SRK Updates Preliminary Economic Assessment for Pampa de Pongo Iron Deposit

Cardero Resource Corp. announce that SRK Consulting has updated the recent Preliminary Economic Assessment for the Pampa de Pongo iron deposit. The increased NPV and IRR result from the positive MIDREX Direct Reduction material evaluation (See NR 08-25), which demonstrated the suitability of Pampa de Pongo iron oxide pellets as Direct Reduction (DR) process feed.

DR-grade pellets typically attract a premium of at least 10%, which has increased the after-tax NPV8% by approximately US$700 Million to US$4.1 Billion, and increased the real after-tax IRR from 18% to 20%. The life of mine project revenue, net of all off-site costs and project royalties and including copper and gold credits, is now estimated at US$ 46 billion, equating to average annual net revenue of US$ 1.93 billion. Life of mine net pre-tax operating cash flow is estimated at US$38.9 billion or US$1.6 billion average annually.

Site estimated operating costs are approximately 15.8% of net revenue, providing a very high project operating margin and are indicative of the robust project fundamentals. On a per tonne basis, the net revenue (pre-tax) after all off-site costs and royalties and including copper and gold credits is approximately US$140 per tonne of pellets sold, with the corresponding total cost of production approximately US$22 per tonne of pellets sold, yielding net operating cash flow per tonne of pellets produced of US$118.

The Company cautions that the PEA is preliminary in nature, and is based on 100% inferred mineral resources that are considered too speculative geologically to have the economic considerations applied to them that would enable them to be categorized as mineral reserves. Mineral resources that are not mineral reserves do not have demonstrated economic viability. Accordingly, there can be no certainty that the results estimated in the SRK PEA will be realized. The PEA results are only intended as a preliminary first-pass review of the potential project economics based on a minimal amount of information. In addition, the cavability assessment of the deposit is preliminary as it is based on a limited number of drillholes and, as such, substantial work is required to verify the current caving and output assumptions.

MINERAL RESOURCES

The effective date of the mineral resource estimate is September 30th, 2008. SRK is not aware of any environmental, permitting, legal, title, taxation, socio-political, marketing or other relevant issues that may affect the mineral resource estimate. The classified inferred mineral resource estimates at a 15% iron cut-off grade are shown in Table 1. The economic cut-off used to generate mineral resources was assumed and is based on experience with similar projects. The final cut-off required to produce a saleable product will need to be confirmed by future metallurgical test work. This economic cut-off was applied to both the Central and South Zones. Although the South Zones contribute a relatively small tonnage, SRK is of the opinion that there are reasonable prospects for additional tonnage in this area which could then make these resources amenable to underground mining methods. At the East Zone, a large magnetic anomaly, with potential for 350-500 million tonnes of conceptual mineralization is ready for drill-testing. A single drillhole, which tested the southern edge of the anomaly, intersected 292 metres of semi-massive to massive magnetite mineralization.
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