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October 09, 2008:

Cardero Receives Positive Independent Preliminary Economic Assessment for the Central Zone at Pampa de Pongo Iron Deposit

Cardero Resource Corp. ("Cardero" or the "Company") -- (TSX: CDU, NYSE-A: CDY, Frankfurt: CR5) is pleased to announce that SRK Consulting (Canada) Inc. ("SRK") has completed a Preliminary Economic Assessment ("PEA") on the 750Mt Central Zone of the Pampa de Pongo Iron Deposit, located in the Marcona Iron District of Southern Peru, and have delivered a draft of their formal N.I. 43-101 PEA Technical Report.

According to Rio Tinto, the Marcona and Pampa de Pongo deposits are the largest iron accumulations with associated copper and gold along the western coast of South America. At full planned production, Pampa de Pongo would produce 15 million tonnes of iron ore pellets per year, a total of 330 million tonnes through the currently proposed life of mine, which would be available for Asian markets. For context, this output would equate to 35% of Vale's total current pellet production (Vale is the global number one iron ore producer).

"SRK's draft PEA confirms our belief that Pampa de Pongo is a truly world-class resource" stated Henk van Alphen, Cardero's President and CEO. "Given the pre-existing infrastructural advantages and the substantially shorter shipping routes to Asia from Peru, I have no doubt that the development of Pampa de Pongo will put the Marcona Iron District and Peru on the global iron stage. Prior to completion of the study we have received numerous expressions of interest in the project from major mining companies and end-users, and we obviously look forward to greatly maximizing our shareholder value."

TABLE 1. ECONOMIC SUMMARY

 

 

Mine Life

Mean Annual**

Ore Production

million tonnes

578

24.1

Mine Life

production years

24

 

Iron Pellet Production

million tonnes

330

13.7

Payable Copper production

million lbs

535

22.2

Payable Gold Production

000 oz

493

20.5

Iron Pellet price

USą/dmtu / US$/t

198ą / $128

Copper price

US$/lb

$2.00

Gold price

US$/oz

$650

Gross Revenue

US$ Million

$43,595

$1,810

Net Smelter Return*

US$ Million

$43,350

$1,800

Post-Royalties

US$ Million

$42,050

$1,746

Site Operating Costs

US$ Million

$7,324

$304

Pre-Tax Operating Cash Flow

US$ Million

$34,726

$1,442

Initial Capital

US$ Million

$3,284

Sustaining Capital

US$ Million

$4,178

Total Capital

US$ Million

$7,462

Income and other taxes

US$ Million

$9,706

$403

Post-Tax NPV8%

US$ Million

$3,318

Internal Rate of Return %

%

18.0%

Undiscounted Total Post-Tax Cash Flow

US$ Million

$17,558

$729

* The NSR here reflects revenue from iron, copper and gold, net of all off-site costs. For iron the net revenue is the FOB sales price.
** Mean Annual figures are averaged over 24.1 production years, including ramp-up in the early years of production. These figures are lower than those achieved during full production.

The Company cautions that the PEA is preliminary in nature, and includes 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 drillholes and, as such, substantial work is required to verify the current caving and output assumptions.

PROJECT BACKGROUND


Pampa de Pongo is located 38 kilometres from the San Juan deep-water port, on the Pacific coast of Peru, where a major expansion to mega-port status is scheduled to be completed ahead of projected production at the proposed mine. The significance of this location, infrastructure and access to Asian markets cannot be overstated. Highlights of the SRK PEA conclude that Pampa de Pongo would be developed as a 75,000 tonne/day underground block caving operation. Ore would be crushed and ground, with an iron concentrate produced through wet magnetic separation, and a copper-gold by-product concentrate produced through flotation. The iron concentrate would be converted into iron pellets at the port site. Upon reaching full planned production, Pampa de Pongo would produce 15 million tonnes of iron ore pellets per year (a total of 330 million tonnes through current proposed life of mine), which would be available for Asian markets.

PROJECT HIGHLIGHTS & RESOURCE ESTIMATE


Pampa de Pongo is a world-class magnetite deposit, with Inferred Resources of 750Mt at a grade of 41.7% iron (Fe), 0.093% copper (Cu) and 0.059 g/t gold (Au) defined in the Central Zone alone. All economics in this news release refer to the Central Zone only.

The effective date of the Pampa de Pongo Iron Project, Preliminary Economic Assessment Technical Report Resource Estimate for Central Zone is September 30th, 2008. Inferred mineral resources were estimated at a cut-off of 15% Fe and were classified in accordance with Canadian Institute of Mining, Metallurgy and Petroleum (CIM) Definition Standards on Mineral Resources and Mineral Reserves. The database used to estimate mineral resources for the Central Zone was comprised of 5 drill holes and 1,011 Fe, Cu and Au assays. Gold grades were capped at 0.4 g/t Au while Cu grades were capped at 0.3% Cu. Two solids were generated with which to constrain grade interpolation. The high grade shell generally comprised of >40% Fe grade which represents roughly 2/3rds of the inferred mineral resource and a second >15% Fe grade shell representing a hanging wall zone of lower grade and lower intensity of magnetite replacement. Assays were composited to 2 metre intervals. A total of 210 density determinations were used to generate a regression with iron grades which were subsequently used to assign density to the block model. The block model comprised of 25 metre x 25 metre x 10 metre blocks, and grade was interpolated using inverse distance squared of iron grades weighted with specific gravity. The assay and drillhole database and resource estimate was validated by SRK and found to be appropriate for the estimation of inferred mineral resources. SRK is not aware of any known environmental, permitting, legal, title, taxation, socio-political, marketing or other relevant issues that would materially affect the mineral resources.

SRK's resource estimation on the South Zone is not yet complete - any additional economic impact from South Zone will be determined on completion of resource estimation and analysis of various mining scenarios (presently underway).

The East Zone was discovered in 1996 when a single hole was drilled by Rio Tinto. In 2008, Cardero completed a new magnetic survey, from which 3D magnetic modeling suggests potential for up to an additional 400Mt of magnetite mineralization. The Rio Tinto drillhole in this area intersected 192 metres of magnetite mineralization on the extreme southern edge of the anomaly and this target is now a priority for exploration drilling.

The North Zone is another priority magnetic anomaly, which remains untested to date.

PROJECT CONTEXT

Vale, the world's largest iron ore producer, currently produces 43Mt of iron ore pellets from 23 mines and exports pellets from 9 plants via 4 shipping terminals. By 2012, with various expansion plans realized, Vale would produce 65Mt of iron ore pellets from 26 mines and export pellets from 12 pelletizing plants via 5 shipping terminals. Pampa de Pongo would produce 15Mt (35% of Vale's current production) from a single pelletizing plant, via a single port on the Pacific coast of Peru.

This percentage does not take into account any potential upside from South Zone (where resource estimation is in progress) or from any advanced exploration on the East Zone (where 3D magnetic modeling indicates potential for up to an additional 400Mt of magnetite mineralization). These production levels, together with existing production from Marcona Mine (35 kilometres to the northwest) would put the Marcona District on the world stage as a premier source of iron ore for Asia.

FINANCIAL ANALYSIS


At the base case iron pellet price of 198 US cents per dmtu (US$ 128/tonne) the estimated after-tax NPV8% is US$3.3 billion and the real project after-tax internal rate of return is 18%. The life of mine project revenue, net of all off-site costs and project royalties and including copper and gold credits, is estimated at US$42 billion, equating to an average annual net revenue of US$1.75 billion. Life of mine operating costs are estimated at US$7.3 billion, or US$304 million on an average annual basis. Life of mine net pre-tax operating cash flow is estimated at US$34.7 billion or US$1.44 billion average annually.

The operating costs are approximately 17% of net revenue, providing a very high project operating margin. 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$127 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$105.

CASH FLOW MODEL INPUTS AND ASSUMPTIONS


Mining Method -- Underground mining in Central Zone would consist of two adjacent block caves. Mine design and scheduling is driven by NPV and IRR. The current mine plan extracts only ¾ of the in situ inferred resources.

Production -- Planned mine production rates are 75,000 tonnes per day (tpd) or approximately 27 million tonnes per annum (mtpa). Total production (mill feed) over current 24 year Life of Mine (LOM) is estimated at 578 million tonnes (Mt).

Grade Factor -- Grade factor is estimated at 90% (10% dilution). Block caving should yield lower levels of dilution in the early years of production.

Processing - Iron recovery is 93.4% with a final pellet grade of 64.5% iron, while copper and gold recovery from concentrate is conservatively estimated at 50% each.

Payable Metal - Pampa de Pongo would produce, on a LOM basis, 330Mt of blast furnace pellets grading 64.5% iron, 535 million pounds of copper and 493,000 ounces of gold. MIDREX Technologies is currently evaluating the suitability of the Pampa de Pongo pellets as Direct Reduction pellets, which would attract a 10% premium on price.

Central Zone Inferred Resource -- Central Zone contains NI 43-101 compliant inferred resources of 750 Mt at 41.7% iron, 0.093% copper and 0.059 g/t gold. The proposed LOM plan portion of the inferred resource is 578 Mt @ 39.4% iron, 0.09% copper and 0.05 g/t gold (after application of 90% grade factor), extracted over a 24 year LOM.

Operating Cost -- Operating cost is estimated at approximately US$13 per tonne of ore milled or US$22 per tonne of pellets produced.

Capital Cost -- Pre-production capital is US$3.3 billion. Expansion and sustaining capital is US$4.2 billion. All capital costs include 20% contingency.

Metal Price Assumptions - In order to demonstrate robust economics, three separate future price estimates have been utilized, as follows:

  1. USą154/dmtu ($99/t) 3-year average Blast Furnace pellet price (based on Brazilian operations);
  2. USą198/dmtu ($128/t) long-term price from an independent study; and
  3. USą230/dmtu ($148/t) long-term price from recent and comparable economic assessments.

Pricing USą /dmtu 154 198 230
pellet grade %Fe 64.5 64.5 64.5
US$/t 99 128 148
Post-Tax NPV0 11,671 17,558 21,819
NPV8 1,655 3,318 4,514
NPV10 844 2,114 3,026
IRR % 14 18 21
Pre-Tax NPV0 18,165 27,263 33,879
NPV8 3,253 5,808 7,665
NPV10 2,020 3,969 5,385
IRR % 17 23 26

Table 2: Cash Flow Results



CASH FLOW MODEL INPUTS AND ASSUMPTIONS


Table 2 summarizes the pre-tax and post-tax Net Present Value (NPV) and Internal Rate of Return (IRR) for three price scenarios. NPV remains robust at all discount rates and at all pricing levels.

The Company anticipates that the final version of the SRK PEA Technical Report will be delivered, and thereafter filed on SEDAR, prior to the end of October, 2008.

Qualified Person

Mr. Gordon Doerksen, P.Eng., Mr. Marek Nowak, P.Eng. and Mr. George Wahl, P.Eng. (all of SRK Consulting (Canada) Inc.), each of whom is a qualified person as defined by National Instrument 43-101, are each responsible for portions of the PEA Technical Report and have reviewed the scientific and technical information that forms the basis for this news release. All of these qualified persons are independent of Cardero.

Gordon Doerksen P.Eng. is a Principal Consultant -- Mining with SRK in Vancouver. Mr. Doerksen has 23 years of experience in the mining industry, mainly at operating mines in North America and Africa. He has conducted and managed engineering studies for a variety of commodities in Asia, South America, North America and Africa.

Marek Nowak, P. Eng, has over 25 years of experience in the mining industry. Mr. Nowak specializes in natural resource evaluation and risk assessment using a variety of geostatistical techniques. He has worked on a variety of studies for operating mines and on advanced exploration projects, which included validation of large databases, studies of sample biases, resource estimates, reconciliation, and simulation of grade control models.

George H Wahl, P. Geo has over 20 years of experience. Mr. Wahl is a resource geologist who has worked with clients to advance their projects from exploration through to basic engineering. He has worked on several iron ore projects in Carajas, Corumba, and the Iron Quadrilateral in Brazil, as well as on several iron ore projects in the Labrador Trough and another on Baffin Island.

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 NYSE Alternext US (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
Email:
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.

Cautionary Note Regarding Forward-Looking Statements

This press release contains forward-looking statements within the meaning of Section 27A of the Securities Act and Section 27E of the Exchange Act. All statements, other than statements of historical fact, included herein including, without limitation, statements regarding the anticipated content, commencement and cost of exploration programs, anticipated exploration program results, the discovery and delineation of mineral deposits/resources/reserves, the preliminary economic assessment of proposed operations at Pampa de Pongo (including the assumptions upon which such assessment is based), business and financing plans and business trends, are forward-looking statements. Information concerning mineral resource estimates also may be deemed to be forward-looking statements in that it reflects a prediction of the mineralization that would be encountered if a mineral deposit were developed and mined. 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 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, variations in the market for, and pricing of, any mineral products the Company may produce or plan to produce, the Company's inability to obtain any necessary permits, consents or authorizations required for its activities, the Company's inability to produce minerals from its properties successfully or profitably, to continue its projected growth, to raise the necessary capital or to be fully able to implement its business strategies, and other risks and uncertainties disclosed in the Company's annual report on Form 40-F filed with the United States Securities and Exchange Commission (the "SEC"), and other information released by the Company and filed with the appropriate regulatory agencies. All of the Company's Canadian public disclosure filings may be accessed via www.sedar.com and its United States public disclosure filings may be accessed 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.

Cautionary Note Concerning Reserve and Resource Estimates

This press release and other information released by Cardero uses the terms "resources", and "inferred resources". United States investors are advised that, while such terms are recognized and required by Canadian securities laws, the SEC does not recognize them. Under United States standards, mineralization may not be classified as a "reserve" unless the determination has been made that the mineralization could be economically and legally produced or extracted at the time the reserve determination is made. Mineral resources that are not mineral reserves do not have demonstrated economic viability. United States investors are cautioned not to assume that all or any part of inferred resources will ever be converted into reserves. Inferred resources have a great amount of uncertainty as to their existence and as to whether they can be mined legally or economically. It cannot be assumed that all or any part of the inferred resources will ever be upgraded to a higher category. Therefore, United States investors are also cautioned not to assume that all or any part of the inferred resources exist, or that they can be mined legally or economically.

National Instrument 43-101 Standards of Disclosure for Mineral Projects ("NI 43-101") is a rule developed by the Canadian Securities Administrators, which established standards for all public disclosure an issuer makes of scientific and technical information concerning mineral projects. Unless otherwise indicated, all reserve and resource estimates contained in this press release or released by Cardero in the future, have been or will be prepared in accordance with NI 43-101 and the Canadian Institute of Mining, Metallurgy and Petroleum (the "CIM") Standards on Mineral Resource and Mineral Reserves, adopted by the CIM Council on November 14, 2004 (the "CIM Standards") as they may be amended from time to time by the CIM. United States shareholders are cautioned that the requirements and terminology of NI 43-101 and the CIM Standards differ significantly from the requirements and terminology of the SEC set forth Industry Guide 7. Accordingly, the Company's disclosures regarding mineralization may not be comparable to similar information disclosed by companies subject to the SEC's Industry Guide 7.

This press release contains information with respect to adjacent or similar mineral properties in respect of which the Company has no interest or rights to explore or mine. The Company advises US investors that the US Securities and Exchange Commission's mining guidelines strictly prohibit information of this type in documents filed with the SEC. Readers are cautioned that the Company has no interest in or right to acquire any interest in any such properties, and that mineral deposits on adjacent or similar properties are not indicative of mineral deposits on the Company's 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.