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| | | |   Pampa El Toro Iron Sands Deposit Project The Pampa el Toro Project is an Iron Sands project situated in the desert coastal region of Southern Peru. During late 2005 the Company initiated a feasibility study on this project by starting a sand sampling program headed by Cooke Geochemical Consulting, and a trenching and percussion drilling programme managed by their own geologists. This has been followed up by various outsourced metallurgical test programs, initially done by Midrex (2005) and most recently by Bateman Engineering (2007). Location The property is located near the city of Nazca in the desert coastal region of southern Peru approximately 45 km northeast of the port of San Juan, close to the large Marcona iron mine (approximate resource of 1.4Bt @ 54% iron), the Mina Justa copper deposit (inferred resource of 218Mt @ 0.8% copper), and to Cardero's recently sold Pampa de Pongo iron deposit. Resource Estimate In mid-2009 Cardero received an initial mineral resource estimate for the Pampa El Toro deposit from SRK Consulting (South Africa) Inc. (SRK). Indicated and inferred resources have been defined over an approximate area of 1,595 hectares (approximately 15% of the total 10,300 hectare Pampa El Toro concession area and only to a nominal depth of 30 metres from surface, as follows:
Although a 30-metre cut-off depth was selected by SRK - as a conceptual mining depth to provide a 30-year life-of-mine (LOM) - drill testing of dune sand has been undertaken up to 60 metres depth in certain drillholes and has returned similar grades. Property Background In 1974 the Peruvian Ministry of Energy and Mines originally highlighted the iron sand potential of the area as part of a nationwide iron inventory study. Geologically, the large property is comprised of magnetite (iron)-bearing sands consisting of active dune fields and a large Quaternary basin containing a thick sequence of friable sands with visible magnetite throughout many of the exposures. Preliminary sampling by Cardero indicates that the magnetic fraction for active dune material ranges between 0.7% and 21.24 weight percent (wt. %) magnetite and averages approximately 11.0 wt. %. Samples of Quaternary sand returned magnetic fractions ranging between 1.62 and 13.59 wt. %, averaging about 7.7 wt. % magnetite. Assays of the magnetic concentrates showed fairly uniform values of approximately: 61.5% iron (Fe), 4.3-6.41% titanium oxide (TiO2), 0.2-0.28% phosphate (P2O5), 2.41-4.34% silica (SiO2), 1.22-1.82% alumina (Al2O3), 0.61-1.14% magnesium (MgO), 0.4-0.55% manganese (MnO) and 0.01% sulphur (S). Going Forward (see PR July 21, 2009) Midrex Technologies, Inc., a fully owned subsidiary of the Kobe Steel Group, is an international process engineering and technology company based in Charlotte, NC USA, and has been a leading innovator and technology supplier for the direct reduction of iron ore for more than 30 years. Midrex is principally known for the MIDREX® Direct Reduction Process that converts iron ore into high-purity direct reduced iron (DRI) for use in steelmaking, ironmaking, and foundry applications. MIDREX® Plants currently produce over two-thirds of the world's DRI. Midrex has also developed two additional proprietary processes, FASTMET® and FASTMELT®. FASTMET® is used to convert iron oxide fines, such as those of interest here, with carbon as coal, charcoal or coke acting as a reductant to highly metallized DRI. Utilizing the FASTMELT® Process, this hot DRI is fed to a specially-designed electric melter, for production of a high quality hot metal. Two bulk samples from the property were provided: An initial 65 kg laboratory cleaned sample (twice dry magnetic separation) and a 100 kg rough sand sample (hand treated on site using large permanent magnets and containing significant amounts of silica). The test program consisted of two phases - an initial FASTMET® test following by FASTMELT® testing. As part of the testing process various ratios of magnetite (from the property) and thermal coal (to act as a reductant) were mixed together in order to optimize the iron : carbon ratio and binding characteristics prior to briquetting and reduction. Finally, the quality of pig iron produced via FASTMELT® was determined and the composition of the slag analyzed. The Midrex process successfully produced a high quality low sulfur, low phosphorous and low titanium liquid iron and generated a desulfurizing titanium-rich fluid slag at melting temperatures of 1288°C. Midrex has characterized these initial test results as "very encouraging", concluding that a "liquid metal button containing ~ 94% iron, ~ 5% carbon and <0.05% sulphur can be produced with excellent separation of metal to slag." A summary of the FASTMELT® test results is as follows:
Carbon (C): 3.5 - 4.5% Silicon (Si): <0.3% Titanium (Ti): <0.1% Vanadium (V): <0.1% Sulphur (S): <0.1% Phosphorus (P): <0.1% The 'waste' slag resulting from the Midrex process assayed up to 21.48 % TiO2 (titanium dioxide) by weight and 3.18% V2O5 (vanadium pentoxide) by weight. The feasibility of recovering these by-products from the slag has not been examined at this stage. Significantly, the 100 kg 'untreated' concentrate shipped directly from the Company's project performed virtually as well as the magnetically upgraded 65 kg sample from SGS Lakefield Research Ltd. This is important as it indicates that a minimal amount of mineral processing will be required to convert the magnetite bearing sand from the project into an easily transported pig iron product. This positive development, coupled with the fact that no drilling or blasting will be required during mining, could make extracting any resource that may be defined extremely cost effective. Typically, the FASTMELT® hot metal is cast into 15-25 kg pyramids or star shaped ingots that are easily transportable to Basic Oxygen Furnaces or Electric Arc Furnaces for further processing into steel. The current market price for this iron ingot product is approximately US$300 to 320 / Tonne. | | | | 
Iron Sands
Magnetic Separator
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