I hope this article dtd 08Sept08 isn't a repeat on the Board but I hadn't seen it before today and I found it somewhat interesting.

As the Board is quiet I decided to post it failing the availability of more recent news. I don't know why I continue to read these articles because all they do is upset me. Nevertheless, I guess we should read and learn what others are saying of our dilemma. It won't benefit us financially but it does help to pass the time until Monday 15Sept08.

Aurelian Resources and other junior exploration firms operating in Ecuador were the ones most affected by the April 18th mining mandate, which was issued by the Constitutional Assembly and halted all large-scale mining operations for six months. When the mandate was announced and entered into force, ARU stock abruptly fell 61 percent from more than $8.59 in April 16th. The stock plummeted further to $3.28 in April 21th and was unable to recapture its pre-mandate price levels. See chart below

“I think that if the mandate hadn’t happened, Barrick or Newmont – which expressed interest in Aurelian in the past – may have bid alongside Kinross, and the takeover price would have reached around $15 per share. But the mandate did happen, and the consequence for Aurelian was that no other company was willing to take the risk in Ecuador,” added Flores.

Kinross (TSX:K, NYSE:KGC) made the takeover deal at a time when ARU stocks were depressed as a consequence of the mandate, and prior to the Ecuadorian government’s publishing of its new mining law that was sent to the presidency from the Ministry of Mines and Petroleum last June 27th. The law is expected to be favorable to the industry and will promptly be approved by the new interim Congresillo, which will be created if Ecuadorians approve the country’s new constitution in a referendum on September 28th. If the “Magna Carta” passes, the Constituent Assembly’s transition plan calls for the creation of the interim Congresillo, as well as new elections next February for mayors, provincial governors, and the president and vice-president. According to the latest survey on August 19th, 44 percent of Ecuadorian respondents said they will vote for the new Magna Carta, 10 points more than the 34 percent saying they will oppose it. Read Cedatos Report (Spanish only)

Kinross President and CEO Tye Burt says the transaction is a win-win-win: ARU shareholders get a high premium for an early stage development, plus a percentage in a warrant; Kinross acquires FDN as a new addition to its future mines; and Ecuadorian communities surrounding FDN will benefit from its corporate social responsibility projects. Burt explains in detail the Aurelian transaction in a video released last August 25th

With the takeover transaction completed, Kinross will become the first major company acquiring a mining exploration project in Ecuador, and the largest private transaction in Andean country’s history. Kinross, the third largest gold producer in North America, was recently recognized as the top performer in senior gold equity at the New York Stock Exchange (NYSE) last June 12th. See KGC’s stock performance the last five years, below

The Kinross portfolio includes nine mines in five countries, most of them located in friendly jurisdictions: roughly 40 percent of its gold, silver, and copper reserves are in Brazil, 40 percent in Chile, 13 percent in the United States, and eight percent in Russia. In a recent interview with Bloomberg at the NYSE last June 12th, Burt said that his company “has the luxury to have some time to look at those junior companies because of our growth profile over the one year and a half. When junior miners lack access to capital, it’s time to make a JV with seniors.” When the ARU-KGC deal was announced, Burt said he had been studying FDN and Ecuador for the last two years. See Tye Burt Interview with Bloomberg

Kinross’s new acquisition FDN was proudly showcased before investors at the Merrill Lynch 14th Annual Mining Conference in Toronto last September 4th, the same day the ARU-KGC deal succeeded. Including FDN’s 13.7 million oz of gold, Kinross’s gold resources total 47 million ounces of proven and probable resources, 11 million of measured and indicated, and 20.7 million of inferred resources. Go to Kinross presentation incl. FDN

“Kinross is well-positioned to work with the government in ways we never could,” Patrick Anderson, Aurelian Resources President and CEO, was quoted after the friendly takeover deal was announced.

Kinross’s CEO Burt seems to agree with that statement.

“FDN itself has a much higher likelihood of being developed successfully in the hands of an experienced senior company such as Kinross,” he said in the explanatory video released two weeks ago. Both firms may have anticipated some difficulties for the industry within the new mining law. These include new royalties or the feared 70 percent windfall tax, both to be applied more severely to high-mineralization deposits than modest ones.

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