Mr. Arnaud Ajdler of Engine Capital reports

ENGINE CAPITAL CALLS ON DYE & DURHAM'S BOARD NOT TO ISSUE SHARES AHEAD OF THE SPECIAL MEETING

Engine Capital LP, which owns approximately 6.6 per cent of Dye & Durham Ltd.'s outstanding shares, has issued the following open letter to Dye & Durham's board of directors.

May 6, 2024

Dye & Durham Ltd.

1100, 25 York St.

Toronto, Canada

M5J 2V5

Attention: board of directors

Dear members of the board of directors

Engine Capital LP is a meaningful shareholder of Dye & Durham, holding approximately 6.6 per cent of the company's outstanding shares. On April 30, 2024, Dye & Durham filed a non-routine base shelf prospectus, which would facilitate the issuance of (among others) common shares of the company. We believe the timing of this prospectus is highly suspicious given that it comes just weeks after the company scheduled the special meeting of shareholders requisitioned by Engine, and more than a year after the prior base shelf prospectus expired. We are concerned that the company may employ a dilutive share issuance as a defensive tactic to entrench the board by placing newly issued shares in friendly hands to weaken the voting power of Engine and the other current shareholders ahead of the special meeting.

Issuing shares at the current price would be a serious capital allocation mistake given the company's undervaluation. Ironically, one of the primary reasons for this undervaluation is the board's poor record of capital allocation, illustrated by the recent equity issuance at $12.10 per share. We believe Dye & Durham's intrinsic value is at least $25 per share. This valuation also aligns with sell-side analysts' target price of around $24.50 per share. Issuing shares at such a discount to the company's intrinsic value, whether as part of an acquisition or as part of a financing, would destroy meaningful shareholder value. Beyond this value destruction, issuing shares so close to the special meeting would be a governance stain on the board and would disenfranchise the company's shareholders. To assuage shareholders' concerns that any share issuance is not done for defensive reasons, we urge the board to subject any such issuance to shareholders' approval or, alternatively, issue any such shares only after the record date for the special meeting has passed.

The board should be aware that Engine's counsel has brought these matters to the attention of the Toronto Stock Exchange, and that it is our intention to take all legal and other actions necessary to oppose any share issuance between now and the special meeting.

Separately, we believe it would be timely for the board to form a special committee of independent directors whose purpose would be to communicate directly with shareholders. We are concerned that the board is getting filtered information and is not properly assessing shareholders' frustration with the current situation. It would be natural for incoming chair Colleen Moorehead and a subset of independent directors to communicate directly with shareholders, ask for their feedback and considering their views. We believe this exercise would be conducive to a constructive resolution with the board as it may help the board realize the futility of engaging in scorched-earth tactics such as the issuance of deeply undervalued shares.

Sincerely,

Arnaud Ajdler

Managing partner

About Engine Capital LP

Engine Capital is a value-oriented special situations fund that invests both actively and passively in companies undergoing change.

Notes:

1. The company announced on March 29, 2024, that the special meeting is scheduled for Aug. 20, 2024.
2. The prior base shelf prospectus expired 16 months ago in December, 2022.
3. Intrinsic value calculation conservatively assumes 10 times LTM (last 12 months) EBITDA (earnings before interest, taxes, depreciation and amortization) multiple, 2025 EBITDA of $280-million, and $125-million of free cash flows generated in second-half 2024 and 2025.
4. Only two sell-side analysts have updated their numbers since the recent refinancing: Canaccord Genuity and Scotiabank have target prices of $25 and $24 per share, respectively.
5. Shareholder approval: Along the principles set out in the case of Re Eco Oro Minerals Corp., 2017 ONSEC 23, which established that actions taken by boards and management that affect materially the control of the listed issuer in the context of a proxy contest, should be shareholder approved prior to taking effect.