Overview

Commodity

Iron Ore

Overview

The Sheini Hills Iron Project is a large-scale iron project, made up of three prospecting licenses covering the Sheini Hills iron ore deposit (approximately 400 square kilometres in aggregate), which is in line with Cardero's bulk commodity focus and is expected to add significant value to Cardero's metallurgical coal and iron resource base. The Sheini Hills Iron formation, occurring as hematite with a lesser component of magnetite, has an indicated average thickness of 50 to 150 metres and can be followed by surface mapping and sampling for a minimum of 30 kilometres of strike. The mineralized system appears to be flat to gently dipping at surface, forming north-south trending prominent ridges.

Ownership

Joint Ventures with Emmaland
Cardero, through Cardero Ghana, has agreed with Emmaland Resource Limited, an arm's length Ghanaian company ("Emmaland") to enter into three separate joint ventures (one for each of 3 prospecting licenses anticipated to be issued to Emmaland) to explore and, if warranted, develop, an aggregate of approximately 400 square kilometres of lands located in the Zabzugu-Tatale District in the Northern Region of the Republic of Ghana and referred to as the Sheini Hills Iron Project. Formation of each joint venture is subject to the actual issuance of the prospecting license that is the subject of that joint venture.

Under the three proposed joint ventures, Cardero Ghana will have the right to earn a 100% working interest in each license, subject to (a) a 10% NPI in favour of Emmaland and (b) a 10% fully carried interest, in favour of the Government of Ghana, in the portions of the license areas that become the subject of one or more mining licenses subsequently issued to Emmaland. In order to earn its interest, Cardero will fund all expenditures under the particular joint venture and make the following payments to Emmaland:

For each of the Sheini Hills North and Middle Sheini property licenses:

• USD 25,000 upon the agreement to enter into the joint venture (paid)
• USD 250,000 as an initial joint venture payment (paid)
• USD 1,000,000 upon the formation of the joint venture (Effective Date)
• USD 1,000,000 six months after the Effective Date
• USD 500,000 one year after the Effective Date
• USD 1,000,000 two years after the Effective Date
• USD 1,000,000 three years after the Effective Date
• USD 500,000 four years after the Effective Date
• USD 500,000 five years after the Effective Date

For the Sheini South property license:

• USD 3,000,000 upon the formation of the joint venture (Effective Date)
• USD 1,000,000 one year after the Effective Date
• USD 1,000,000 two years after the Effective Date

Cardero Ghana will have the right to purchase the 10% NPI held by Emmaland in a joint venture at any time for an amount representing the net present value thereof, as calculated by an independent engineering firm, or such other amount as is acceptable to Emmaland.

Location

The three prospecting licenses cover an area approximately 55 kilometres long by an average of 7 kilometres wide (approximately 400 square-kilometres). The project is approximately centred on the town of Sheini located in north-eastern Ghana adjacent to the border with Togo approximately 400 kilometres north-east of Accra and 160 kilometres east of Tamale, the regional capital of Northern Ghana. Infrastructure is good to moderate with graded roads, power and communications available at the district capital of Zabzugu, some 20 kilometres north-west of Sheini.

About Ghana

The Republic of Ghana, is located in West Africa, bordered by Côte d'Ivoire to the west, Burkina Faso to the north, Togo to the east, and the Gulf of Guinea to the south. The population is approximately 24 million people with a labour force of 11.5 million people. Ghana is rich with natural resources and was known for its gold in colonial times, remaining one of the world's top gold producers today. Other exports such as cocoa, oil, timber, electricity, diamond, bauxite and manganese are major sources of foreign exchange. Ghana remains one of the more economically sound countries in all of Africa.

Ghana operates politically through a stable parliamentary system yet also honours an historic chief system with a complex hierarchy branching downward from an Ashanti king, through four "paramount" regional chiefs and then down to district and village chiefs. Ghana is a modern developing country with strong economic ties in West Africa and with Europe and North America. It is West Africa's largest gold producer and a top-ten gold producer globally. It is also the world's second largest cocoa producer and is emerging as an oil-producing nation through newly discovered offshore fields.