Kinross wins Aurelian deal

theglobeandmail.com/report-on-business/kinross-wins-aurelian-deal/article659244

Andy 5 September
Hoffman 2008

Seven years ago, a 33-year-old geologist named Patrick Anderson sprinted up several flights of stairs to a
government office in Ecuador and staked claim to what would soon become one of the greatest gold
discoveries in a decade.

When it was revealed last year that the Fruta del Norte deposit contained nearly 14 million ounces of gold, the
market value of Aurelian Resources Inc. swelled to more than $1.6-billion and Mr. Anderson, its president and
chief executive officer, was hailed as a hero by a loyal army of fanatical gold bug retail investors.

Then, everything changed.

Troubles hit in April, when Ecuador halted all mining exploration while it developed a new mining law. Aurelian
shares nosedived, losing more than half their value in a matter of days.

Mr. Anderson's standing with some shareholders took a dramatic turn in July, when he and the Aurelian board
accepted an all-stock takeover bid from senior producer Kinross Gold Corp., worth about $770-million
yesterday, not including warrants.

In a series of impassioned e-mails, website postings and bizarre videos uploaded to YouTube, Mr. Anderson
became the target of a vitriolic campaign against the bid. These investors accused him of selling out a world-
class deposit at a bargain-basement price.

One YouTube video titled "The Aurelian Scam" billed itself as a slideshow illustrating "how Patrick Anderson,
president of Aurelian Resources, enriched himself and betrayed his shareholders." Another video called
"Hitler's reaction to Aurelian buyout" inserted subtitles related to the Aurelian affair over a scene from Der
Untergang or Downfall, a 2004 German film portraying the dictator's final days.

In an interview, Mr. Anderson conceded the sale has been a bittersweet experience.

"I didn't think it would end up like this," he said, sounding uncharacteristically subdued. He said he tried not to
pay too much attention to the Internet attacks, which often ignored the political uncertainty surrounding
mining in Ecuador that can be better shouldered by a big company like Kinross.

"People weren't giving the political-risk discount enough credit. You can't ignore it."

In the end, the retail shareholders' online campaign failed to stop the Kinross deal. Yesterday, the company
said about 75 per cent of Aurelian's stock, including roughly three million shares controlled by Mr. Anderson,
had been tendered to the offer, well above the two-thirds needed to get the transaction done. Including
outstanding Aurelian employee stock options, which will be converted to Kinross options, Kinross now owns
about 80 per cent of Aurelian's outstanding shares.

"We've won," said Kinross CEO Tye Burt, who added that even if the remainder of Aurelian's shareholders don't
tender to the offer, the company will be taken private in a so-called second-stage cleanup transaction.

Mr. Burt was never concerned about the dissident investors' campaign. "They were rather vocal, sure, but
we're not going to be pressured by that activity."

For his part, Mr. Anderson said he's already working on his next exploration play. And despite the personal
nature of the anti-Kinross-bid campaign, he even found some levity in the situation.

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"The Hitler video was kind of funny. That made me laugh."

Kinross (K)

Close: $14.74, down 83¢

Aurelian Resources (ARU)

Close: $5.15 down 18¢

Report on Business Company Snapshots are available for:

KINROSS GOLD CORPORATION

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