News/Event

· This morning before market open, Kinross and Aurelian announced a friendly take-over bid that values ARU at approximately $1.2 billion. The deal terms are:

· 0.317 Kinross share plus 0.1429 Kinross warrant offered to ARU shareholders (one full warrant at $32.00 = one common share);

· Requires 66.67% of ARU shares tendered; and,

· Management lock-up in place along with a $42 million break fee and right to match competing offers.

Highlights

· Kinross's take-over bid has an implied value of $8.20/share or a 63% premium to ARU’s 20-day volume-weighted average share price.

· Unanimous offer support by ARU's Board and management.

· Kinross via a 15 million share placement in ARU ($4.75/share) plus lock-up agreement with management means approximately a 12% position.

Analysis/Conclusion

· Impact – Positive. It was only a matter of time before a producer stepped up to bid on ARU despite the political uncertainty in Ecuador. We believe Kinross must have sufficient in-country intelligence to propel them to make a bid for ARU at this time “pre-new mining law and new constitution.”

· We believe that Kinross's bid will be the start of a bidding war for one of the most coveted undeveloped gold deposits in the world. Although recent comparable transactions have averaged EV of US$140/oz gold (in situ), we apply a significant approximately 30% discount to US$100/oz given the political uncertainty, including the potential for government participation to develop FDN. We also believe Kinross can afford to pay approximately US$200/oz (recoverable). On this basis, we value ARU at $1.78 billion or $11.00 per share, maintain our BUY recommendation, and increase our target price to $11.00.