Event: Proposed acquisition of Aurelian Resources

Analysis & Forecasts: Kinross' proposed business

combination with Aurelian Resources (ARU-TSX) is an

aggressive step by the company to tie up one of the world's

best undeveloped gold projects (the FDN project in

Ecuador has 13.7mm oz at an average grade of 7.23 g/t)

and also addresses concerns about the long-term growth

potential beyond 2010 (production peaks at 2.4mm oz/yr

before potential declines in 2011). The attractive acquisition

price of $87/oz highlights the primary risk of the

acquisition, however, which is the uncertainty of the

political situation in Ecuador regarding foreign investment

and ownership of mining projects in the country. Under the

assumption that the government will ultimately approve

development of the project, albeit with a governmentfriendly

tax and royalty structure, the upside for Kinross is

significant. Using our rough NAV estimate of $11.85 for

Aurelian, we estimate the acquisition would increase our

Kinross NAV to $13.70 (from $12.00).

Valuation & Recommendation:

We are maintaining our **** BUY recommendation and C$25.00 target (based on 2.0 times

NAV and 20 times 2009 CF). Given the large and high

quality nature of the FDN project, we believe there is a

decent chance of a competing offer.