Court File and Parties

COURT FILE NO.: CV-14-504010CP DATE: 20170425 ONTARIO SUPERIOR COURT OF JUSTICE

BETWEEN:

MARTIN GERARD Plaintiff – and – DETOUR GOLD CORPORATION and GERALD PANNETON Defendants

COUNSEL: Andrew J. Morganti and Matthew M.A. Stroh, for the Plaintiff Luis Sarabia and Chantelle T. Spagnola for the Defendants

HEARD: April 25, 2017

PERELL, J.

REASONS FOR DECISION

[1] Pursuant to the Class Proceedings Act, 1992, S.O. 1992, c. 6, Martin Gerard brings a proposed class action against Detour Gold Corporation and Gerald Panneton. The parties have settled the litigation and, on consent, Mr. Gerard seeks certification of his action as a class proceeding for settlement purposes and incidental relief.

[2] More precisely, Mr. Gerard seeks an order: (1) certifying the action as a class proceeding for settlement purposes only; (2) approving the form, content and method of dissemination of the Short-Form and Long-Form Notices of Certification and Settlement Approval Hearing; (3) appointing a third party firm to effect publication of the Notices and administer any opt-outs; (4) setting the deadline for Class Members to opt-out; and (5) setting the date for the hearing of the motion to approve the settlement.

[3] The background facts are that Detour Gold is a gold mining and exploration company incorporated under the Canada Business Corporations Act, R.S.C. 1985, c. C-44 with its headquarters in Toronto, Ontario. Its shares are listed and traded on the Toronto Stock Exchange. Mr. Panneton is Detour Gold’s President and Chief Executive Officer.

[4] Detour Gold’s principal operating property is the Detour Lake Mine located 185 kilometers northeast of Cochrane, Ontario.

[5] A predecessor to Mr. Gerard commenced this proposed class action by Statement of Claim issued on May 12, 2014 and amended on July 10, 2014, February 10, 2016, July 21, 2016, January 27, 2017 and April 18, 2017.

[6] With a class period defined as from March 12, 2013 to and including November 7, 2013, the action is brought on behalf of the following class:

All persons, other than Excluded Persons, who acquired Detour’s securities during the Class Period: (i) in the secondary market; or (ii) in the SPO pursuant to the Prospectus and during its distribution period; and (iii) who held some or all of those securities at the close of trading on November 7, 2013.

[7] The Statement of Claim alleges that during the Class Period, Detour Gold made misrepresentations in its continuous public disclosures with regards to gold production guidance and cash cost projections and certain operating covenants included within the credit agreement for a $135 million credit facility. It is alleged that Detour Gold is liable for damages sustained by the proposed Class as a result of these alleged misrepresentations.

[8] The Defendants served a Statement of Defence on July 29, 2016. The Defendants have denied, and continue to deny, all liability, and have asserted various statutory defences under Part XXIII.1 of the Ontario Securities Act, R.S.O. 1990, c. S.5.

[9] Mr. Gerard’s motions for leave to commence a claim for secondary market misrepresentation under Part XXIII.1 of the Ontario Securities Act and for certification pursuant to the Class Proceedings Act, 1992 were scheduled to be heard December 6 to 9, 2016.

[10] Those motions were adjourned as the parties began settlement negotiations. After extensive arm’s-length negotiations, and with the assistance of Ronald G. Slaght, as mediator, the parties reached a settlement.

[11] The Settlement Agreement is subject to court approval. Under the Settlement Agreement, Detour Gold has agreed to pay or cause to be paid the all-inclusive sum of $6 million for the benefit of the proposed Class. Gerald Panneton will not pay any amount personally. In return, the Plaintiff and the proposed Class (excluding those people who choose to opt-out of this action) will provide a release to the Defendants.

[12] The parties consent to the certification of this action as a class proceeding solely for the purposes of implementing the Settlement Agreement. In the event that the Settlement Agreement is not approved by this Court, the Settlement Agreement provides that the order certifying the within action as a class proceeding will be set aside, the Plaintiff and Defendants will retain all of their legal rights and defences, and the Plaintiff and Defendants will be restored to their respective positions prior to the execution of the Settlement Agreement.

[13] The parties have agreed that this proceeding be certified, for settlement purposes only, on the basis of the following common issues:

(a) Did Detour make a misrepresentation by omission by failing to disclose during the Class Period the Completion Test covenant contained in the Credit Facility’s credit agreement as well as its terms? (b) Did Detour make misrepresentations by announcing gold production numbers that it knew or should have known could not be achieved?

[14] Pursuant to s. 5(1) of the Class Proceedings Act, 1992, the court shall certify a proceeding as a class proceeding if: (1) the pleadings disclose a cause of action; (2) there is an identifiable class; (3) the claims or defences of the class members raise common issues of fact or law; (4) a class proceeding would be the preferable procedure; and (5) there is a representative plaintiff or defendant who would adequately represent the interests of the class without conflict of interest and there is a workable litigation plan.

[15] In the present case, I am satisfied that all of the criteria for certification have been satisfied and that the incidental relief should be granted.

[16] Accordingly, I grant Mr. Gerard’s motion.

Perell, J. Released: April 25, 2017