"Recommendation: Buy (S)

Target Price: C$14.50

Aurelian Resources Inc. (ARU-TSX)

Resource Exceeds Expectations, 13.7 MMoz

David Stein, CFA, (416) 943-6407; dstein@cormark.com

Mike Kozak ­ Associate, (416) 943-6749; mkozak@cormark.com

MORNING MEETING NOTES

OCTOBER 05, 2007

Unless otherwise denoted, all figures shown in US$

Investment Thesis:

Aurelian Resources has made a major gold discovery in southern Ecuador,
Fruta Del Norte (FDN), and now that the initial excitement of the discovery
has passed, we see significant unrecognized value in the size of the
discovery so far, as well as the regional potential on Aurelian¹s huge land
position. Aurelian has reported an initial inferred resource of 13.7 MMoz.
We think Aurelian can continue to add value as it moves the project forward
towards production. This is the first new discovery controlled by a junior
company that is clearly marketable to even the largest gold producers, and
could earn a premium valuation if the market can become comfortable with
Ecuador.

Highlights:

€ 13.7 MMoz First-Ever Resource Confirms World-Class Size And Scope Results
comfortably exceed our 10 MMoz-11 MMoz estimate range, thanks partly to a
higher resource grade at 7.2 g/t.

€ Engineering Scoping Work Now Ahead, Geopolitics The Biggest Upside Market
still wary on Ecuador based on Aurelian¹s low valuation.

€ Increasing Target To C$14.50 From C$13.25 And Maintaining Our Speculative
Buy Recommendation

Resource approximately 20% higher than we were expecting, but we increased
our costs assumptions as well.

Company Description:

Aurelian Resources is an exploration company that has made the largest new
gold discovery by a junior so far this decade (13.7 MMoz). Fruta Del Norte
is located in SE Ecuador, within an epithermal gold-silver trend and a
porphyry copper-gold trend.

13.7 MMoz Resource Better Than Expected On Fruta Del Norte: Aurelian¹s
first-ever resource announced yesterday was a pleasant surprise. Although we
had tried to be somewhat conservative, we recognize that estimating the size
of a world-class deposit at the initial drilling stage is risky.
Nevertheless, the resource size is significantly bigger than the 10 MMoz-11
MMoz size we had been modelling and at a higher grade as well. Aurelian
split the resource into four zones that are distinctive based on geological
host and mineralogy, and the result is summarized below:

The initial resource is a key milestone, is what has quickly become one of
the exploration highlights of the decade. With the respected firm Micon
International in charge of the 43-101 resource estimate, it should reduce
any remaining naysayers as to the size and grade of the new discovery and
hence should reduce the technical risk priced into the stock. The
information surrounding the resource estimate, and yesterday¹s conference
call certainly addressed the geological and technical aspects of developing
and mining FDN very well, and while the mining and metallurgy is going to be
a little higher cost than we were expecting, given that this project is
still at the early stages, it is not surprising. Overall any additional
costs we have modelled were more than offset by the greater resource.

Initial Mining And Metallurgy Suggest Potential For Higher Costs: We were
right in modelling a two- stage mining scenario, as it appears Aurelian is
leaning towards designing the mining and milling to minimize capital costs
and the environmental footprint. The biggest surprise to us on the
engineering side is that initial metallurgical work suggests that part of
the ore is refractory and will require a pre-oxidation process to achieve
high recoveries. While much more detailed metallurgical engineering work
will take place over the next year, at the present time Aurelian is looking
at a process that will recover gold in three stages. First a gravity circuit
will recover the coarse gold and then the ore will undergo a sulphide
floatation process. The tails from floatation process will be processed
using conventional CIL (recovering gold that is free but too fine to be
recovered in the gravity process). The sulphide concentrate will be oxidized
and then report to the CIL for leaching. The pre-oxidation process will add
some capital cost and operating cost to the operation due to energy involved
in oxidizing the sulphides.

The inferred resource estimate, in some ways, was better than most initial
resource reports we see in that the engineers clearly did much more work on
the potential economics of the FDN mine than we would usually see at this
early stage. Micon¹s preliminary estimates for mining costs were $37/tonne
to derive a 2.3 g/t cut-off for the resource. The cost assumption uses a
long-hole open stoping mining method and does not factor in any benefit from
bulk mining in the expanded mining phase (phase 2). Our most recent model
estimate a $26/t cost, so we have increased it to the scoping-level figure
released with the inferred resource. The main difference is probably
attributed to the additional processing costs as a result of the
pre-oxidation step required, as well as general inflation (our original cost
estimates for underground mining and G&A were based on Iamgold¹s Quimsacocha
study, which is now over a year old).

Other changes we are making at this time include extending out the mine
life, partly due to the higher resource base and also a more conservative
throughput assumption. We are also adding a 3% royalty to the project (over
and above the current 1%), which is a conservative measure to account for
the likelihood that the government will introduce a royalty on mining before
FDN reaches production, similar to what has happened recently in Chile, Peru
and other countries. Currently, there is no government royalty and only a 1%
royalty technically applies to the property. We introduced this measure
originally when we picked up Dynasty Mining and Metals a few months ago,
and we are adding to our Aurelian analysis to maintain consistency.

We estimate a $250MM capital cost, which we believe is conservative given
the relatively modest mill (5,000 tpd) to start phase 1 of the mine. But, we
have considered underground development costs and the additional expense of
adding floatation and pressure oxidation to the mill flowsheet. The cash
costs remain in the same range as our previous model due to the higher
grades being mined, even though the raw operating costs are higher.

Development, Exploration And Geopolitical News Could Enhance Value: Aurelian
has yet to regain its highs that the stock enjoyed before Correa was
elected, and this is despite a $100/oz higher gold price and a significantly
larger-than-expected resource. Now that the constitutional assembly has been
elected, we should see a more stable regime in Ecuador, and we expect the
government to gradually address issues related to modernizing the mining
sector, while maintaining a favourable environment for foreign investment.
We see the continual advancement of this world-class project as another
avenue to add value over the longer term, as the Company reduces the project
risk. The first milestone for the market could be the permit/approval to
drive a decline that the Company will use for large tonnage metallurgical
sampling, underground exploration drilling and delineation drilling, and
eventually perhaps production. While obtaining an excavation permit should
be fairly minor ordeal based on Dynasty¹s experience, we think that the
market will look upon approval as being an indication that the government is
³on side² with Aurelian¹s plans.

Meanwhile, we expect Aurelian to continue exploring its huge land package,
both near to and away from Fruta Del Norte. So far there have been no
significant new discoveries outside of FDN but with more than 30 target
areas, and the history of gold and copper mineralization in the Condor belt,
it is highly likely that Aurelian will be able to add value this way over
the longer term.

Increasing Target To C$14.50 And Maintaining Speculative Buy Recommendation:
Our NAVPS for Aurelian ($550/oz gold, 5% discount) increases to C$14.38 from
C$13.30 per share previously and we have maintained our 1.0x P/NAV target
multiple rounding to C$14.50. The positive impact of the resource, which is
24% larger than we were modelling, is partially offset by higher operating
costs, a stretched out production profile, a slight delay in start-up by one
year to 2011, and the addition of the hypothetical 3% royalty. Given where
Aurelian is trading, we still see tremendous upside potential as the market
recognizes the enormous development opportunity and becomes more comfortable
with the technical aspects and the geopolitics. Ultimately, because of the
size of the resource, the potential to produce well over 500,000 oz/yr and
rapid reserve depletion of the world¹s largest gold producers, we think
Aurelian makes an excellent candidate for a takeover."

safeharbour