Cardero Resource is pleased to announce a maiden NI 43-101 Resource Estimate for the current Carbon Creek metallurgical coal project held by the Carbon Creek Joint Venture of 290 million tonnes of Measured and Indicated and 161 million tons of Inferred ASTM rank mvB coal as at November 1, 2014.

The current Carbon Creek joint venture property comprises 30,390 hectares, having been recently expanded by 77% following acquisition of prospective coal license applications in September 2014.

Resource Summary

  • Measured and indicated resources are 290 million tonnes ("Mt") of metallurgical coal.
  • Inferred resources are 161 Mt of metallurgical coal.
  • New geological model benefits from inclusion of 23,600 metres of drilling completed in late 2012.
  • A total of 61 coal seams and sub-seams are considered of potential economic significance and are reported as resources.
  • 66% of measured and indicated resources are classified as potentially surface mineable.
  • 63% of the measured and indicated resources and 85% of the inferred resources are classified as Hard Coking Coal ("HCC").

The accuracy of resource and reserve estimates is, in part, a function of the quality and quantity of available data and of engineering and geological interpretation and judgment. Given the data available at the effective date of this resource estimate, the estimates presented are considered reasonable. However, they should be accepted with the understanding that additional data and analysis available subsequent to the effective date of the estimate may necessitate revision. These revisions may be material. There is no guarantee that all or any part of the estimated resources will be recoverable. Mineral resources are not mineral reserves and there is no assurance that any mineral resources will ultimately be reclassified as proven or probable reserves. Mineral resources which are not mineral reserves do not have demonstrated economic viability.

Technical Report Summary

The resource estimate is contained in a NI 43-101 Technical Report entitled "Technical Report – Carbon Creek Coal Property, British Columbia, Canada" dated December 11, 2014 ("Report") and prepared by Norwest Corporation ("Norwest") for Cardero. Cardero Coal Ltd. ("Cardero Coal"), formerly "Coalhunter Mining Corporation", a wholly-owned coal exploration and development subsidiary of Cardero, is the entity which holds the interest in the Carbon Creek property.

Cardero Coal holds a 75% joint venture interest in the Carbon Creek property ("Property") which is located in the Peace River Coalfield and currently consists of four coal licenses ("Licenses") and 25 applications for coal licenses ("Applications"). The Property totals 30,590 hectares (ha), comprising 26,910 ha of Applications and 3,680 ha of Licenses. Any coal licenses issued pursuant to the Applications will be included in the Property. Cardero Coal’s interest is held through a joint venture ("JV") agreement with the Carbon Creek Partnership ("CCP"). The JV, known as the Carbon Creek JV, controls the Property, and Cardero Coal is the manager of the JV. The JV agreement provides that the CCP interest is a carried interest which requires Cardero Coal to fund the exploration, development, construction and operation of the mine and the CCP is to receive 25% of the net proceeds of production from the Property after Cardero Coal has recovered 100% of its investment, including all exploration and development expenditures as well as the costs of acquiring the Licenses.

From December 21, 2011 to May 30, 2014, the JV also held an interest in 10 Crown Granted District Lots ("CGDL" or "Freehold") via a coal lease ("Lease") between Cardero Coal and the Peace River Partnership. Cardero Coal withdrew from the Lease on May 30, 2014 and the Freehold ceased to form part of the Property. Accordingly, as all previous disclosures of coal resources and reserves for the Carbon Creek property by Cardero have included this additional 2,600 ha of Freehold, such previous resource and reserve estimation are no longer valid and should not be relied upon. The estimated resource reported in this news release is the initial resource estimate for the Property as now constituted.

For coal deposits, "mineralization" refers to coal development and coal seam stratigraphy. The coals occurring within the Property are thought to occur in the upper to middle sections of the Gething Formation. Based on the available data and existing geological interpretation, Norwest has determined coal mineralization to be of the Moderate geology type.

Norwest validated all drillcore intercepts from Utah Mines Ltd. ("Utah") and Cardero Coal drill programs for use in the geologic model for the Property. The model data set was rigorously checked for errata and inconsistencies using statistical data evaluation techniques. Maps and cross-sections were evaluated as an iterative process during the finalization of the model prior to calculation of the current coal resource for the Property.

Norwest personnel were directly involved in the field sampling and management of Cardero Coal drilling programs and the Qualified Person for the Report conducted site inspections during these exploration campaigns. The 2010 Cardero Coal twin-hole verification drilling program was able to replicate the results of the earlier Utah drilling program from the 1970s, allowing much of this data to be used with current drill data in the geological model for the Property.

Coal Quality

The coal deposition found on the Property is typical of the Gething Formation, consisting of abundant coal seams, some showing favourable metallurgical properties. Although there are numerous seams throughout the Property, 61 identified coal seams are of sufficient thickness and extent to include in the geologic model and report as coal resources.

Values shown represent coal without out-of-seam dilution (OSD). Run-of-Mine (ROM) coal, including OSD, can be beneficiated using size specific density and froth flotation separating processes to improve coal quality. Coking properties such as Free Swelling Index (FSI) and dilation are typically improved through beneficiation as well. The washability testing and metallurgical analyses described in the Report show this to be applicable to coals from the Property.

The 2011 and 2012 exploration programs conducted by Cardero Coal included a select number of large diameter (6in/150mm) cores for the purpose of obtaining representative washability and carbonization data. One bulk sample per seam was obtained, with each sample ranging from 250kg to 325kg of coal. Each bulk sample, representing 16 of the key seams exhibiting metallurgical characteristics, was subjected to a comprehensive washability study program. Applying Limn(r) simulations to a process design typifying the washing of high value coking coals, a plausible product for each seam was developed. With this information, a physical simulated seam product (SSP) was assembled in the laboratory. These SSPs were then subjected to a wide range of quality tests including petrographics, plasticity and sole heated oven testing. A summary of key test results are listed in Table 2, composited as either hard coking coal (HCC) or semi-soft coking coal (SSCC).