Cardero Resource Corp. ('Cardero' or the 'Company') -- (TSX: CDU, AMEX: CDY, Frankfurt: CR5) is pleased to announce that it has completed an option to lease agreement with an arm's length private mineral owner on the TiTac Iron-Titanium-Vanadium deposit in northeast Minnesota, USA. Metallurgical test work on the deposit completed by the United States Steel Corporation ('US Steel') produced a magnetic concentrate grading 57.32% iron, 14.02% titanium dioxide (V2O5), and 1.30% vanadium pentoxide (V2O5). The residual non-magnetic concentrate graded 29.14% iron, 37.22% TiO2 and 0.18% V2O5. The deposit was discovered in 1968 by US Steel, which completed six diamond drillholes on the property. Drill intersections include drillhole 26002, which returned 254.8 metres of 35.0% iron, 18.68% TiO2and 0.47% V2O5. Cardero is moving quickly to complete independent metallurgical work on a composite sample from the deposit, with the aim of producing pig iron, titanium and vanadium from magnetic and non-magnetic concentrates.
TiTac Project Background
The TiTac property (previously known as the 'Section 34 deposit') was originally explored with airborne geophysical surveys, which identified coincident magnetic and electromagnetic anomalies. These anomalies were further investigated with follow-up ground geophysical surveys, including Induced Polarization (IP), Resistivity and Electromagnetic (EM) methods.
In 1968, US Steel drilled 5 vertical drillholes and 1 inclined drillhole to test the magnetic anomalies. Drilling intersected abundant magnetite and ilmenite mineralization that ranged from disseminated to massive mineralization. The US Steel drillhole numbering system is sequential, but not limited to the TiTac property. The six holes drilled on the TiTac property are numbered 26000, 26001, 26002, 26003, 26007 and 26008.
All drillholes intersected 'ore-grade' mineralization. As an example of the grades encountered, US Steel reported the following results from drillhole 26002: 254.8 metres @ 35.0% iron, 18.68% TiO2 and 0.47% V2O5, including 158.5 metres @ 42.7% iron, 22.47% TiO2and 0.57% V2O5..
US Steel also conducted limited metallurgical work. Drill core material was crushed and separated using heavy-liquid separation. The residual heavy mineral concentrate subsequently underwent magnetic separation to produce a second magnetic (magnetite) concentrate, leaving a residual non-magnetic (ilmenite) concentrate.
The drill core was selected to be representative of the mineralized body and weighted averages for the head grade from all metallurgical samples was reported as 32.8% iron, 19.76% TiO2, and 0.44% V2O5. Following gravitational and magnetic separation, the US Steel laboratory reported grades for magnetic and non-magnetic concentrates as follows:
Titanium -- Vanadium Background
Titanium is primarily used in pigment industries (paint, paper and plastics) as a whitening constituent (titanium dioxide) due to its brightness and very high refractive index. The metal is also used as a light, high-strength and corrosion-resistant material in the fabrication of specialized components in the aeronautical and aerospace industries, and in high-end sporting goods and medical components. Most of the world's titanium production comes from alluvial sand deposits in Australia, South Africa and the United States.
Vanadium is primarily used as an alloy agent for steel and titanium - significantly increasing its strength and resistance wear and corrosion. Iron-vanadium alloy steels are typically used in the construction, pipeline, automotive and railway industries.
Recent pricing for ferro-titanium metal has been around the USD 3.90 per pound level, while titanium dioxide (TiO2) has recently been priced around the USD 1.10 per pound level. Vanadium pentoxide (V2O5) has recently traded in the USD 13.00-18.00 per pound range.
In order to independently verify metallurgical results reported by US Steel Laboratories, Cardero has initiated metallurgical test work on samples from the TiTac deposit at the Natural Resources Research Institute (NRRI) in Minnesota. The work will build on that of US Steel, producing pig iron, titanium and vanadium from magnetic and non-magnetic concentrates. Details of the metallurgical studies will be released upon receipt of results, anticipated to be in the last quarter of 2008.
US Steel sampled half-core, with the remaining half being retained. Samples of variable thickness (1.5 to 3.0 metres) were crushed, homogenised and analyzed and/or forwarded for metallurgical testing. Cardero selected a composite metallurgical test sample from drillholes 26001, 26002, 26003 and 26007, sampling from top of bedrock to a maximum depth of 88 metres. Representative samples were taken by riffle splitting and combined into one bulk sample for submission to NRRI Coleraine Minerals Research Laboratory (CMRL) for testing.
Assuming that the metallurgical test results confirm the US Steel results, Cardero plans an initial drill program designed to verify the US Steel results and expand the information available regarding the deposit in order to permit the preparation of an initial resource estimate. The surface of the TiTac deposit is owned by the State of Minnesota and managed by St. Louis County. The Company has entered into a surface use agreement with the County which will permit the initial drilling program to proceed.
The TiTac Iron-Titanium-Vanadium Deposit is located on the margins of the Duluth Complex in north-eastern Minnesota. The Duluth Complex is a 1.1 billion-year old, large, multiphase, layered gabbroic intrusive complex. The TiTac Deposit is associated with late, cross-cutting Oxide-bearing Ultramafic Intrusives (OUI's) which intrude the Western Margin Intrusion of the Duluth Complex. Within the Duluth Complex, the OUI's typically form along linear trends, and exhibit strong fault control.
The TiTac Deposit occurs at the junction of a northeast-trending, linear magnetic and gravimetric discontinuity in the Duluth complex and a northwest-trending magnetic and conductive linear anomaly. Oxides in the intrusions typically comprise 15-100% of the rock, comprising coarse-grained ilmenite (iron-titanium oxide) and titanium-bearing magnetite.
The foregoing information with respect to the TiTac property, and the drilling and metallurgical results thereon, has been taken from internal US Steel reports made available to the Company and such information, although considered to be reliable, has not been independently verified by Cardero. Accordingly, such information is presented for illustrative purposes only, and should not be relied upon.
Option/Mining Lease Agreements
Pursuant to an option agreement dated July 1, 2008 (as amended on July 24, 2008), between Cardero Iron Ore (USA) Inc., a wholly owned subsidiary of Cardero Iron Ore Company Ltd., and an arm's length private mineral owner ('owner'), the Company has a two year option to enter into a mining lease with the owner over an aggregate of 1,402 acres (567 hectares) of mineral rights located sections 2 and 3 of Township 54 North and sections 34 and 35 of Township 55 North, all Range 14 West, St. Louis County, Minnesota. The mining lease will grant a lease over any mineral substance of a metalliferous nature, including those intermingled or associated materials or substances, recovered from each tone of crude ore for the purpose of extracting iron (essentially, iron, titanium and vanadium). All other minerals are reserved to the owner. The key terms of the option agreement (and the subsequent mining lease) are as follows:
Option Agreement: An initial payment of USD 5,000 on execution (paid) plus an extension payment of USD 25,000 due on the first anniversary of the agreement to extend the option for an additional year. There are no work commitments under the option, but the Company is required to comply with all laws and to maintain specified insurance in place during the option term. The Company can exercise the option to enter into a mineral lease at any time prior to June 29, 2010 upon notice to that effect to the owner.
Mining Lease: The initial term of the mining lease is for a period of 20 years, provided that the lease may be extended for an additional 5 year period if the Company gives notice at least 180 days prior to the end of such term, and has either paid to the owner at least USD 10,000,000 in royalties or pays to the owner the difference between the royalties actually paid and USD 10,000,000. In like manner, the lease can be extended for up to three additional 5 year terms, provided that the appropriate notice is given and that the Company has paid to the owner at least USD 5,000,000 in royalties during the previous 5 year term (or pays any deficiency in cash). The Company can terminate the lease at any time on sixty days' notice. The Company is required to make a bonus payment of USD 2,500 upon entering into the lease, plus yearly rental payments under the lease of the greater of USD 2,500 and USD 2/acre in years one and two, the greater of USD 5,000 and USD 5/acre in years three through five, the greater of USD 7,500 or USD 10/acre in years six through ten, the greater of USD 10,000 or USD 25/acre in years eleven through fifteen and the greater of USD 50,000 or USD 50/acre in years sixteen through twenty. These rental payments cease upon the commencement of commercial production, following which yearly minimum royalty payments of USD 200,000 apply. Following the commencement of commercial production, the Company is required to pay a royalty of USD 0.85 per ton of crude iron ore (adjusted quarterly based on variation in the quoted price of certain iron ore products) and 5% of the net return values for any other products produced (subject to a minimum royalty of USD 0.02 per pound of titanium). The Company is required to incur minimum work expenditures of USD 50,000 prior to the second anniversary of the lease, and USD 50,000 per year thereafter (any deficiency being payable in cash to the owner).
The Company has agreed, subject to regulatory acceptance, to pay a finder's fee to an arm's length individual in connection with the completion of the option agreement. The fee will consist of an initial 25,000 common shares, issuable following regulatory acceptance, plus an additional common 50,000 shares issuable upon the exercise by the Company of the option to enter into the mining lease.
MOU with International Minerals and Mines Limited
Cardero also announces that it has entered into a memorandum of understanding with International Minerals and Mines Ltd., a private Gibraltar company headquartered in London ('IMM'), to earn an interest in a subsidiary of IMM which is presently engaged in reconnaissance exploration programs in the Caucasian Region. Cardero is the manager of the exploration programs. Project generation to date by Cardero indicates that the Caucasian Region is prospective for significant to world class base and precious metal porphyry and epithermal deposits.
Pursuant to a memorandum of understanding dated August 8, 2008 (but effective as and from April 25, 2008) between Cardero and IMM, Cardero has acquired the right to receive up to a 30% interest in IMM Gold Limited, a subsidiary of IMM incorporated under the laws of Gibraltar ('IMMG'). Stephan Fitch, a director of Cardero, is a director and significant shareholder of a private company which is the major shareholder (67%) of IMM.
Cardero has agreed to acquire an initial 15% interest in IMMG by issuing to IMM up to 750,000 common shares, as follows:
- an initial 500,000 common shares upon acceptance for filing of the transaction by the Toronto Stock Exchange ('TSX')
- if, on the date ('Adjustment Date') which is one year after the date ('Issue Date') of the issuance of the initial 500,000 shares to IMM, the volume weighted average trading price for Cardero common shares on the TSX for the five trading days immediately prior to such date ('Final VWAP') is less than the volume weighted average trading price for Cardero Shares on the TSX for the five trading days immediately prior to the date of this news release ('Initial VWAP'), Cardero will issue to IMM such number of additional common shares of Cardero (up to a maximum of 250,000 additional shares) as is equal to the difference between the Initial VWAP and the Final VWAP, multiplied by 500,000 and divided by the Final VWAP
Cardero has the option to acquire an additional 15% of IMMG by issuing an additional 1,000,000 shares to IMM on or before December 31, 2009.
Cardero is responsible for formulating and managing, on behalf of IMMG, an exploration program designed to identify prospective mineral properties located in the Caucasian Region, for acquisition by IMMG. As manager, Cardero is entitled to charge a 15% management fee. The costs of the exploration program are to be paid by IMMG, which is in the process of raising an initial GBP 2.0 million financing for such purpose. The initial funding will be without dilution to Cardero's initial 15% (and, if acquired, subsequent 15%) interest. Any additional funding by IMMG thereafter will dilute all existing shareholders, but Cardero has the right to participate in any such financing and thereby maintain its then percentage equity interest in IMMG.
The reconnaissance exploration program has commenced, but no properties have yet been acquired.
EurGeol Mr. Keith J. Henderson, Cardero's Vice President-Exploration and a qualified person as defined by National Instrument 43-101, has reviewed the scientific and technical information that forms the basis for this news release. Mr. Henderson is not independent of the Company as he is an officer and securityholder.
The work program at TiTac is designed and supervised by Keith J. Henderson, Cardero's Vice President-Exploration, and Dr. S. Jayson Ripke, the Vice-President, Technical, of Cardero Iron Ore Management (USA) Inc. (an indirect subsidiary of Cardero), who together are responsible for all aspects of the work, including the quality control/quality assurance program. Metallurgical test work will be undertaken by Natural Resources Research Institute's Coleraine Minerals Research Labs, Minnesota, and the work is designed and supervised by Dr. Ripke. NRRI follows international (ISO) and North American (ASTM) procedures where such procedures exist for highly specialized test work. NRRI are generally considered to be industry leaders in this type of test work.
About Cardero Resource Corp.
Cardero's focus through 2008 will be to realise the considerable value it believes is locked in the Company's significant iron ore assets in the Marcona District of southern Peru, while continuing to progress its base and precious metal exploration projects in Argentina and Mexico. The common shares of the Company are currently listed on the Toronto Stock Exchange (symbol CDU), the American Stock Exchange (symbol CDY) and the
Frankfurt Stock Exchange (symbol CR5). For further details on the Company readers are referred to the Company's web site (www.cardero.com), Canadian regulatory filings on SEDAR at www.sedar.com and United States regulatory filings on EDGAR at www.sec.gov.
On Behalf of the Board of Directors of
CARDERO RESOURCE CORP.
'Hendrik van Alphen' (signed)
Hendrik van Alphen, President
Contact Information: Quentin Mai, Manager -- Corporate Communications & Investor Relations
Phone: 1-888-770-7488 (604) 408-7488 / Fax: (604) 408-7499
The Toronto Stock Exchange has not reviewed and does not accept responsibility for the adequacy or accuracy of the content of this news release, which has been prepared by management.
This press release contains forward-looking statements within the meaning of Section 27A of the United States Securities Act of 1933, as amended, and Section 27E of the Securities Exchange Act of 1934, as amended. Such statements include, without limitation, statements regarding the timing, cost and nature of future anticipated exploration programs and the results thereof, the potential results of future metallurgical testing on material from the TiTac Deposit, the discovery and delineation and acquisition of mineral deposits in the Caucasian Region and the potential financing by IMMG. Although the Company believes that such statements are reasonable, it can give no assurance that such expectations will prove to be correct. Forward-looking statements are typically identified by words such as: believe, expect, anticipate, intend, estimate, postulate, potential and similar expressions, or are those, which, by their nature, refer to future events. The Company cautions investors that any forward-looking statements by the Company are not guarantees of future results or performance, and that actual results may differ materially from those in forward-looking statements as a result of various factors, including, but not limited to, variations in the nature, quality and quantity of any mineral deposits that may be located, the inability of the Company to obtain any necessary permits, consents or authorizations required for its activities, the inability of the Company to produce minerals from its properties successfully or profitably, the inability of the Company to continue its projected growth, the inability of the Company to raise the necessary capital to continue its operations or to be able to fully implement its planned business strategies, including those detailed above, and other risks identified in the Company's most recent Annual Information Form and Form 40F annual report, which may be viewed at www.sedar.com and www.sec.gov, respectively.
All of the Company's Canadian public disclosure filings may be accessed via www.sedar.com and its United States disclosure filings via www.sec.gov and readers are urged to review these materials, including the technical reports filed with respect to the Company's mineral properties.
This press release is not, and is not to be construed in any way as, an offer to buy or sell securities in the United States.