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Zonia Copper Oxide Project, Arizona

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Overview

The Zonia Copper Oxide Project has been held under private ownership for almost 100 years and has undergone comprehensive exploration, metallurgical studies and mine development planning. The majority of the mineralized area was pre-stripped during previous open-pit mining operations at Zonia in 1966, as 17 million tons were mined with 7 million tons stacked on heap leach pads, producing cement copper up till 1975. The property has been drill tested with almost 700 drill holes (60,000 meters). This high density drilling covers 30% of the property and defines the current resource estimate, reducing technical risk on the deposit. Mineralization is mostly open to the northeast, providing considerable opportunity to grow the resource.

  • Zonia Regional Location

  • Zonia Details

2016 Resource Estimate

On January 13, 2016, Cardero reported a NI43-101 resource estimate for Zonia. The resource estimate was completed by Tetra Tech Inc. on behalf of Cardero. Highlights include:
  • Measured and Indicated Resources of 76.8 million short tons grading 0.33% copper containing 510 million pounds of copper (0.2% copper cut-off grade).
  • Inferred Resources of 27.2 million short tons grading 0.28% copper containing 154.6 million pounds of copper (0.2% copper cut-off grade).
  • Low strip ratio of 1:1 waste to mineralized material in base case.
The base-case classified resources are outlined in detail in Table 1 and at various total copper cut-off grades in Table 2. Mineral resources have been constrained to a Lerch-Grossman pit optimization run on measured, indicated, and inferred blocks using the parameters shown in Table 3. Total-copper within the block model was estimated using ordinary kriging. Blocks that fall within the optimized shell have been reported using a base-case block cut-off grade of 0.2% total copper.

Table 1: Base Case Classified Resources
Classification Cut-Off
Grade
(% Cu)
Short Tons
(x '000)
Copper
(%)
Contained Copper
(M lbs)
Measured 0.2 15,400 0.42 129.3
Indicated 0.2 61,400 0.31 380.6
Measured & Indicated 0.2 76,800 0.33 510.0
Inferred 0.2 27,200 0.28 154.6


Table 2: Resources at Various Cut-Off Grades
Cut-Off
Grade
(% Cu)
Strip Ratio Measured & Indicated Inferred
Short Tons
(x '000)
Copper
(%)
Contained Copper
(M lbs)
Short Tons
(x '000)
Copper
(%)
Contained Copper
(M lbs)
0.25 1.96 54,500 0.43 312.6 16,200 0.37 63.2
0.225 1.43 65,200 0.38 410.1 21,000 0.33 105.8
0.20 1.01 76,800 0.33 510.0 27,200 0.28 154.6
0.175 0.69 88,000 0.31 551.9 35,700 0.26 186.4
0.15 0.52 96,200 0.30 578.6 41,600 0.25 205.5


Table 3: Lerch-Grossman Pit Optimization Parameters
Input Value Unit
Mining Cost 1.5 $/ton
Process Cost 3.4 $/ton
G&A 0.45 $/ton
Recovery Oxide 73 %
Recovery Transition 70 %
Recovery Primary Sulfide 0 %
Pit Slope 45 Degrees
Cu Price 2.5 $/lbs


Mineral Resources are not Mineral Reserves and do not have demonstrated economic viability. There is no certainty that all or any part of the Mineral Resources will be converted into Mineral Reserves. Inferred resources are that part of a Mineral Resource for which quantity and grade or quality are estimated on the basis of limited geological evidence and sampling. Geological evidence is sufficient to imply but not verify geological and grade or quality continuity. It is reasonably expected that the majority of Inferred Mineral Resources could be upgraded to Indicated Mineral Resources with continued exploration.

  • Zonia Blocks within Whittle Pit Shell

  • Zonia Block Model Cross Section

  • Zonia Block Model Cross Section



The deposit has undergone deep oxidation from surface and metallurgical studies demonstrate that it is amenable to open-pit mining, heap-leaching and SX-EW to produce cathode copper, with an expected recovery of 73%.

The currently defined deposit is located on private land, where mine road construction and pre-stripping has already been completed. Power is available from the public grid within 7km of the mine site and the project has sufficient water supply to support mining and processing. Cardero believes that permitting for the project will be streamlined due to the fact that no part of the project will impact public lands.

Geology and Mineralization

The Zonia property is in the southern part of the Basin and Range Transition province of the North American Cordillera, immediately south of the Colorado Plateau and north of the Basin and Range province. This section of the Basin and Range province in Arizona and New Mexico hosts a large number of base and precious metal mines and mineral occurrences. The Zonia deposit is hosted by the steeply dipping, northeast-trending, Precambrian Yavapai Series, which consists of schistose subvolcanic intrusions, volcanic flows, and tuffaceous sedimentary rocks. Portions of the area are covered by post-mineralization Quaternary basalt, fanglomerate, and alluvial material.

Rocks at the Zonia Property consist mainly of highly variably foliated rhyolitic to dacitic quart-eye porphyry subvolcanic rocks, diorite, and minor diabase dikes, with highly schistose phyllites and chlorite schist along the southeast margin. Foliation dips steeply to the northwest over most of the Zonia claims block, but changes to southeast dipping along the southeast margin in the Bragg Estate and Silver Queen claim block. This typical greenstone package is intruded and enclosed by younger Precambrian granitic batholiths which show only weak foliation at the margins.

Zonia appears to be the highly oxidized portion of a previously supergene-enriched metamorphosed porphyry deposit, though it has previously been interpreted as a volcanogenic massive sulfide (VMS) deposit due to confusion of the protolith of the quartz-sericite schist along the northwest margin and the nature of the contact with adjacent, structurally overlying chlorite schist. The main mineralized unit is variably foliated quartz-feldspar porphyry dacite and related sericite schist, with disseminated sulphides and stockwork quartz-sulphide veins that predominately pre-date the metamorphism, but also post-date it to some extent.

Oxidation of the original chalcopyrite mineralization and younger secondary supergene chalcocite has been pervasive and deep, extending down over 250 metres (874 feet) in the central pit at the historical Cuprite shaft. Chrysocolla, malachite, azurite, melaconite, and cuprite are the most common copper minerals. Quartz and jasper accompany the ore minerals; oxides are ubiquitous in the mineralized zones. Higher copper grades are associated with contacts of the dacite porphyry with acid-reactive mafic chlorite schist, which are zones of increased supergene deposition. Lower grades are associated with more massive enclosures of the dacite porphyry, which were less permeable to supergene fluids.


Work Plan

Cardero intends to publish a preliminary economic assessment ("PEA") in 2018. No additional on-site data collection is required before completing the PEA. In preparation for the PEA, Cardero will analyze the database of work completed by Redstone and former owners, including open pit design and optimization, production scheduling, metallurgical test work, geotechnical analysis, leach pad and process design, waste rock facility design, hydrogeological studies and reclamation planning.

Environmental work and permitting will be a parallel process. Cardero has received advice regarding permitting requirements and some of the necessary baseline work and permit applications have already been completed. Notwithstanding this advanced-stage work, permitting will be an area of focus and Cardero believes that a development plan located on private land will offer the easiest permitting route for the project, at least for the first phase of development.

Cardero intends to seek a development partner and financier to move the project through feasibility and construction.


Current Exploration

Recent rock geochemical sampling on a 150-metre spaced grid over most of the claim block has generated a new porphyry copper target based on coincident anomalous copper, molybdenum and manganese. The 2500 by 1000 metre anomaly occurs northeast of the drill-defined Zonia copper oxide deposit, and shares characteristics of its geochemical footprint.

Coincident areas of elevated molybdenum (Mo) and copper (Cu) values with depressed manganese (Mn) values is a classic geochemical signature of porphyry copper mineralization. Copper values are also anomalous, but copper is not as reliable as the other metals due to its solubility in the weathering profile. The overlapping anomalies suggest a porphyry copper target size on the order of 2500 by 1000 metres. The same quartz-feldspar porphyry dacite that hosts the Zonia copper oxide resource (see NR17-08) underlies the anomaly. The anomaly marks a break in the northeast trend of the mineralization, with a narrow southern "tail" that opens northward to a broader northeast trend. The anomaly is truncated at the north end by younger, post-mineral cover rocks (Gila conglomerate, alluvium, and Tertiary basalt). The east margin of the anomaly contains some narrow high-grade copper bearing structures in the historical Copper Crown mine workings, with associated intense epidote alteration.

Cardero is currently completing a 28 line-kilometre IP survey over the Zonia and neighbouring Silver Queen properties (see NR16-06), utilizing 200 metre spaced dipoles. This will cover the same area as the rock geochemical grid. Once completed within the next few weeks, this additional data should further delineate subsurface mineralization as well as depth to sulphides (depth of oxidation) under the large northeast Cu-Mo-Mn anomaly.

Additional 150-metre spaced rock sampling is planned for the open pit area and southwest of the pit, where more detail is required to close off the anomalies.

Mo

Cu

Au

Mn

Zn



Ownership

Cardero Resource Corp. has the exclusive option to acquire up to a 100% interest in the Zonia Copper Oxide Project, located in Arizona.

On August 27, 2015 Cardero entered into an Option Agreement with Redstone Resources Corporation (Redstone) under which Cardero has been granted an exclusive option to acquire a 100% interest in the Zonia copper project. In order to exercise the option, Cardero must pay Redstone $2,225,000 ($801,350 paid) and issue 16,500,000 common shares of Cardero Resource Corp. to Redstone (7,500,000 issued).

Table 4: Option Agreement
Date Cash to Redstone (USD$) Cardero Shares
Initial Payment $25,000 (Paid) -
BLM Fees $26,350 (Paid) -
October 15, 2015 $150,000 (Paid) 1,000,000 (Issued)
January 31 2016 $75,000 (Paid) 1,500,000 (issued)
July 31 2016 $75,000 (Paid) -
January 31 2017 $450,000 (Paid) 2,500,000 (issued)
July 31 2017 - 2,500,000 (issued)
January 8 2018 $500,000 (Paid) 4,000,000 (issued)
October 31 2018 $923,650 5,000,000
Total $2,225,000 16,500,000


Cautionary Note Regarding Forward-Looking Statements

Forward Looking Information: This report includes certain information that may be deemed "forward looking information". Forward-looking information can generally be identified by the use of forward-looking terminology such as "may", "will", "expect", "intend", "estimate", "anticipate", "believe", "continue", "plans" or similar terminology. All information in this release, other than information of historical facts, including, without limitation, the potential of the Zonia general future plans and objectives for the Zonia project, the completion of the Plan and receipt of shareholder and regulatory approval therefor, the likelihood of receipt of value from the Retained Right, the availability of financing to Cardero Resource Corp. ("the Company") and the Company's plan in relation to its listing review are forward-looking information that involve various risks and uncertainties. Although the Company believes that the expectations expressed in such forward-looking information are based on reasonable assumptions, such expectations are not guarantees of future performance and actual results or developments may differ materially from those in the forward-looking information. Forward-looking information is based on a number of material factors and assumptions. Factors that could cause actual results to differ materially from the forward-looking information include changes in project parameters as plans continue to be refined, future metal prices, availability of capital and financing on acceptable terms, general economic, market or business conditions, regulatory changes, delays in receiving approvals, and other risks detailed herein and from time to time in the filings made by the Company with securities regulatory authorities in Canada. Mineral exploration and development of mines is an inherently risky business. Accordingly, actual events may differ materially from those projected in the forward-looking information. For more information on the Company and the risks and challenges of our business, investors should review our continuous disclosure filings which are available at www.sedar.com. Readers are cautioned not to place undue reliance on forward-looking information. The Company does not undertake to update any forward looking information, except in accordance with applicable securities law.