of the wider duty of confidentiality imposed by other documents issued by the Corporation or undertaken by the insider under specific agreements.Any communication or divulgation of privileged information, such as information concerning the income, pricing and other financial subjects must be made exclusively through the Chairman of the Board or the President and Chief Executive Officer or the Chief Financial Officer. Furthermore, in no event may a director, officer or employee disseminate any information if such information is false or misleading.Certain information can be so sensitive that it should not be disclosed even within the Corporation, unless such disclosure is necessary to enable an employee to perform his or her duties (on a “need to know” basis). Such information include, for instance, proposed transactions on securities, significant capital expenditures, mergers or acquisitions prior public announcement. So-called “Chinese Walls” must be maintained around employees working on such projects. No director, officer or employee should be provided with information about such projects unless authorized by the project coordinator. Accordingly, persons inside the “Chinese Wall” may not, by discussion or otherwise, disclose information concerning such projects to employees outside the “Chinese Wall”. Appropriate security measures must be employed by those within the “Chinese Wall” to preserve secrecy.Appropriate measures must be taken to avoid disclosure of privileged information to outsiders. Particular care must be taken to guard against inadvertent disclosure of privileged information by discussing in public places such as taxis, elevators or restaurants, by discussing on cellular phones, by discussing with friends or by reading confidential documents on planes, trains or other places where their contents may be seen by outsiders. Care must also be taken to prevent the dissemination of privileged information to people outside the Corporation who are frequently on the premises of the Corporation for conferences or other meetings.
4. Blackout periods
   The appropriate person with overall responsibility for a project as well as an insider who is in possession of undisclosed material information that may affect current or future earnings of the Corporation, will consult with the Chief Executive Officer (“CEO”) or Chief Financial Officer (“CFO”) to determine if there is privileged information and if a blackout period should be imposed and which employees would be affected by such a blackout period. The CEO or CFO will, by email or other form of written communication, advise all Directors, Officers and those employees deemed to be in possession of undisclosed material information to refrain from trading until otherwise advised, or two business days after the release of the appropriate news release, whichever is the earlier.
   In circumstances where the Corporation is contemplating a major transaction or activity that could raise the Corporation’s profile in the marketplace, the CEO or CFO will, by email or other form of written communication, advise all Directors, Officers and if deemed advisable or necessary, all or certain employees to refrain from trading.Even in the absence of privileged information, the directors and officers of the Corporation are prohibited from trading in the Corporation’s securities for a period commencing 10 days before (20 days in the case of the annual financial statements) and ending one day after the public dissemination of the financial statements.Such a trading prohibition is also applicable for a period commencing a week preceding the disclosure of information relating to a dividend, a material acquisition or financing or any other material information as well as a week preceding the meeting of the board of directors and ending after two days of trading activities have elapsed following their public dissemination.
   The following table represents the prohibited period for each financial year. This table is based on the public dissemination of financial results at the latest 45 days after the end of each quarter and 90 days after the financial year end:Period Trading
   January 1 – March 11 Authorized(1)
   March 12 – April 2 Prohibited
   April 3 – May 4 Authorized(1)
   May 5 – May 17 Prohibited
   May 18 – August 3 Authorized(1)
   August 4 – August 16 Prohibited
   August 17 – November 3 Authorized(1)
   November 4 – November 16 Prohibited
   November 17 – December 31 Authorized(1)(1) Unless in possession of privileged information.Notwithstanding the foregoing, the Corporation reserves the right to issue a notice from the Chairman of the Board or the President and Chief Executive Officer to allow trading on securities of the Corporation within these blackout periods.
5. Circumstances where an insider may trade in securities on the basis of privileged information
   If an insider trades in the Corporation securities where he is in possession of privileged information, he will not be held liable to the extent that he can prove that he was, in good faith, under the impression that the information had been divulged to the public or the other party.

Penalties

If an insider fails to file an insider report, makes a false statement or trades on the basis of privileged information, judicial proceedings can be instituted against the insider and a fine or a sentence of imprisonment may be imposed by the courts. An administrative monetary penalty of $100 for each day during which a failure to report occurs may be imposed subject to a maximum of $5,000.

The minimum fine for failure to file a report is $1,000 with a maximum of $20,000 for a natural person and $50,000 in other cases. The minimum fine for making a false statement is $5,000 with a maximum of $5,000,000. In the case of illegal use of a privileged information, the courts can force the insider to indemnify the persons who suffered direct damages or to compensate the Corporation for profits or direct benefits obtained from such illegal use. They may also impose a fine equal to double the profit that may be realized from the illegal action or $5,000 up to a maximum amount equal to four times the profit that was realized or $5,000,000, whichever is greater. The prison term shall not exceed five years. Every person who aids a person in the commission of an offence is guilty of the offence as if he had committed it himself.

An insider may not purchase any financial instrument that is designed to cover or compensate the holder against a drop in the value of the Corporation’s shares that has been awarded to an insider or that is held directly or indirectly by an insider. In order to clarify this rule a financial instrument is defined as any forward contract (puts/calls, futures, options or any combination of such instruments), share swaps, forward collar contracts or shares in a fund that is publically traded.

Conclusion

It is very important to file all the required insider reports, including the initial report and the following reports on the change in the interest or control that any insider may exercise on the Corporation securities and to be careful with regard to transactions on the Corporation securities or on securities of the Corporation affiliates, if the insider holds privileged information. If the insider has doubt as to the need for filing a report, he or she should consult with the Chairman of the Board or the President and Chief Executive Officer.

Majority Voting policy

The board of directors (the “Board”) of Dynacor Gold Mines Inc. (the “Corporation”) believes that each of its members should carry the confidence and support of the Corporation’s shareholders. To this end, the directors of the Corporation have unanimously adopted this Majority Voting Policy.

In an uncontested election of directors of the Corporation, each director should be elected by the vote of a majority of the shares represented in person or by proxy at any shareholders’ meeting for the election of directors. Accordingly, if any nominee for director receives a greater number of votes “withheld” from his election than votes “for” such election, that nominee shall promptly tender his resignation to the Chairman of the Board following the Corporation’s shareholders’ meeting at which he is elected. In this Majority Voting Policy, an “uncontested election” means an election where the number of nominees for director is equal to the number of directors authorized to be elected upon such election as determined by the Board.

The Board shall consider the resignation offer within 90 days following the meeting at which the director whose resignation has been tendered was elected. The Board shall be expected to accept the resignation except in situations where extenuating circumstances would warrant the applicable director to continue to serve on the Board. In considering whether or not to accept the resignation, the Board will consider all factors deemed relevant by members of the Board including, without limitation, the stated reasons why shareholders “withheld” votes from the election of that nominee,  such director’s contributions to the Corporation, the Corporation’s corporate governance policies, alternatives to cure the underlying cause of the withheld votes, the overall composition of the Board (including the current mix of skills and attributes of the Board), and whether accepting the resignation would cause the Corporation to fail to meet any applicable listing, statutory or regulatory requirements.

Following the Board’s decision on the resignation, the Board shall promptly disclose, via press release, its decision whether to accept the director’s resignation offer and shall provide a copy of such press release to the Toronto Stock Exchange. Should the Board decline to accept the resignation offer, it shall include in the press release the reasons for its decision.

Any director who tenders his resignation pursuant to this Policy shall not participate in any meeting of the Board in which it will be decided whether his resignation shall be accepted.

Subject to any corporate law restrictions, the Board may (i) leave the resultant vacancy unfilled until the next shareholders’ annual meeting, (ii) fill the vacancy through the appointment of a new director whom the Board considers to merit the confidence of the shareholders, or (iii) call a special meeting of shareholders at which there will be presented a new candidate to fill the vacant position.

The Board may adopt such procedures as it sees fit to assist it in its determinations with respect to this Majority Voting Policy.

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The purpose of this Advance Notice By-law (the “By-law”) is to establish the conditions and framework under which holders of record of common shares of the Corporation may exercise their right to submit director nominations by fixing a deadline by which such nominations must be submitted by a shareholder to the Corporation prior to any annual or special meeting of shareholders, and sets forth the information that a shareholder must include in the notice to the Corporation for the notice to be in proper written form.

It is the position of the Corporation that this By-law is beneficial to shareholders and other stakeholders.

1. Nomination procedures – Subject only to the Business Corporations Act (Québec) (the “Act”) and the articles of the Corporation, only persons who are nominated in accordance with the following procedures shall be eligible for election as directors of the Corporation. Nominations of persons for election to the board of directors of the Corporation (the “Board”) may be made at any annual meeting of shareholders, or at any special meeting of shareholders, if one of the purposes for which the special meeting was called is the election of directors. Such nominations may be made in the following manner:

1. by or at the direction of the Board, including pursuant to a notice of meeting;
2. by or at the direction or request of one or more shareholders pursuant to a proposal made in accordance with the provisions of the Act, or a requisition of the shareholders made in accordance with the provisions of the Act; or
3. by any person (a “Nominating Shareholder”): (A) who, at the close of business on the date of the giving of the notice provided for below in this By-law and on the record date for notice of such meeting, is entered in the securities register as a holder of one or more shares carrying the right to vote at such meeting or who beneficially owns shares that are entitled to be voted at such meeting; and (B) who complies with the notice procedures set forth below in this By-law.

2. Timely notice – In addition to any other applicable requirements, for a nomination to be made by a Nominating Shareholder, the Nominating Shareholder must have given timely notice thereof in proper written form to the Corporate Secretary of the Corporation at the principal executive offices of the Corporation.

3. Manner of timely notice – To be timely, a Nominating Shareholder’s notice to the Corporate Secretary of the Corporation must be made:

1. in the case of an annual meeting of shareholders, not less than 30 nor more than 65 days prior to the date of the annual meeting of shareholders; provided, however, that in the event that the annual meeting of shareholders is to be held on a date that is less than 50 days after the date (the “Notice Date”) on which the first public announcement of the date of the annual meeting was made, notice by the Nominating Shareholder may be made not later than the close of business on the tenth (10th) day following the Notice Date; and
2. in the case of a special meeting (which is not also an annual meeting) of shareholders called for the purpose of electing directors (whether or not called for other purposes), not later than the close of business on the fifteenth (15th) day following the day on which the first public announcement of the date of the special meeting of shareholders was made. In no event shall any adjournment or postponement of a meeting of shareholders or the announcement thereof commence a new time period for the giving of a Nominating Shareholder’s notice as described above.

4. Proper form of timely notice – To be in proper written form, a Nominating Shareholder’s notice to the Corporate Secretary of the Corporation must set forth:

1. as to each person whom the Nominating Shareholder proposes to nominate for election as a director: (A) the name, age, business address and residential address of the person; (B) the principal occupation or employment of the person; (C) the class or series and number of shares in the capital of the Corporation which are controlled or which are owned beneficially or of record by the person as of the record date for the meeting of shareholders (if such date shall then have been made publicly available and shall have occurred) and as of the date of such notice; and (D) any other information relating to the person that would be required to be disclosed in a dissident’s proxy circular in connection with solicitations of proxies for election of directors pursuant to the Act and Applicable Securities Laws (as defined below); and
2. as to the Nominating Shareholder giving the notice, any proxy, contract, arrangement, understanding or relationship pursuant to which such Nominating Shareholder has a right to vote any shares of the Corporation and any other information relating to such Nominating Shareholder that would be required to be made in a dissident’s proxy circular in connection with solicitations of proxies for election of directors pursuant to the Act and Applicable Securities Laws (as defined below).

The Corporation may require any proposed nominee to furnish such other information, including a written consent to act, as may reasonably be required by the Corporation to determine the eligibility of such proposed nominee to serve as an independent director of the Corporation or that could be material to a reasonable shareholder’s understanding of the independence, or lack thereof, of such proposed nominee.

5. Eligibility for nomination as a director – No person shall be eligible for election as a director of the Corporation unless nominated in accordance with the provisions of this By-law; provided, however, that nothing in this By-law shall be deemed to preclude discussion by a shareholder (as distinct from the nomination of directors) at a meeting of shareholders of any matter in respect of which it would have been entitled to submit a proposal pursuant to the provisions of the Act. The Chairman of the meeting shall have the power and duty to determine whether a nomination was made in accordance with the procedures set forth in the foregoing provisions and, if any proposed nomination is not in compliance with such foregoing provisions, to declare that such defective nomination shall be disregarded.

6. Terms – For purposes of this By-law:

1. “public announcement” shall mean disclosure in a press release reported by a national news service in Canada, or in a document publicly filed by the Corporation under its profile on the System of Electronic Document Analysis and Retrieval at www.sedar.com; and
2. “Applicable Securities Laws” means the applicable securities legislation of each relevant province and territory of Canada, as amended from time to time, the rules, regulations and forms made or promulgated under any such statute and the published national instruments, multilateral instruments, policies, bulletins and notices of the securities commission and similar regulatory authority of each province and territory of Canada.

7. Delivery of notice – Notwithstanding any other provision of this By-law, notice given to the Corporate Secretary of the Corporation pursuant to this By-law may only be given by personal delivery, facsimile transmission or by email (at such email address as stipulated from time to time by the Corporate Secretary of the Corporation for purposes of this notice), and shall be deemed to have been given and made only at the time it is served by personal delivery, email (at the aforesaid address) or sent by facsimile transmission (provided that receipt of confirmation of such transmission has been received) to the Corporate Secretary at the address of the principal executive offices of the Corporation; provided that if such delivery or electronic communication is made on a day which is a not a business day or later than 5:00 p.m. (Montreal time) on a day which is a business day, then such delivery or electronic communication shall be deemed to have been made on the subsequent day that is a business day.

8. Board Discretion – Notwithstanding the foregoing, the Board may, in its sole discretion, waive any requirement in this By-law.