40-F

U.S. SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

FORM 40-F

[  ]  Registration statement pursuant to Section 12 of the Securities Exchange Act of 1934

or

[X] Annual report pursuant to Section 13(a) or 15(d) of the Securities Exchange Act of 1934

For the fiscal year ended October 31, 2010 Commission File Number 001-32345

Cardero Resource Corp.
(Exact name of Registrant as specified in its charter)

British Columbia, Canada	1041	Not Applicable
(Province or Other Jurisdiction of	(Primary Standard Industrial Classification	(I.R.S. Employer
Incorporation or Organization)	Code No.)	Identification No.)

#1920 – 1188 West Georgia Street
Vancouver, British Columbia, V6E 4A2
(604) 408-7488
(Address and telephone number of Registrant’s principal executive offices)

DL Services Inc.
Columbia Center, 701 Fifth Avenue, Suite 6100
Seattle, WA 98104-7043
(206) 903-5448
(Name, address (including zip code) and telephone number
(including area code) of agent for service in the United States)

Securities registered or to be registered pursuant to Section 12(b) of the Act:

Title of Each Class:	Name of Each Exchange On Which Registered:
Common Shares, no par value	NYSE Amex LLC

Securities registered or to be registered pursuant to Section 12(g) of the Act: None

Securities for which there is a reporting obligation pursuant to Section 15(d) of the Act: None

For annual reports, indicate by check mark the information filed with this form:

[X]  Annual Information Form [X]  Audited Annual Financial Statements

At October 31, 2010, the Registrant had outstanding 58,685,602 common shares without par value.

Indicate by check mark whether the Registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Exchange Act during the preceding 12 months (or for such shorter period that the Registrant was required to file such reports) and (2) has been subject to such filing requirements for the past 90 days. [X] Yes    [  ] No

Indicate by check mark whether the Registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the Registrant was required to submit and post such files).  [  ] Yes    [  ] No

DOCUMENTS INCORPORATED BY REFERENCE

The Annual Information Form (“AIF”) of Cardero Resource Corp. (the “Registrant” or the “Company”) for the fiscal year ended October 31, 2010 is incorporated herein by reference.

The audited consolidated financial statements of the Company for the years ended October 31, 2010 and 2009, including the report of the auditors with respect thereto, are incorporated herein by reference. For a reconciliation of important differences between Canadian generally accepted accounting principles (“Canadian GAAP”) and United States generally accepted accounting principles (“U.S. GAAP”), see Note 15 to the Company’s audited consolidated financial statements.

The Company’s management’s discussion and analysis (“MD&A”) for the year ended October 31, 2010 is incorporated herein by reference.

EXPLANATORY NOTE

The Company is a Canadian issuer eligible to file its annual report pursuant to Section 13 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”) on Form 40-F. The Company is a “foreign private issuer” as defined in Rule 3b-4 under the Exchange Act. Accordingly, the Company’s equity securities are exempt from Sections 14(a), 14(b), 14(c), 14(f) and 16 of the Exchange Act pursuant to Rule 3a12-3.

The Company is permitted, under a multi-jurisdictional disclosure system adopted by the United States, to prepare this annual report on Form 40-F in accordance with Canadian disclosure requirements, which are different from those of the United States.

The Company prepares its financial statements in accordance with Canadian GAAP, and is subject to Canadian auditing and auditor independence standards. Accordingly, the financial statements of the Company included in this report may not be comparable to financial statements of United States companies. Significant differences between Canadian GAAP and U.S. GAAP are described in Note 15 to the audited consolidated financial statements of the Company included in this report.

Unless otherwise indicated, all dollar amounts are reported in Canadian dollars.

FORWARD LOOKING STATEMENTS

This report contains forward-looking statements concerning anticipated developments in the operations of the Company in future periods, planned exploration and development activities, the adequacy of the Company’s financial resources and other events or conditions that may occur in the future. Forward-looking statements are frequently, but not always, identified by words such as “expects,” “anticipates,” “believes,” “intends,” “estimates,” “potential,” “possible” and similar expressions, or statements that events, conditions or results “will,” “may,” “could” or “should” occur or be achieved. Information concerning the interpretation of drill results and mineral resource estimates also may be deemed to be forward-looking statements, as such information constitutes a prediction of what mineralization might be found to be present if and when a project is actually developed. Forward-looking statements are statements about the future and are inherently uncertain, and actual achievements of the Company or other future events or conditions may differ materially from those reflected in the forward-looking statements due to a variety of risks, uncertainties and other factors, including, without limitation, those described in the AIF.

The Company’s forward-looking statements are based on the beliefs, expectations and opinions of management on the date the statements are made and the Company assumes no obligation to update such forward-looking statements in the future. For the reasons set forth above, investors should not place undue reliance on forward-looking statements.

DISCLOSURE CONTROLS AND PROCEDURES

The information provided under the heading “Evaluation of Disclosure Controls and Procedures” (page 29) contained in the MD&A is incorporated by reference herein.

MANAGEMENT’S REPORT ON INTERNAL CONTROL OVER FINANCIAL REPORTING

The information provided under the heading “Management’s Report On Internal Control Over Financial Reporting” contained at the beginning of the Company’s audited consolidated financial statements is incorporated by reference herein.

ATTESTATION REPORT OF THE REGISTERED PUBLIC ACCOUNTING FIRM

The information provided under the heading “Report of Independent Registered Public Accounting Firm to the Shareholders of Cardero Resource Corp. (an Exploration Stage Company)” contained at the beginning of the Company’s audited consolidated financial statements is incorporated by reference herein.

CHANGES IN INTERNAL CONTROL OVER FINANCIAL REPORTING

The information provided under the heading “Changes In Internal Control Over Financial Reporting” (page 29) contained in the MD&A is incorporated by reference herein.

DIRECTOR INDEPENDENCE

The Company’s Board of Directors consists of the following individuals: Hendrik Van Alphen, Lawrence W. Talbot, Leonard Harris, Murray Hitzman and Stephan Fitch. The Company’s Board of Directors has determined that Messrs. Harris, Hitzman and Fitch are “independent” under the criteria established by NYSE Amex.

AUDIT COMMITTEE IDENTIFICATION AND FINANCIAL EXPERT

The information provided in Schedule “A” to the AIF is incorporated by reference herein. The Company’s Board of Directors has determined that Stephan Fitch, a member of the Audit Committee, is an “audit committee financial expert” within the meaning of the Commission’s rules. Mr. Fitch is “independent” under the criteria established by NYSE Amex.

CODE OF ETHICS

The Company has adopted a code of ethics that applies to its principal executive officer, principal financial officer, principal accounting officer or controller and persons performing similar functions. A copy of the Company’s code of ethics has been posted on the Company’s Internet website at www.cardero.com. No substantive amendments were made to the Company’s code of ethics during the fiscal year ended October 31, 2010 and no waivers of the Company’s code of ethics were granted to any principal officer of the Company or any person performing similar functions during the fiscal year ended October 31, 2010.

PRINCIPAL ACCOUNTANT FEES AND SERVICES

The information provided under the headings “Pre-Approval Policies and Procedures” (page 12) and “External Auditor Service Fees (By Category)” (page 13) contained in Schedule “A” to the AIF is incorporated by reference herein.

OFF-BALANCE SHEET ARRANGEMENTS

The Company does not have any off-balance sheet arrangements.

TABULAR DISCLOSURE OF CONTRACTUAL OBLIGATIONS

The following table presents, as at October 31, 2010, the Company’s known contractual obligations, aggregated by type of contractual obligation as set forth below:

Contractual obligations		Total		Less than 1 Year		1-3 Years		3-5 Years		More than 5 Years
Operating lease obligations(1)	$	6,482,384	$	681,794	$	1,473,088	$	1,201,658	$	3,125,844
Total contractual obligations	$	6,482,384	$	681,794	$	1,473,088	$	1,201,658	$	3,125,844

(1) Obligations in respect of office and facilities leases.

UNDERTAKINGS

The Company undertakes to make available, in person or by telephone, representatives to respond to inquiries made by the Commission staff, and to furnish promptly, when requested to do so by the Commission staff, information relating to: the securities registered pursuant to Form 40-F; the securities in relation to which the obligation to file an annual report on Form 40-F arises; or transactions in said securities.

CONSENT TO SERVICE OF PROCESS

The Company has previously filed with the Commission a written consent to service of process and power of attorney on Form F-X. Any change to the name or address of the Company’s agent for service shall be communicated promptly to the Commission by amendment to the Form F-X referencing the file number of the Company.

MINE SAFETY DISCLOSURE

Pursuant to Section 1503(a) of the recently enacted Dodd-Frank Wall Street Reform and Consumer Protection Act (the “Dodd-Frank Act”), issuers that are operators, or that have a subsidiary that is an operator, of a coal or other mine are required to disclose in their periodic reports filed with the Commission information regarding specified health and safety violations, orders and citations, related assessments and legal actions, and mining-related fatalities. During the fiscal year ended October 31, 2010, the Company had no such events requiring disclosure pursuant to Section 1503(a) of the Dodd-Frank Act.

SIGNATURES

Pursuant to the requirements of the Exchange Act, the Registrant certifies that it meets all of the requirements for filing on Form 40-F and has duly caused this annual report to be signed on its behalf by the undersigned, thereto duly authorized.

CARDERO RESOURCE CORP.

(signed) Hendrik Van Alphen               
Hendrik Van Alphen
President and Chief Executive Officer

Date: January 28, 2011

EXHIBIT INDEX

The following documents are being filed with the Commission as exhibits to this annual report on Form 40-F.

Exhibit	Description
1.	Annual Information Form
2.	Audited Consolidated Financial Statements, including the reports of the auditors with respect thereto
3.	Management’s Discussion and Analysis
4.(1)	Management Information Circular dated May 25, 2010 in respect of the 2010 Annual General Meeting
5.(2)	Technical Report dated September 10, 2009 entitled “Pampa El Toro Mineral Resource Technical Report” prepared by SRK Consulting (South Africa) (Pty) Ltd.
6.	Technical Report dated January 27, 2011 entitled “Longnose and Titac Iron Titanium Exploration Project, Minnesota, USA – Exploration Results 2010” prepared by EurGeol Keith J. Henderson and Stephen (Jayson) Ripke
10.	Certification of Chief Executive Officer as Required by Rule 13a-14(a) under the Exchange Act
11.	Certification of Chief Financial Officer as Required by Rule 13a-14(a) under the Exchange Act
12.	Certification of Chief Executive Officer Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
13.	Certification of Chief Financial Officer Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
14.	Consent of Smythe Ratcliffe LLP
15.	Consent of SRK Consulting (South Africa) (Pty) Ltd. and Mark D. Wanless
16.	Consent of Holland and Holland Consultants (UK) and Leonard Holland
17.	Consent of Keith J. Henderson
18.	Consent of Stephen (Jayson) Ripke

(1)  Incorporated by reference to the Form 6-K furnished by the Company on June 2, 2010.
(2)  Incorporated by reference to the Form 40-F filed by the Company on January 29, 2010.

EX-1

   Cardero Resource Corp. - Exhibit 1 - Filed by newsfilecorp.com

EX-2

CARDERO RESOURCE CORP.
(An Exploration Stage Company)

Audited Consolidated Financial Statements

OCTOBER 31, 2010 and 2009

MANAGEMENT’S RESPONSIBILITY FOR FINANCIAL STATEMENTS

The consolidated financial statements and all information in the annual report are the responsibility of the Board of Directors and management. The consolidated financial statements have been prepared by management in accordance with Canadian generally accepted accounting principles. Management maintains the necessary systems of internal controls, policies and procedures to provide assurance that assets are safeguarded and that the financial records are reliable and form a proper basis for the preparation of financial statements.

The Board of Directors ensures that management fulfills its responsibilities for financial reporting and internal control through an Audit Committee. This committee, which reports to the Board of Directors, meets with the independent auditors and reviews the financial statements.

The consolidated financial statements have been audited by Smythe Ratcliffe LLP, Chartered Accountants, who were appointed by the shareholders. The auditors’ report outlines the scope of their examination and their opinion on the consolidated financial statements.

MANAGEMENT’S REPORT ON INTERNAL CONTROL OVER FINANCIAL REPORTING

The management of the Company is responsible for establishing and maintaining adequate internal control over financial reporting. Internal control over financial reporting is a process to provide reasonable assurance regarding the reliability of the Company’s financial reporting for external purposes in accordance with accounting principles generally accepted in Canada and the United States of America. Internal control over financial reporting includes maintaining records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the Company; providing reasonable assurance that transactions are recorded as necessary for preparation of the Company’s financial statements in accordance with generally accepted accounting principles; providing reasonable assurance that receipts and expenditures are made in accordance with authorizations of management and the directors of the Company; and providing reasonable assurance that unauthorized acquisition, use or disposition of Company’s assets that could have a material effect on its financial statements would be prevented or detected on a timely basis. Because of its inherent limitations, internal control over financial reporting is not intended to provide absolute assurance that a misstatement of the Company’s financial statements would be prevented or detected.

Management conducted an evaluation of the effectiveness of the Company’s internal control over financial reporting based on the framework and criteria established in Internal Control – Integrated Framework, issued by the Committee of Sponsoring Organizations of the Treadway Commission. This evaluation included review of the documentation of controls, evaluation of the design effectiveness of controls, testing of the operating effectiveness of controls and a conclusion on this evaluation. Based on this evaluation, management concluded that the Company’s internal control over financial reporting was effective as of October 31, 2010. The effectiveness of the Company’s internal control over financial reporting as of October 31, 2010 has been audited by Smythe Ratcliffe LLP, an independent registered public accounting firm, as stated in their report.

“Hendrik Van Alphen”	“Michael Kinley”
Hendrik Van Alphen,	Michael Kinley,
President & Chief Executive Officer	Chief Financial Officer
January 26, 2011
Vancouver, Canada

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
TO THE SHAREHOLDERS OF CARDERO RESOURCE CORP.
(AN EXPLORATION STAGE COMPANY)

We have audited the consolidated balance sheets of Cardero Resource Corp. as of October 31, 2010 and 2009 and the consolidated statements of operations, shareholders’ equity and cash flows for the years ended October 31, 2010, 2009 and 2008. These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on these financial statements based on our audits.

We conducted our audits in accordance with Canadian generally accepted auditing standards and the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform an audit to obtain reasonable assurance whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation.

In our opinion, these consolidated financial statements present fairly, in all material respects, the financial position of the Company as at October 31, 2010 and 2009 and the results of its operations and its cash flows for the years ended October 31, 2010, 2009 and 2008 in accordance with Canadian generally accepted accounting principles.

We have also audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States), the effectiveness of the Company’s internal control over financial reporting as of October 31, 2010 based on criteria established in Internal Control – Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission and our report dated January 26, 2011 expressed an unqualified opinion.

“Smythe Ratcliffe LLP” (signed)

Chartered Accountants

Vancouver, Canada
January 26, 2011

COMMENTS BY AUDITORS FOR US READERS

In the United States, reporting standards of the Public Company Accounting Oversight Board for auditors require the addition of an explanatory paragraph (following the opinion paragraph) when the financial statements are affected by conditions and events that cast substantial doubt on the Company’s ability to continue as a going-concern, such as described in Note 1 to the financial statements. Our report to the shareholders dated January 26, 2011, is expressed in accordance with Canadian reporting standards, which do not permit a reference to such events and conditions in the auditors’ report when these are adequately disclosed in the financial statements.

“Smythe Ratcliffe LLP” (signed)

Chartered Accountants

Vancouver, Canada
January 26, 2011

 

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
TO THE SHAREHOLDERS OF CARDERO RESOURCE CORP.
(AN EXPLORATION STAGE COMPANY)

We have audited Cardero Resource Corp.’s (the “Company”) internal control over financial reporting as of October 31, 2010 based on the criteria established in Internal Control – Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). The Company’s management is responsible for maintaining effective internal control over financial reporting and for its assessment of the effectiveness of internal control over financial reporting. Our responsibility is to express an opinion on the Company’s internal control over financial reporting based on our audit.

We conducted our audit in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether effective internal control over financial reporting was maintained in all material respects. Our audit included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, and testing and evaluating the design and operating effectiveness of internal control based on the assessed risks. Our audit also included performing such other procedures as we considered necessary in the circumstances. We believe that our audit provides a reasonable basis for our opinion.

A company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A company’s internal control over financial reporting includes those policies and procedures that: (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use or disposition of the company’s assets that could have a material effect on the financial statements.

Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

In our opinion, the Company maintained, in all material respects, effective internal control over financial reporting as of October 31, 2010, based on the criteria established in Internal Control – Integrated Framework issued by the COSO.

We have also audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States), the consolidated balance sheets of the Company as of October 31, 2010 and 2009 and the related consolidated statements of operations, shareholders’ equity and cash flows for the years ended October 31, 2010, 2009 and 2008 and our report dated January 26, 2011 expressed an unqualified opinion on those financial statements.

“Smythe Ratcliffe LLP” (signed)

Chartered Accountants

Vancouver, Canada
January 26, 2011

 

CARDERO RESOURCE CORP.
(AN EXPLORATION STAGE COMPANY)
Consolidated Financial Statements

October 31, 2010, 2009 and 2008

INDEX	Page
Auditors’ Report
Report of Independent Registered Public Accounting Firm
Consolidated Financial Statements	1-5
Consolidated Balance Sheets	1
Consolidated Statements of Operations	2
Consolidated Statements of Shareholders’ Equity	3-4
Consolidated Statements of Cash Flows	5
Notes to Consolidated Financial Statements	6-42

CARDERO RESOURCE CORP.

(AN EXPLORATION STAGE COMPANY)

Consolidated Balance Sheets

October 31

		2010			2009
ASSETS
Current
Cash and cash equivalents	$	52,264,003		$	5,823,196
Accounts receivable		267,431			286,291
Due from related parties (note 8)		1,361,550			587,956
Prepaid expenses		335,493			240,028
Total Current Assets		54,228,477			6,937,471
Fixed Assets (note 3)		197,737			228,553
Resource Related Investments (note 4)		60,685,650			23,406,055
Equity Investments (note 5)		5,236,540			-
Resource Properties (note 6)		15,856,750			17,499,592
Total Assets	$	136,205,154		$	48,071,671
LIABILITIES
Current
Accounts payable and accrued liabilities (note 8)	$	832,087		$	568,951
Income taxes payable		26,847,314			-
Future income taxes payable (note 10)		-			2,564,900
Total Current Liabilities		27,679,401			3,133,851
SHAREHOLDERS’ EQUITY
Capital Stock (note 7)		69,890,947			70,034,895
Obligation to Issue Shares (note 6(d))		-			111,500
Contributed Surplus		14,726,585			13,058,271
Accumulated Other Comprehensive Income		30,227,593			13,003,496
Deficit		(6,319,372	)		(51,270,342	)
Total Shareholders’ Equity		108,525,753			44,937,820
Total Liabilities and Shareholders’ Equity	$	136,205,154		$	48,071,671

Nature of operations and going concern (note 1)
Commitments (note 11)
Subsequent events (note 13)

Approved on behalf of the Board:

“Hendrik Van Alphen”	“Lawrence W. Talbot”
Hendrik Van Alphen, Director	Lawrence W. Talbot, Director

See Notes to Consolidated Financial Statements

1

CARDERO RESOURCE CORP.

(AN EXPLORATION STAGE COMPANY)

Consolidated Statements of Operations

Years Ended October 31

		2010			2009			2008
Administrative Expenses
Amortization	$	69,463		$	52,418		$	27,860
Bad debt (note 8)		104,835			468,099			-
Consulting fees (note 8)		1,828,250			1,276,789			2,664,502
Insurance		162,115			173,179			162,469
Investor relations (note 8)		1,184,166			601,191			962,246
Office costs		1,005,473			726,334			795,747
Professional fees (note 8)		995,418			820,382			947,782
Property evaluations		226,202			453,525			520,020
Regulatory and transfer agent fees		104,686			134,609			111,561
Salaries		3,238,965			2,215,861			2,807,687
Loss Before Other Items and Income Taxes		(8,919,573	)		(6,922,387	)		(8,999,874	)
Other Items
Foreign exchange gain (loss)		(3,832,001	)		(418,566	)		350,962
Interest income, net of bank charges		36			24,575			92,501
Realized gain on sale of available-for-sale investment (note 4)		939,651			2,718,254			258,920
Unrealized gain (loss) on derivative investments (note 4)		1,346,746			349,424			(1,800,000	)
Unrealized gain on held-for-trading investment (note 4)		52,000			11,000			-
Gain on sale of resource property (note 6(c)(ii))		87,727,157			8,597,655			-
Write-off of resource properties		(8,498,083	)		(3,070,287	)		(5,366,125	)
Loss on equity investment (note 5)		(483,461	)		(795,000	)		-
Loss on debt settlement		-			(17,176	)		-
		77,252,045			7,399,879			(6,463,742	)
Income (Loss) Before Income Taxes		68,332,472			477,492			(15,463,616	)
Income Taxes (Expense) (note 10)
Current		(26,421,049	)		(2,564,900	)		-
Future		3,039,547			1,832,780			(366,046	)
		(23,381,502	)		(732,120	)		(366,046	)
Net Income (Loss) for Year	$	44,950,970		$	(254,628	)	$	(15,829,662	)
Basic and Diluted Income (Loss) Per Share	$	0.77		$	(0.01	)	$	(0.29	)
Weighted Average Number of Common Shares Outstanding		58,571,515			58,421,309			53,918,438

See Notes to Consolidated Financial Statements

2

CARDERO RESOURCE CORP.

(AN EXPLORATION STAGE COMPANY)

Consolidated Statements of Shareholders’ Equity

	Capital Stock													Accumulated
														Other			Total
						Obligation to					Contributed			Comprehensive			Shareholders’
	Shares		Amount			issue shares		Deficit			Surplus			Income			Equity
Balance, October 31, 2007	47,321,439	$	55,473,921		$	-	$	(35,186,052	)	$	8,490,791		$	4,692,000		$	33,470,660
Net loss for the year	-		-			-		(15,829,662	)		-			-			(15,829,662	)
Other comprehensive loss
Unrealized loss on available-for-sale investments	-		-			-		-			-			(1,887,697	)		(1,887,697	)
Transfer to income of realized gain on sale of resource related investments	-		-			-		-			-			(186,563	)		(186,563	)
Comprehensive income (loss) for the year																	(17,903,922	)
Shares issued for cash
Exercise of options	998,500		1,838,750			-		-			-			-			1,838,750
Exercise of warrants	1,411,908		2,758,816			-		-			-			-			2,758,816
Private placement	7,501,000		8,251,100			-		-			-			-			8,251,100
Share issue costs	-		(866,167	)		-		-			-			-			(866,167	)
Shares issued for non-cash
Reclassification of contributed surplus on exercise of options	-		689,036			-		-			(689,036	)		-			-
Property acquisition	500,000		1,000,000			-		-			-			-			1,000,000
Obligation to issue shares						795,000		-			-			-			795,000
Agent’s compensation	50,000		55,000			-		-			-			-			55,000
Share issue costs	-		(375,634	)		-		-			320,634			-			(55,000	)
Stock-based compensation	-		-			-		-			3,789,920			-			3,789,920
Balance, October 31, 2008	57,782,847	$	68,824,822		$	795,000	$	(51,015,714	)	$	11,912,309		$	2,617,740		$	33,134,157

See Notes to Consolidated Financial Statements

3

CARDERO RESOURCE CORP.

(AN EXPLORATION STAGE COMPANY)

Consolidated Statements of Shareholders’ Equity (cont’d)

	Capital Stock															Accumulated
																Other			Total
							Obligation to						Contributed			Comprehensive			Shareholders’
	Shares			Amount			Issue Shares			Deficit			Surplus			Income			Equity
Balance, October 31, 2008 (carried forward)	57,782,847		$	68,824,822		$	795,000		$	(51,015,714	)	$	11,912,309		$	2,617,740		$	33,134,157
Net loss for the year	-			-			-			(254,628	)		-			-			(254,628	)
Other comprehensive income
Unrealized gain on available-for-sale investments	-			-			-			-			-			12,043,882			12,043,882
Transfer to income of realized gain on sale of resource related investments	-			-			-			-			-			(1,658,126	)		(1,658,126	)
Comprehensive income for the year																			10,131,128
Shares issued for cash
Exercise of options	25,000			36,750			-			-			-			-			36,750
Exercise warrants	92,500			127,500			-			-			-			-			127,500
Shares issued for non-cash
Reclassification of contributed surplus on exercise of options	-			14,088			-			-			(14,088	)		-			-
Reclassification of contributed surplus on exercise of warrants	-			32,059			-						(32,059	)		-			-
Investment acquisition	500,000			795,000			(795,000	)		-			-			-			-
Obligation to issue shares	-			-			111,500			-			-			-			111,500
Debt settlement	143,130			204,676			-			-			-			-			204,676
Stock-based compensation	-			-			-			-			1,192,109			-			1,192,109
Balance, October 31, 2009	58,543,477			70,034,895			111,500			(51,270,342	)		13,058,271			13,003,496			44,937,820
Net income for the year	-			-			-			44,950,970			-			-			44,950,970
Other comprehensive income
Unrealized gain on available-for-sale investments	-			-			-			-			-			17,686,472			17,686,472
Transfer to income of realized gain on sale of resource related investments	-			-			-			-			-			(462,375	)		(462,375	)
Comprehensive income for the year																			62,175,067
Shares issued for cash
Exercise warrants	67,125			90,619			-			-			-			-			90,619
Shares purchased pending return to treasury	(312,300	)		(374,760	)		-			-			1,066			-			(373,694	)
Shares issued for non-cash
Reclassification of contributed surplus on exercise of warrants	-			28,693			-			-			(28,693	)		-			-
Property acquisition	75,000			111,500			(111,500	)		-			-			-			-
Stock-based compensation	-			-			-			-			1,695,941			-			1,695,941
Balance, October 31, 2010	58,373,302		$	69,890,947		$	-		$	(6,319,372	)	$	14,726,585		$	30,227,593		$	108,525,753

See Notes to Consolidated Financial Statements

4

CARDERO RESOURCE CORP.

(AN EXPLORATION STAGE COMPANY)

Consolidated Statements of Cash Flows

Years Ended October 31

		2010			2009			2008
Operating Activities
Net income (loss) for year	$	44,950,970		$	(254,628	)	$	(15,829,662	)
Items not involving cash
Amortization		69,463			52,418			27,860
Bad debt		104,835			468,099			-
Stock-based compensation		1,695,941			1,192,109			3,789,920
Write-off resource properties		8,498,083			3,070,287			5,366,125
Realized gain on sale of available-for-sale investments		(939,651	)		(2,718,254	)		(258,920	)
Unrealized loss (gain) on derivative investments		(1,346,746	)		(349,424	)		1,800,000
Unrealized gain on held-for-trading investment		(52,000	)		(11,000	)		-
Gain on sale of resource property		(87,727,157	)		(8,597,655	)		-
Loss on equity investment		483,461			795,000			-
Loss on debt settlement		-			17,176			-
Future income taxes (recovery) expense		(3,039,547	)		(1,832,780	)		366,046
Unrealized foreign exchange loss		2,877,426			32,360			36,315
Changes in non-cash working capital items
Accounts receivable		(85,975	)		300,662			1,275,153
Due from related parties		(773,594	)		150,916			(699,658	)
Prepaid expenses		(95,465	)		(16,254	)		(73,701	)
Accounts payable and accrued liabilities		173,710			78,765			155,559
Income taxes payable		24,282,414			2,564,900			-
Cash Used in Operating Activities		(10,923,832	)		(5,057,303	)		(4,044,963	)
Investing Activities
Investment in and expenditures on resource properties		(7,411,092	)		(3,778,314	)		(5,575,442	)
Proceeds from resource property transactions, net of costs		88,372,433			13,587,313			-
Proceeds from sale of investments		2,416,776			4,607,154			418,610
Purchase of resource related investments		(17,094,329	)		(4,874,325	)		(2,124,666	)
Purchase of equity investments		(5,720,000	)		-			-
Purchase of equipment		(38,648	)		(82,059	)		(155,367	)
Cash Provided by (Used in) Investing Activities		60,525,140			9,459,769			(7,436,865	)
Financing Activities
Proceeds from shares issued		90,619			164,250			12,848,666
Shares purchased pending return to treasury		(373,694	)		-			-
Share issue costs		-			-			(866,167	)
Cash Provided by (Used in) Financing Activities		(283,075	)		164,250			11,982,499
Effect of Foreign Exchange on Cash		(2,877,426	)		(32,360	)		(36,315	)
Increase in Cash and Cash Equivalents		46,440,807			4,534,356			464,356
Cash and Cash Equivalents, Beginning of Year		5,823,196			1,288,840			824,484
Cash and Cash Equivalents, End of Year	$	52,264,003		$	5,823,196		$	1,288,840
Supplemental Cash Flow Information
Accounts payable related to property expenditure	$	292,977		$	203,551		$	396,074
Shares issued for property option payments	$	111,500		$	-		$	1,000,000
Shares issued for debt settlement	$	-		$	204,676		$	-
Shares issued for equity investment	$	-		$	795,000		$	-
Option payment received in shares	$	-		$	17,000		$	-
Shares issued for brokers’ commission	$	-		$	-		$	55,000
Obligation to issue shares	$	-		$	111,500		$	795,000
Income taxes paid	$	2,138,634		$	-		$	-

See Notes to Consolidated Financial Statements

5

CARDERO RESOURCE CORP.

(AN EXPLORATION STAGE COMPANY)

Notes to Consolidated Financial Statements

Years Ended October 31, 2010, 2009 and 2008

1.	NATURE OF OPERATIONS AND GOING CONCERN
	Cardero Resource Corp. and its subsidiaries are engaged in the exploration of mineral properties, primarily in Mexico, Peru, Argentina and the United States. The Company considers itself to be an exploration stage company.
	These consolidated financial statements have been prepared on the basis of accounting principles applicable to a going concern, which assume that the Company will be able to continue in operation for the foreseeable future and will be able to realize its assets and discharge its liabilities and commitments in the normal course of business.
	The Company had a net income of $44,950,970 for the year ended October 31, 2010 (2009 - $254,628 net loss; 2008 - $15,829,662 net loss). The Company has working capital as at October 31, 2010 of $26,549,076 (2009 - $3,803,620) and a deficit of $6,319,372 (2009 - $51,270,342).
	During the year, the Company successfully concluded the sale of its Pampa de Pongo Iron Deposit in Peru and received the final payment of USD 88 million, which ensures sufficient funding for operations in the near future. Management believes that this transaction, together with the fair value of its investments, results in the going concern assumption being an appropriate underlying concept for the preparation of these consolidated financial statements.
	The business of mining and exploration involves a high degree of risk and there can be no assurance that current exploration programs will result in profitable mining operations. The Company has no source of revenue, and has significant cash requirements to meet its administrative overhead and maintain its mineral interests. The recoverability of amounts shown for resource properties is dependent on several factors. These include the discovery of economically recoverable reserves, the ability of the Company to obtain the necessary financing to complete the development of these properties, and future profitable production or proceeds from disposition of mineral properties or resource related investments.
2.	SIGNIFICANT ACCOUNTING POLICIES
	(a)	Basis of presentation
		These consolidated financial statements are prepared in accordance with Canadian generally accepted accounting principles (“GAAP”) and are stated in Canadian dollars. As described in note 15, accounting principles generally accepted in Canada differ in certain material respects from accounting principles generally accepted in the United States (“US GAAP”).
		These consolidated financial statements include the accounts of Cardero Resource Corp. (“Cardero”) and its wholly-owned integrated subsidiaries, Cardero Argentina, S.A. (“Cardero Argentina”), Minerales Y Metales California, S.A. de C.V. (“MMC”), Cardero Iron Ore Company Ltd., Cardero Peru S.A.C. (“Cardero Peru”), Cardero Hierro Del Peru S.A.C. (“Cardero Iron Peru”), Cerro Colorado Development Ltd., Compania Minera Cardero Chile Limitada (“Cardero Chile”), Cardero Iron Ore (USA) Inc. (“Cardero Iron US”), Cardero Iron Ore Management (USA) Inc., Cardero Iron Ore Company (BVI) Ltd. and Cardero Hierro Peru (BVI) Ltd. (collectively, the “Company”). All significant inter-company transactions and balances have been eliminated.
	(b)	Cash and cash equivalents
		Cash and cash equivalents includes cash and highly liquid investments, with maturities of three months or less from the date of purchase, that are readily convertible to known amounts of cash and which are subject to an insignificant risk of change in value. Cash equivalents are held for the purpose of meeting short-term cash commitments rather than for investment or other purposes.

6

CARDERO RESOURCE CORP.

(AN EXPLORATION STAGE COMPANY)

Notes to Consolidated Financial Statements

Years Ended October 31, 2010, 2009 and 2008

2.	SIGNIFICANT ACCOUNTING POLICIES (Continued)
	(c)	Use of estimates
		The preparation of financial statements in conformity with Canadian GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements, and the reported amounts of revenues and expenses during the reporting period. Areas requiring the use of estimates include the rates of amortization for fixed assets, the recoverability of resource property interests, the recoverability of accounts receivable and amounts due from related parties, the recoverability of equity investments, the assumptions used in the determination of the fair value of financial instruments and stock-based compensation, and the determination of the valuation allowance for future income tax assets and accruals. Management believes the estimates are reasonable; however, actual results could differ from those estimates and could impact future results of operations and cash flows.
	(d)	Amortization
		Amortization of equipment is recorded at the following annual rates:

Computer equipment	-	30% declining balance basis
Office equipment	-	20% declining balance basis
Leasehold improvements	-	over the term of the lease on a straight-line basis

	Additions during the year are amortized at one-half the annual rates.
(e)	Investments
	Investments over which the Company exercises significant influence are accounted for using the equity method. Resource related investments, not including derivatives, are principally classified as available-for-sale, and are carried at quoted market value, where applicable, or at an estimate of fair value. Resulting unrealized gains or losses, net of applicable income taxes, are reflected in other comprehensive income, while realized gains or losses are reflected in operations. Share purchase warrants included in investments are derivative financial instruments and are classified as held-for-trading and, accordingly, unrealized gains or losses, net of applicable income taxes, are included in operations.
(f)	Resource properties
	The Company capitalizes all costs related to investments in mineral property interests on a property-by-property basis. Such costs include mineral property acquisition costs and exploration and development expenditures, net of any recoveries. Costs are deferred until such time as the extent of mineralization has been determined and mineral property interests are either developed, the property is sold or the Company’s mineral rights are allowed to lapse.
	All capitalized costs are reviewed, on a property-by-property basis, to consider whether there are any conditions that may indicate impairment. When the carrying value of a property exceeds its net recoverable amount (as estimated by quantifiable evidence of an economic geological resource or reserve or by reference to option or joint venture expenditure commitments) or when, in the Company’s assessment, it will be unable to sell the property for an amount greater than the deferred costs, the property is written down for the impairment in value.
	From time to time, the Company may acquire or dispose of a mineral property interest pursuant to the terms of an option agreement. As such options are exercisable entirely at the discretion of the optionee and the amounts payable or receivable are not recorded at the time of the agreement. Option payments are recorded as property costs or recoveries when the payments are made or received.
	The amounts shown for acquisition costs and deferred exploration expenditures represent costs incurred to date and do not necessarily reflect present or future values.

7

CARDERO RESOURCE CORP.

(AN EXPLORATION STAGE COMPANY)

Notes to Consolidated Financial Statements

Years Ended October 31, 2010, 2009 and 2008

2.	SIGNIFICANT ACCOUNTING POLICIES (Continued)
	(f)	Resource properties (Continued)
		Capitalized costs are depleted over the useful lives of the properties upon commencement of commercial production, or written off if the properties are abandoned or the applicable mineral rights are allowed to lapse.
	(g)	Foreign currency translation
		The functional and reporting currency of the Company is the Canadian dollar. Amounts recorded in foreign currency are translated into Canadian dollars as follows:
		i.	Monetary assets and liabilities, at the rate of exchange in effect as at the balance sheet date;
		ii.	Non-monetary assets and liabilities, at the exchange rates prevailing at the time of the acquisition of the assets or assumption of the liabilities; and
		iii.	Interest income and expenses (excluding amortization, which is translated at the same rate as the related asset), at the rate of exchange on the transaction date.
		Gains and losses arising from this translation of foreign currency are included in the determination of net income (loss) for the year.
	(h)	Stock-based compensation
		The Company accounts for stock-based compensation using a fair value based method with respect to all stock-based payments measured and recognized, to directors, employees and non-employees. For directors and employees, the fair value of the option is measured at the date of grant. For non-employees, the fair value of the options is measured on the earlier of the date at which the counterparty performance is complete or the date the performance commitment is reached, or the date at which the equity instruments are granted if they are fully vested and non-forfeitable. For directors, employees and non-employees, the fair value of the options is accrued and charged either to operations or mineral property interests, with the offset credit to contributed surplus, over the vesting period. If and when the stock options are exercised, the applicable amounts from contributed surplus are transferred to capital stock.
	(i)	Basic and diluted loss per share
		Basic loss per share is calculated using the weighted average number of common shares outstanding during the year. The Company uses the treasury stock method to compute the dilutive effect of options, warrants and similar instruments. Under this method the dilutive effect on earnings per share is calculated presuming the exercise of outstanding options, warrants and similar instruments. It assumes that the proceeds of such exercise would be used to repurchase common shares at the average market price during the year. However, the calculation of diluted loss per share excludes the effects of various conversions and exercise of options and warrants that would be anti-dilutive. Shares held in escrow, other than where their release is subject to the passage of time, are not included in the calculation of the weighted average number of common shares outstanding.
	(j)	Revenue recognition
		Interest income is recorded as earned at the effective rate of interest of the term deposits over the terms to maturity.

8

CARDERO RESOURCE CORP.

(AN EXPLORATION STAGE COMPANY)

Notes to Consolidated Financial Statements

Years Ended October 31, 2010, 2009 and 2008

2.	SIGNIFICANT ACCOUNTING POLICIES (Continued)
	(k)	Asset retirement obligations (“ARO”)
		The Company recognizes an estimate of the liability associated with an ARO in the consolidated financial statements at the time the liability is incurred. The estimated fair value of the ARO is recorded as a long-term liability, with a corresponding increase in the carrying amount of the related asset. The capitalized amount is depleted on a unit-of-production basis over the life of the proved reserves. The liability amount is increased each reporting period due to the passage of time and the amount of accretion is charged to earnings in the period. The ARO can also increase or decrease due to changes in the estimates of timing of cash flows or changes in the original estimated undiscounted cost. Actual costs incurred upon settlement of the ARO are charged against the ARO to the extent of the liability recorded.
	(l)	Income taxes
		The Company follows the asset and liability method of accounting for income taxes. Under this method of tax allocation, future income tax assets and liabilities are determined based on differences between the financial statement carrying values and their respective income tax basis (temporary differences). Future income tax assets and liabilities are measured using the tax rates expected to be in effect when the temporary differences are likely to reverse. The effect on future income tax assets and liabilities of a change in tax rates is included in operations in the period in which the change is enacted or substantially assured. The amount of future income tax assets recognized is limited to the amount of the benefit that is more likely than not to be realized.
	(m)	Financial instruments
		All financial instruments are classified as one of the following: held-to-maturity, loans and receivables, held-for-trading, available-for-sale or other financial liabilities. Financial assets and liabilities held-for-trading are measured at fair value with gains and losses recognized in net income (loss). Financial assets held-to-maturity, loans and receivables, and other financial liabilities are measured at amortized cost using the effective interest method. Available-for-sale instruments are measured at fair value with unrealized gains and losses recognized in other comprehensive income (loss) and reported in shareholders’ equity. Any financial instrument may be designated as held-for-trading upon initial recognition.
		Transaction costs that are directly attributable to the acquisition or issue of financial instruments that are classified as other than held-for-trading, which are expensed as incurred, are included in the initial carrying value.
	(n)	Future accounting changes
		i.	International Financial Reporting Standards (“IFRS”)
			In 2008, the Canadian Accounting Standards Board confirmed that the transition to IFRS from Canadian GAAP will be effective for fiscal years beginning on or after January 1, 2011 for publicly accountable enterprises. The Company will therefore be required to present IFRS financial statements for its January 31, 2012 interim financial statements. The effective date will require the restatement for comparative purposes of amounts reported by the Company for the interim periods and for the year ended October 31, 2011. The Company is currently evaluating the impact of the conversion on the Company’s consolidated financial statements and is considering accounting policy choices available under IFRS.

9

CARDERO RESOURCE CORP.

(AN EXPLORATION STAGE COMPANY)

Notes to Consolidated Financial Statements

Years Ended October 31, 2010, 2009 and 2008

2.	SIGNIFICANT ACCOUNTING POLICIES (Continued)
	(n)	Future accounting changes (Continued)
		ii.	Business Combinations
			In January 2009, the Canadian Institute of Chartered Accountants (“CICA”) issued Handbook Section 1582, “Business Combinations”, Section 1601, “Consolidated Financial Statements”, and Section 1602, “Non-Controlling Interests”. These sections replace the former Section 1581, “Business Combinations”, and Section 1600, “Consolidated Financial Statements”, and establish a new section for accounting for a non-controlling interest in a subsidiary.
			Sections 1582 and 1602 will require net assets, non-controlling interests and goodwill acquired in a business combination to be recorded at fair value and non-controlling interests will be reported as a component of equity. In addition, the definition of a business is expanded and is described as an integrated set of activities and assets that are capable of being managed to provide a return to investors or economic benefits to owners. Acquisition costs are not part of the consideration and are to be expensed when incurred. Section 1601 establishes standards for the preparation of consolidated financial statements.
		iii.	Consolidated Financial Statements
			In January 2009, the CICA issued Handbook Section 1601, “Consolidated Financial Statements”, which replaces the existing standards. This section establishes the standards for preparing consolidated financial statements and is effective for interim and annual consolidated financial statements beginning on or after January 1, 2011.
		iv.	Non-Controlling Interests
			In January 2009, the CICA issued Handbook Section 1602, “Non-Controlling Interests”, which establishes standards for the accounting of non-controlling interests of a subsidiary in the preparation of consolidated financial statements subsequent to a business combination. This standard is equivalent to IFRS on consolidated and separate financial statements. This standard is effective for interim and annual consolidated financial statements beginning on or after January 1, 2011.
			The preceding three new sections apply to interim and annual consolidated financial statements relating to fiscal years beginning on or after January 1, 2011. Earlier adoption of these sections is permitted as of the beginning of a fiscal year. All three sections must be adopted concurrently.
3.	FIXED ASSETS

		2010						2009
				Accumulated						Accumulated
		Cost		Amortization		Net		Cost		Amortization		Net
Computer equipment	$	171,624	$	122,128	$	49,496	$	171,625	$	100,915	$	70,710
Office equipment		99,853		48,402		51,451		90,866		36,894		53,972
Leasehold improvements		210,530		113,740		96,790		180,869		76,998		103,871
	$	482,007	$	284,270	$	197,737	$	443,360	$	214,807	$	228,553

10

CARDERO RESOURCE CORP.

(AN EXPLORATION STAGE COMPANY)

Notes to Consolidated Financial Statements

Years Ended October 31, 2010, 2009 and 2008

4. RESOURCE RELATED INVESTMENTS

	Shares			Warrants
2010	Number		Fair Value	Number		Fair Value		Total
International Tower Hill Mines Ltd.	4,591,223	$	34,847,383	-	$	-	$	34,847,383
Trevali Resources Corp. (notes 13(f) and (g))	7,032,432		9,986,053	2,855,866		1,243,942		11,229,995
Wealth Minerals Ltd.	5,022,806		3,164,368	-		-		3,164,368
Dorato Resources Inc.	2,416,000		3,020,000	-		-		3,020,000
Indico Resources Ltd.	50,000		31,000	-		-		31,000
Kria Resources Ltd. (notes 13(e) and (g))	15,000,000		3,150,000	15,000,000		2,400,000		5,550,000
Corvus Gold Inc.	880,711		871,904	-		-		871,904
Totem Minerals Inc. (note 13(a))	3,782,000		1,891,000	-		-		1,891,000
Ethos Capital Corp.	100,000		80,000	-		-		80,000
		$	57,041,708		$	3,643,942	$	60,685,650

	Shares			Warrants
2009	Number		Fair Value	Number		Fair Value		Total
International Tower Hill Mines Ltd.	3,482,800 $		17,657,796	-	$	-	$	17,657,796
Trevali Resources Corp.	4,154,588		2,908,212	1,427,294		587,829		3,496,041
Wealth Minerals Ltd.	2,641,853		1,241,671	2,380,953		666,667		1,908,338
Dorato Resources Inc.	596,000		315,880	-		-		315,880
Ethos Capital Corp.	100,000		28,000	-		-		28,000
		$	22,151,559		$	1,254,496	$	23,406,055

All resource related investments in shares are classified as available-for-sale, unless otherwise indicated. All resource related investments in warrants are classified as held-for-trading.

(a)	International Tower Hill Mines Ltd. (“ITH”)
	ITH is considered to be a related party as a result of common officer and director relationships (note 8).
	During the year ended October 31, 2008, the Company sold 249,700 common shares of ITH for net proceeds of $418,610 resulting in a gain on sale of $258,920, and purchased 2,094,300 common shares at a cost of $2,124,666 (2,000,000 shares were acquired through the exercise of share purchase warrants held by the Company).
	During the year ended October 31, 2009, the Company sold 1,481,800 common shares for net proceeds of $3,752,030, realizing a gain of $2,637,280, and purchased 120,000 common shares at a cost of $423,849.
	During the year ended October 31, 2010, the Company sold 99,000 shares of ITH for net proceeds of $640,244 resulting in a gain on sale of $460,094. Meanwhile, the Company acquired 1,207,423 shares of ITH at a cost of $7,328,514. At October 31, 2010, the Company held 4,591,223 common shares (2009 - 3,482,800), or approximately 6.79% (2009 - 6%) of the issued and outstanding common shares of ITH.
	At October 31, 2010, the quoted market value of ITH common shares was $7.59 (2009 - $5.07) per share, or a total market value for the Company’s ITH shares of $34,847,383 (2009 - $17,657,796). Fair value adjustments for the year ended October 31, 2010 amounted to unrealized gains of $10,340,676 (2009 - $11,217,746) on the shares, net of tax, as other comprehensive income.

11

CARDERO RESOURCE CORP.

(AN EXPLORATION STAGE COMPANY)

Notes to Consolidated Financial Statements

Years Ended October 31, 2010, 2009 and 2008

4.	RESOURCE RELATED INVESTMENTS (Continued)
	(b)	Trevali Resources Corp. (“Trevali”)
		On April 24, 2007, the Company acquired 1,000,000 common shares of Trevali, a related party (note 8), at a cost of $100,000.
		On May 11, 2009, the Company purchased 1,250,000 units of Trevali at $0.80 per unit and allocated $0.60 and $0.20 to each common share and warrant, respectively. Each unit consists of one common share and one-half of one common share purchase warrant. Each whole warrant is exercisable to acquire one common share of Trevali at a price of $1.30 until May 11, 2011.
		On May 29, 2009, the Company purchased 134,000 units of Trevali from a company related by virtue of common officers and directors at a price of $0.75 per unit and allocated $0.57 and $0.18 to each common share and warrant, respectively. Each unit consists of one common share and one-half of one common share purchase warrant. Each whole warrant is exercisable to acquire one common share of Trevali at a price of $1.20 until December 29, 2010 (note 13(f)).
		On August 31, 2009, the Company purchased 300,000 Trevali common shares at a cost of $185,732.
		On October 9, 2009, the Company settled an outstanding $1,000,000 loan to Trevali (advanced on July 30, 2009) on the basis of 1,470,588 units at a price of $0.68 per unit and allocated $0.51 and $0.17 to each common share and warrant, respectively. Each unit consisted of one common share and one-half of one common share purchase warrant. Each warrant is exercisable to acquire an additional common share of Trevali at a price of $1.00 until October 9, 2011.
		On September 1, 2010, the Company purchased 2,857,144 units of Trevali at a price of $1.05 per unit and allocated $0.85 and $0.20 to each common share and half-warrant, respectively. Each unit consists of one common share and one-half of one common share purchase warrant. Each whole warrant is exercisable to acquire one common share of Trevali at a price of $1.50 until September 1, 2012.
		During the year ended October 31, 2010, the Company also acquired 175,700 common shares of Trevali from the open market at a cost of $213,563. Meanwhile, the Company sold 155,000 shares of Trevali for net proceeds of $239,387 resulting in a gain on sale of $169,638.
		At October 31, 2010, the quoted market value of the Trevali common shares was $1.42 per share (2009 - $0.70), or a total market value for the Company’s shares of $9,986,053 (2009 - $2,908,212). Fair value adjustments for the year ended October 31, 2010 amounted to an unrealized gain of $3,927,133 (2009 - $294,185), net of tax, recorded as other comprehensive income. The Company held 7,032,432 common shares (2009 - 4,154,588), or 12.44 %( 2009 - 9.99%) of the issued and outstanding common shares of Trevali as of October 31, 2010.
		At October 31, 2010, the fair value of 625,000 Trevali warrants (purchased on May 11, 2009) was $175,000 (2009 - $237,500). Fair value adjustments for the year ended October 31, 2010 amounted to an unrealized loss of $62,500 (2009 - $12,500).
		At October 31, 2010, the fair value of 67,000 Trevali warrants (purchased on May 29, 2009) was $14,740 (2009 - $26,800). Fair value adjustments for the year ended October 31, 2010 amounted to an unrealized loss of $12,060 (2009 - $2,680 unrealized gain).
		At October 31, 2010, the fair value of 735,294 Trevali warrants (purchased on October 9, 2009) was $397,059 (2009 - $323,529). Fair value adjustments for the year ended October 31, 2010 amounted to an unrealized gain of $73,529 (2009 - $73,529).
		At October 31, 2010, the fair value of 1,428,572 Trevali warrants (purchased on September 1, 2010) was $657,143. Fair value adjustments for the year ended October 31, 2010 amounted to an unrealized gain of $85,714.

12

CARDERO RESOURCE CORP.

(AN EXPLORATION STAGE COMPANY)

Notes to Consolidated Financial Statements

Years Ended October 31, 2010, 2009 and 2008

4.	RESOURCE RELATED INVESTMENTS (Continued)
	(c)	Wealth Minerals Ltd. (“Wealth”)
		On June 2, 2009, the Company purchased 2,841,400 common shares of Wealth, a related party (note 8), at $0.30 per share.
		On October 23, 2009, the Company purchased 2,380,953 units at $1,000,000 and allocated $0.26 and $0.16 to each common share and warrant, respectively. Each unit consisted of one common share and one non-transferable common share purchase warrant, with each warrant being exercisable to acquire one additional common share until October 23, 2011 at an exercise price of $0.60.
		During the last quarter of 2009, the Company sold 2,580,500 common shares of Wealth for net proceeds of $855,124 resulting in a gain on sale of $80,974.
		On August 25, 2010, the Company exercised 2,380,953 warrants of Wealth at $0.60 per share, totalling $1,428,572. A fair value loss of $537,937 was recognized on exercise of the warrants.
		At October 31, 2010, the quoted market value of Wealth common shares was $0.63 per share (2009 - $0.47), or a total market value for the Company’s shares of $3,164,368 (2009 - $1,241,671). Fair value adjustments for the year ended October 31, 2010 amounted to an unrealized gain of $310,586 (2009 - $528,503), net of tax, recorded as other comprehensive loss. The Company held 5,022,806 shares (2009 - 2,641,853), or 12.08% (2009 - 7%) of the issued and outstanding common shares of Wealth as of October 31, 2010.
	(d)	Dorato Resources Inc. (“Dorato”)
		In October 2009, the Company purchased 596,000 common shares of Dorato, a related party (note 8), at a cost of $311,825.
		During the year ended October 31, 2010, the Company purchased 2,045,000 common shares of Dorato at a cost of $1,702,725. Meanwhile, the Company sold 225,000 shares of Dorato for net proceeds of $255,671 resulting in a gain on sale of $89,621.
		At October 31, 2010, the Company held 2,416,000 common shares (2009 - 596,000), or 3.49% (2009 - 1.2%) of the issued and outstanding common shares of Dorato. The quoted market value of Dorato common shares was $1.25 (2009 - $0.53), or a total market value for the Company’s shares of $3,020,000 (2009 - $315,880). Fair value adjustment at the year ended October 31, 2010 amounted to an unrealized gain, net of tax, of $1,015,023 (2009 - $3,447).
	(e)	Indico Resources Ltd. (“Indico”)
		During the year ended October 31, 2010, the Company purchased 50,000 common shares of Indico, a related party (note 8), at a cost of $29,954.
		At October 31, 2010, the quoted market value of Indico common shares was $0.62, or a total market value for the Company’s shares of $31,000. Fair value adjustment at the year ended October 31, 2010 amounted to an unrealized gain, net of tax, of $889.
		The Company held 50,000 common shares, or 0.39% of issued and outstanding common shares of Indico as of October 31, 2010.

13

CARDERO RESOURCE CORP.

(AN EXPLORATION STAGE COMPANY)

Notes to Consolidated Financial Statements

Years Ended October 31, 2010, 2009 and 2008

4.	RESOURCE RELATED INVESTMENTS (Continued)
	(f)	Kria Resources Ltd. (“Kria”)
		During the year ended October 31, 2010, the Company acquired 15,000,000 units of Kria at a cost of $1,500,000 (allocation - $900,000 and $600,000 to common shares and warrants, respectively). Each unit consists of one common share and one warrant. Each warrant entitles the holder thereof to acquire one common share at a price of $0.20 until July 29, 2012 (note 13(e)).
		At October 31, 2010, the quoted market value of Kria common shares was $0.21, or a total market value for the Company’s shares of $3,150,000. Fair value adjustment at the year ended October 31, 2010 amounted to an unrealized gain, net of tax, of $1,912,500. The Company owned 15.23% of issued and outstanding common shares of Kria.
		At October 31, 2010, the fair value of 15,000,000 Kria warrants was $2,400,000. Fair value adjustments for the year ended October 31, 2010 amounted to an unrealized gain of $1,800,000.
	(g)	Corvus Gold Inc. (“Corvus”)
		During the year ended October 31, 2010, ITH transferred its non-Livengood Alaska and Nevada assets to Corvus through a plan of arrangement under the Business Corporations Act (B.C.) (“Arrangement”). Under the arrangement, each shareholder of ITH received one Corvus common share for every two ITH common shares held as at the effective date of the Arrangement. The Company received 2,295,611 common shares of Corvus upon the completion of the Arrangement. The shares were initially recorded at $0.75 per share with a corresponding reduction in the carrying value of the ITH shares.
		During the year ended October 31, 2010, the Company sold 1,414,900 common shares of Corvus for net proceeds of $1,281,474 resulting in a gain on sale of $220,298. At October 31, 2010, the Company held 880,711 common shares, or approximately 2.62% of the issued and outstanding common shares of Corvus.
		At October 31, 2010, the quoted market value of Corvus common shares was $0.99 per share, or a total market value for the Company’s Corvus shares of $871,904. Fair value adjustments for the year ended October 31, 2010 amounted to unrealized gains of $179,665 on the shares, net of tax, as other comprehensive income.
	(h)	Totem Minerals Inc. (“Totem”)
		On September 10, 2010, the Company participated in a private placement in Totem and subscribed for 3,782,000 Subscription Receipts of Totem at an aggregate cost of $1,891,000. The Subscription Receipts were not exercised until the acquisition by Totem of all of the issued shares of Abzu Resources Ltd. (occurred on December 21, 2010) subsequent to the Company’s fiscal year ended October 31, 2010 (note 13 (a)). Upon exercise of the Subscription Receipts (which was automatic upon completion of the Abzu acquisition), the Company received 3,782,000 common shares and warrants to purchase an additional 3,782,000 common shares. This investment is valued at cost.
	(i)	Ethos Capital Corp. (“Ethos”)
		During the year ended October 31, 2009, the Company received 100,000 common shares of Ethos valued at $17,000 pursuant to a property option agreement (note 6(a)(iv)). This investment is classified as held-for-trading. At October 31, 2010, the quoted market value of Ethos common shares was $80,000 (2009 - $28,000). Fair value adjustments for the year ended October 31, 2010 amounted to an unrealized gain, of $52,000 (2009 - $11,000).

14

CARDERO RESOURCE CORP.

(AN EXPLORATION STAGE COMPANY)

Notes to Consolidated Financial Statements

Years Ended October 31, 2010, 2009 and 2008

5. EQUITY INVESTMENTS

		2010		2009
Abzu Resources Ltd. (ownership interest – 31.36%)	$	1,131,253	$	-
Coalhunter Mining Corporation (ownership interest – 42.00%)		4,105,287		-
	$	5,236,540	$	-

(a)	Abzu Resources Ltd. (“Abzu”)
	During the year ended October 31, 2010, the Company acquired 9,000,002 shares of Abzu at a gross cost of $1,350,000. The Company’s proportionate share of the net book value of Abzu’s assets at the acquisition date totaled $1,220,272. The difference between investment cost and the Company’s share of net assets is attributed to resource properties. The Company accounts for its investment in Abzu using the equity method and recorded the investment at a gross cost of $1,350,000. For the year ended October 31, 2010, the Company’s share of Abzu’s results of operations amounted to a loss of $218,748 based upon Abzu’s financial statements as of October 31, 2010. As at October 31, 2010, the Company held approximately 31.36% of the outstanding common shares of Abzu (note 13(a)).
(b)	Coalhunter Mining Corporation (“Coalhunter”)
	During the year ended October 31, 2010, the Company acquired 14,200,000 shares of Coalhunter at a gross cost of $4,370,000. The Company’s proportionate share of the net book value of Coalhunter’s assets (liabilities) at the acquisition dates totaled $(60,669). The difference between investment cost and the Company’s share of net assets is attributed to resource properties resource properties. The Company accounts for its investment in Coalhunter using the equity method and recoded the investment at a gross cost of $4,370,000. For the year ended October 31, 2010, the Company’s share of Coalhunter’s results of operations amounted to a loss of $264,713 based upon Coalhunter’s financial statements as of October 31, 2010. As at October 31, 2010, the Company held approximately 42% of the outstanding common shares of Coalhunter.
(c)	IMM Gold Ltd. (“IMMG”)
	Pursuant to a Memorandum of Understanding dated August 8, 2008 (but effective as and from April 25, 2008) between the Company and International Minerals and Mines Ltd. (“IMM”), a private Gibraltar company, the Company has the right to acquire up to a 30% interest in IMMG, a subsidiary of IMM, which is presently engaged in reconnaissance exploration programs in the Caucasian Region. The Company is the manager of the exploration programs, but no properties have yet been acquired by IMMG. A director of Cardero is a director and significant shareholder of a private company, which is the major shareholder (67%) of IMM (note 8).
	The Company acquired a 15% interest in IMMG by issuing to IMM 500,000 common shares upon acceptance for filing of the transaction by the Toronto Stock Exchange (“TSX”) and the NYSE Alternext (formerly the American Stock Exchange) (“NYSE-A”) The shares were issued on November 24, 2008 valued at $795,000, and the Company received 123,530 ordinary shares of IMMG, representing a 15% interest. The Company may also be required to issue up to an additional 250,000 common shares as consideration for the initial 15% interest in IMMG if, on November 24, 2009, the volume weighted average trading price for the Company’s common shares on the TSX for the five trading days immediately prior to such date (“Final VWAP”) is less than $1.83. In such case, the Company is then required to issue to IMM such number of additional common shares of the Company (up to a maximum of 250,000 additional shares) as is equal to the difference between the $1.83 and the Final VWAP, multiplied by 500,000 and divided by the Final VWAP.
	The Company has the option to acquire an additional 15% of IMMG by issuing an additional 1,000,000 shares to IMM on or before December 31, 2009.
	For the year ended October 31, 2009, the Company’s share of IMMG’s results of operations amounted to a loss of $199,677 (2008 - $Nil) based upon IMMG’s audited financial statements for the year then ended. After consideration of current market conditions and IMMG’s operating loss, the Company recorded an impairment charge of $595,323 to reduce the carrying value of the investment to $Nil.

15

CARDERO RESOURCE CORP.

(AN EXPLORATION STAGE COMPANY)

Notes to Consolidated Financial Statements

Years Ended October 31, 2010, 2009 and 2008

5.	EQUITY INVESTMENTS (Continued)
	(c)	IMM Gold Ltd. (“IMMG”) (Continued)
		The Company has determined that it has an obligation to issue an additional 214,843 common shares to IMM pursuant to the acquisition of its 15% investment in IMMG, the final issuance of which is currently the subject of on-going negotiations with IMM. The Company determined not to acquire an additional 15% interest in IMMG and did not, therefore, issue the additional 1,000,000 common shares on or before December 31, 2009.

16

CARDERO RESOURCE CORP.

(AN EXPLORATION STAGE COMPANY)

Notes to Consolidated Financial Statements

Years Ended October 31, 2010, 2009 and 2008

6.	RESOURCE PROPERTIES
	The Company’s capitalized acquisition and exploration expenditures on its resource properties are as follows:

		Mexico									Argentina			Peru
														Pampa de			Iron Sands/								USA
		Baja			Other			Total						Pongo			Marcona		Other			Total			and Other		Total
Balance, October 31, 2008	$	7,064,909		$	370,115		$	7,435,024		$	3,315,933		$	3,692,705		$	7,071,620	$	343,110		$	11,107,435		$	20,854	$	21,879,246
Acquisition costs		102,417			108,871			211,288			7,744			301,254			258,463		95,220			654,937			172,322		1,046,291
Deferred exploration costs:
Camp		48,644			7,931			56,575			79,194			229,958			594,631		6,456			831,045			25,118		991,932
Drilling and analysis		23,560			-			23,560			22,807			-			55,582		89			55,671			-		102,038
Personnel and geology		96,997			204			97,201			64,928			665,741			747,330		28,920			1,441,991			91,053		1,695,173
Total exploration costs		169,201			8,135			177,336			166,929			895,699			1,397,543		35,465			2,328,707			116,171		2,789,143
Total expenditures for the year		271,618			117,006			388,624			174,673			1,196,953			1,656,006		130,685			2,983,644			288,493		3,835,434
Costs recovered – Acquisition		-			(192,627	)		(192,627	)		-			(1,552,292	)		-		-			(1,552,292	)		-		(1,744,919	)
Costs recovered – Exploration		-			(62,516	)		(62,516	)		-			(3,337,366	)		-		-			(3,337,366	)		-		(3,399,882	)
Total before write-offs		7,336,527			231,978			7,568,505			3,490,606			-			8,727,626		473,795			9,201,421			309,347		20,569,879
Write-offs – Acquisition costs		-			-			-			(1,162,834	)		-			-		(238,597	)		(238,597	)		-		(1,401,431	)
Write-offs – Exploration costs		-			-			-			(1,433,658	)		-			-		(235,198	)		(235,198	)		-		(1,668,856	)
Total write-offs		-			-			-			(2,596,492	)		-			-		(473,795	)		(473,795	)		-		(3,070,287	)
Balance, October 31, 2009		7,336,527			231,978			7,568,505			894,114			-			8,727,626		-			8,727,626			309,347		17,499,592
Acquisition costs		302,911			10,966			313,877			4,887			-			649,772		-			649,772			70,714		1,039,250
Deferred exploration costs:
Camp		111,473			12,075			123,548			298,536			-			658,584		-			658,584			318,650		1,399,318
Drilling and analysis		654,228			-			654,228			784,761			-			27,097		-			27,097			1,614,088		3,080,174
Personnel and geology		92,944			6,108			99,052			489,337			-			191,016		-			191,016			557,093		1,336,499
Total exploration costs		858,645			18,183			876,828			1,572,634			-			876,697		-			876,697			2,489,831		5,815,991
Total expenditures for the year		1,161,556			29,149			1,190,705			1,577,521			-			1,526,469		-			1,526,469			2,560,545		6,855,241
Total before write-offs		8,498,083			261,127			8,759,210			2,471,635			-			10,254,095		-			10,254,095			2,869,892		24,354,833
Write-offs – Acquisition costs		(3,567,578	)		-			(3,567,578	)		-			-			-		-			-			-		(3,567,578	)
Write-offs – Exploration costs		(4,930,505	)		-			(4,930,505	)		-			-			-		-			-			-		(4,930,505	)
Total write-offs		(8,498,083	)		-			(8,498,083	)		-			-			-		-			-			-		(8,498,083	)
Balance, October 31, 2010	$	-		$	261,127		$	261,127		$	2,471,635		$	-		$	10,254,095	$	-		$	10,254,095		$	2,869,892	$	15,856,750
Represented by:
Acquisition costs	$	-		$	63,459		$	63,459		$	188,412		$	-		$	2,686,780	$	-		$	2,686,780		$	243,036	$	3,179,687
Exploration costs		-			197,668			197,668			2,285,223			-			7,567,315		-			7,567,315			2,626,856		12,677,063
Balance, October 31, 2010	$	-		$	261,127		$	261,127		$	2,471,635		$	-		$	10,254,095	$	-		$	10,254,095		$	2,869,892	$	15,856,750

17

CARDERO RESOURCE CORP.

(AN EXPLORATION STAGE COMPANY)

Notes to Consolidated Financial Statements

Years Ended October 31, 2010, 2009 and 2008

6.	RESOURCE PROPERTIES (Continued)
	(a)	Mexico
		The properties in Mexico consist of the following:
		i.	Baja IOCG Project, Baja California State, Mexico
			Pursuant to an agreement dated December 1, 2002 (as amended by agreements dated November 26, 2003 and June 30, 2005) between the Company and Anglo (the “Anglo Agreement”), Anglo agreed to manage and fund exploration expenditures for the identification and acquisition of not less than one mineral concession within an area of interest measuring approximately 50,050 square kilometres in size. Anglo could earn a 70% interest in the mineral concession(s) so acquired, as well as in certain previously acquired mineral concessions held by the Company, and a 70% interest in a new Mexican company to be formed to hold such concessions, by incurring aggregate exploration expenditures of not less than USD 3,700,000, as follows:
				USD 200,000 on or before December 1, 2003 (incurred);
				USD 800,000 on or before December 1, 2004 (incurred);
				USD 1,200,000 on or before December 1, 2005 (incurred); and
				USD 3,700,000 on or before December 1, 2006 (see below).
			Upon Anglo incurring an aggregate USD 3,700,000 of exploration expenditures, a joint venture would be formed, with each party required to contribute its pro rata share of all future exploration expenditures. A non-participating party can be diluted to a minimum 10% working interest, below which percentage its interest would be automatically converted to a 5% net profit interest.
			Pursuant to an amending agreement dated June 30, 2005 between the Company and Anglo, the Company assumed operation of the project. Under the terms of the amending agreement, the Company was required to incur exploration expenditures of not less than USD 500,000 within a 12-month period and, upon doing so, earned an additional 10% interest, thereby increasing its retained interest in the project to 40% upon the exercise by Anglo of its option. Upon having incurred the required USD 500,000 in exploration expenditures, the Company could either elect to terminate its expenditure period by delivering a resumption notice to Anglo, or to elect to remain as operator and continue to incur exploration expenditures. If the Company elected to continue incurring exploration expenditures following the USD 500,000 having been incurred, it would earn an additional 0.1% interest for each additional USD 10,000 of exploration expenditures incurred. If the Company elected to continue incurring exploration expenditures, at such time as it has incurred an aggregate of USD 1,400,000 (and has thereby increased its retained interest to 49% upon the exercise by Anglo of its option), it was required to deliver an election request notice to Anglo. Upon receipt by Anglo of a resumption notice or an election request notice, Anglo was required (unless it otherwise so elected) to immediately resume incurring aggregate exploration expenditures of USD 3,700,000 in order to earn its interest in the project (which will range from 60% to 51%, depending upon the amount of exploration expenditures incurred by the Company prior to the delivery of a resumption notice) with the original exploration expenditure dates extended to take into account the time the Company acted as operator. If the Company delivered a resumption notice, or if the Company delivered an election request notice and Anglo elected to continue incurring exploration expenditures, and thereafter Anglo fails to maintain its option in good standing, the Company could terminate the agreement. If the Company delivered an election request notice and Anglo did not elect to resume incurring exploration expenditures, the agreement would be automatically terminated. In either case, in the event of termination, the Company would retain its 100% interest in the project, with Anglo having no residual interest therein.

18

CARDERO RESOURCE CORP.

(AN EXPLORATION STAGE COMPANY)

Notes to Consolidated Financial Statements

Years Ended October 31, 2010, 2009 and 2008

6.	RESOURCE PROPERTIES (Continued)
	(a)	Mexico (Continued)
		i.	Baja IOCG Project, Baja California State, Mexico (Continued)
			Effective May 30, 2006, Anglo elected to terminate the Anglo Agreement and thereby forfeited any interest in, or rights to earn any interest in, the mineral concessions that were the subject of that agreement. Accordingly, the Company is now the owner of a 100% interest in the concessions comprising the Baja IOCG Project.
			On May 20, 2004, Western Telluric Resources Inc. (“WTR”) and Minera Olympic, S. de R.L. de C.V. (“Minera”) (collectively, the “Plaintiffs”) commenced an action (the “Action”) in the British Columbia Supreme Court (Vancouver Registry, No. S042795) against the Company and James Dawson, Murray McClaren and their respective companies, Dawson Geological Consultants Ltd. and 529197 B.C. Ltd. (carrying on business as Crockite Resources). The relief claimed against the Company is the setting aside of an agreement dated December 12, 2001 between the Company and Minera regarding the acquisition of mineral concessions. The Company filed a Statement of Defence, in which it denied any liability, as well as a counterclaim (the “Counterclaim”) against the Plaintiffs. Pursuant to an agreement dated October 17, 2007 (“Settlement Agreement”) among the Plaintiffs, the Company and all other parties to the various actions, all actions (including the Action and the Counterclaim) have been settled. As its part of the settlement, the Company has agreed to issue an aggregate of 500,000 shares to WTR and to grant to WTR a 1.5% net smelter return (“NSR”) royalty over its existing and future acquired Baja California properties, of which the Company can acquire one-half (0.75%) for $2,000,000. Fulfillment by the Company of its obligations under the Settlement Agreement was subject to the acceptance for filing thereof by the TSX (received on November 20, 2007) and the NYSE-A (formerly, the American Stock Exchange) (received on November 13, 2007). Effective May 23, 2008, the transaction closed and the 500,000 shares were released to WTR.
			During the year ended October 31, 2010, the Company wrote-off its remaining investment in the property in the amount of $8,498,084.
		ii.	Corrales Property, Chihuahua State, Mexico
			The Corrales property consists of one exploitation concession (100 hectares) located in the Municipality of Lopez, Chihuahua State, plus an additional 8,400-hectare exploration concession held 100% by the Company.
			Pursuant to an agreement dated October 23, 2007 between the Company and three Mexican individuals, the Company has been granted a five-year lease of the exploitation concession, with the right to purchase a 100% interest by making aggregate payments of USD 657,000 over five years to October 23, 2012, as follows:
			-	USD 24,000 on execution (paid);
			-	USD 18,000 on or before January 23, 2008 (paid);
			-	USD 15,000 on or before October 23, 2008 (paid);
			-	USD 60,000 on or before October 23, 2009 (note 6(a)(iv));
			-	USD 90,000 on or before October 23, 2010;
			-	USD 100,000 on or before October 23, 2011; and
			-	USD 350,000 on or before October 23, 2012.
			The Company has granted to a public company the option to acquire up to a 70% interest in the Corrales property (see note 6(a)(iv)).

19

CARDERO RESOURCE CORP.

(AN EXPLORATION STAGE COMPANY)

Notes to Consolidated Financial Statements

Years Ended October 31, 2010, 2009 and 2008

6.	RESOURCE PROPERTIES (Continued)
	(a)	Mexico (Continued)
		iii.	Santa Teresa Property, Coahuila State
			The Santa Teresa property consists of 8,715 hectares of exploration concessions held 100% by the Company.
			The Company has granted to a public company the option to acquire up to a 70% interest in the Santa Teresa property (note 6(a)(iv)).
		iv.	Ethos Capital Corp. Option/Joint Venture, Mexico
			The Company signed a letter of intent (“LOI”) dated June 12, 2008, as amended October 9, 2008 and May 29, 2009, with Ethos Capital Corp., a company listed on the TSX Venture Exchange (“TSXV”), pursuant to which Ethos has been granted an option to earn an interest in the Company’s Corrales and Santa Teresa silver-lead-zinc projects in Mexico (notes 6(a)(ii) and (iii).
			Pursuant to the LOI, Ethos has an exclusive option to earn an undivided 70% interest in the Corrales and Santa Teresa properties by:
			(a)	paying to the Company the sum of $500,000 (subsequently amended to $300,000), as follows (note 13(c)):
				(i)	$100,000 by July 17, 2009 (the “Acceptance Date”), which is five days after the LOI is accepted for filing by the TSXV (received August 18, 2009);
				(ii)	an additional $150,000 (subsequently amended to $75,000) by the day, which is one year after the Acceptance Date (received on December 10, 2010);
				(iii)	an additional $250,000 (subsequently amended to $125,000) by the day, which is two years after the Acceptance Date;
			(b)	delivering to the Company 1,434,000 (subsequently amended to 1,100,300) Ethos common shares, as follows:
				(i)	100,000 shares with a fair value of $17,000 on the Acceptance Date (received);
				(ii)	266,800 (subsequently amended to 150,000) shares by the day, which is one year after the Acceptance Date (received on December 10, 2010);
				(iii)	an additional 466,900 (subsequently amended to 250,000) shares by the day, which is two years after the Acceptance Date; and
				(iv)	an additional 600,300 shares by the day, which is three years after the Acceptance Date; and
			(c)	maintaining the properties (including making all required payments pursuant to the underlying option agreements) in good standing during the option period.
			Following the exercise of the option by Ethos, the Mexican subsidiaries of Ethos and the Company will enter into a joint venture, with each party being responsible for its ongoing share of further expenditures. If the interest of a participant is diluted to 10% or less, the interest of that participant will be converted to a 10% net profits interest royalty.
			During the year ended October 31, 2009, the Company received $255,143 from Ethos, comprised of $138,143 of expenditure reimbursement and $117,000 of option payments.

20

CARDERO RESOURCE CORP.

(AN EXPLORATION STAGE COMPANY)

Notes to Consolidated Financial Statements

Years Ended October 31, 2010, 2009 and 2008

6.	RESOURCE PROPERTIES (Continued)
	(b)	Argentina
		i.	Chingolo Silver Project, Jujuy Province, Argentina, consisting of the following concessions:
				Cavok Property, Jujuy Province, Argentina
				Pursuant to an agreement dated May 22, 2002 between the Company and a private Argentinean company, the Company has the right to acquire a 100% interest in three mineral concessions in Jujuy Province, Argentina, by making a payment of USD 10,000 on or before October 18, 2002 (paid) and issuing an aggregate of 250,000 common shares, as follows:
					50,000 common shares on or before October 18, 2002 (issued);
					100,000 common shares on or before October 18, 2003 (issued); and
					100,000 common shares on or before October 18, 2006 (issued).
				Two of these concessions form part of the Olaroz Silver Project and, during the fiscal year ended October 31, 2004, these two concessions were written down by $4,381,701 to a nominal value of $1. The third concession forms part of the Chingolo Silver Project. During the year ended October 31, 2009, the Company relinquished or abandoned, or commenced the process of relinquishing or abandoning, all properties relating to its investment in the Chingolo Project, resulting in a charge to operations of $679,055.
		ii.	Huachi Property, Argentina
			Pursuant to an agreement dated June 13, 2005 between the Company and a private Argentinean company, the Company can acquire a 100% interest in 30 mining concessions referred to as the Huachi Property in the Province of San Juan, Argentina. In order to maintain the option in good standing and to be permitted to carry out exploration activities prior to such exercise, the Company is required to make payments and incur exploration expenditures as follows:
			Payments of USD 5,500,000, as follows:
				USD 70,000 on June 13, 2005 (paid);
				USD 70,000 on or before April 13, 2006 (paid);
				USD 200,000 on or before June 13, 2007 (paid);
				USD 600,000 on or before April 13, 2008 (renegotiated to USD 110,000, which was paid);
				USD 1,000,000 on or before June 13, 2009 (see below); and
				USD 3,560,000 on or before June 13, 2010.
			Exploration expenditures of USD 2,000,000, as follows:
				USD 750,000 on or before December 13, 2007 (incurred); and
				USD 1,250,000 on or before June 13, 2010 (see below).
			Pursuant to an agreement dated November 30, 2006 between the Company and an Argentinean individual, the Company can acquire a 50% interest in one mining concession (mina) adjacent to the 30 Huachi concessions noted above. In order to maintain the option in good standing, to be permitted to carry out exploration activities prior to such exercise, and to exercise the option, the Company is required to make aggregate payments of USD 965,000 to the vendor, as follows:

21

CARDERO RESOURCE CORP.

(AN EXPLORATION STAGE COMPANY)

Notes to Consolidated Financial Statements

Years Ended October 31, 2010, 2009 and 2008

6.	RESOURCE PROPERTIES (Continued)
	(b)	Argentina (Continued)

	-           USD 5,000 on signing (paid);
	-           USD 10,000 on November 30, 2007 ( paid); -           USD 50,000 on November 30, 2008 (see below); -           USD 150,000 on November 30, 2009; -           USD 250,000 on November 30, 2010; and -           USD 500,000 on November 30, 2011.
	The Company has relinquished or abandoned, or is in the process of relinquishing or abandoning, all properties relating to its investment in the Huachi Project, resulting in a charge to operations of $1,917,437 during the year ended October 31, 2009.
iii.	Other Argentinean Properties

(a)	Organullo Property, Salta Province, Argentina
	Pursuant to an agreement dated October 1, 2004 between the Company and an Argentinean individual, the Company purchased a 100% interest in eight minas in Salta Province, Argentina, in consideration of the issuance of 70,000 common shares. These common shares were issued during the year ended October 31, 2005.
(b)	Los Manantiales Property (formerly “Mina Angela”), Chubut Province, Argentina
	Pursuant to an agreement dated April 25, 2004 between the Company and a private Argentinean company, the Company can acquire a 100% interest in 44 mineral concessions in Chubut Province, Argentina, subject to a 1% NSR to the vendor, in consideration of aggregate cash payments to the vendor of USD 400,000, as follows:
		USD 50,000 on or before April 25, 2005 (paid);
		USD 50,000 on or before April 25, 2006 (renegotiated, with $10,000 paid on April 25, 2006 and the balance of USD 40,000 paid in October 2006);
		USD 150,000 on or before April 25, 2007 (paid); and
		USD 150,000 on or before April 25, 2008 (paid).
	The Company has the option to purchase the 1% NSR royalty from the vendor for the sum of USD 500,000 at any time.
	Pursuant to a binding LOI dated March 12, 2007, the Company has granted to a public company the option to acquire up to a 70% interest in the property. Pursuant to the LOI, the optionee had a period of 60 days to carry out due diligence. The Company received a payment of USD 40,000 on signing of the LOI, which was refundable to the optionee if it declined to proceed. The optionee elected to proceed. The optionee may earn an initial 60% interest in the property by incurring an aggregate of USD 3,500,000 in expenditures over four years (including making all payments required pursuant to the underlying agreement). Upon the optionee having earned an initial 60% interest, the Company may elect to either participate at its 40% interest level, or request the optionee to fund the preparation of a bankable feasibility study within four years of such request and thereby earn an additional 10% interest in the joint venture. Upon such request being made by the Company, the optionee may elect to fund the bankable feasibility study. If it does so, it will earn the additional 10% interest upon completion of the bankable feasibility study. Following the formation of the joint venture and the completion of its earn-in requirements by the optionee, each participant is responsible for funding its share of joint venture expenditures. If it does not do so, its interest will be diluted. Upon the interest of a participant being diluted to less than 10%, such interest will be converted to a 2% NSR.

22

CARDERO RESOURCE CORP.

(AN EXPLORATION STAGE COMPANY)

Notes to Consolidated Financial Statements

Years Ended October 31, 2010, 2009 and 2008

6.	RESOURCE PROPERTIES (Continued)
	(b)	Argentina (Continued)
		ii.	Other Argentinean Properties (Continued)
			(b)	Los Manantiales Property (formerly “Mina Angela”), Chubut Province, Argentina (Continued)
				In June 2007, the optionee elected to make all remaining payments required under the underlying agreement, and thereby permit the Company to exercise the option and acquire the property (subject to the 1% NSR royalty). The property has been transferred to the Company. On December 3, 2008, the optionee terminated the option and returned all interest in the property to the Company.
			(c)	Pirquitas Property, Jujuy Province, Argentina
				The Pirquitas Property consists of one cateo (approximately 4,382 hectares) near the town of Minas Pirquitas. The property was acquired by the Company through staking and application therefor.
				The Company has entered into an agreement dated July 9, 2009 with a private Australian company, whereby the optionee may earn a 55% interest in the Pirquitas Property by incurring exploration expenditures of USD 1,000,000 over four years, of which USD 50,000 must be incurred in the first year (in progress). The effective date of the agreement is July 14, 2009. Following the optionee having earned its interest, the parties will enter into a joint venture, and thereafter each party is required to contribute its proportional share of further expenditures or be diluted on a straight-line basis.
	(c)	Peru
		i.	Marcona Project, Lucanas, Nazca and Caraveli Provinces, Peru (Carbonera and Daniella Properties)
			Pursuant to option agreements dated October 1, 2003 and October 23, 2003 between the Company and a private Peruvian company, the Company acquired mineral concessions covering approximately 30,000 hectares in Lucanas, Nazca and Caraveli Provinces, Peru. Approximately 10,500 hectares of these concessions are subject to an underlying agreement with Rio Tinto Mining and Exploration Limited (“Rio Tinto”). The private company holds the exclusive right and option to acquire a 100% interest from Rio Tinto, subject to a 0.5% NSR to Rio Tinto, by incurring USD 450,000 in exploration expenditures over three years ending August 22, 2006 and by paying Rio Tinto USD 500,000 (of which USD 50,000 has been paid) on or before January 27, 2008. The Company can earn a 100% interest in all 30,000 hectares by assuming and performing all commitments to Rio Tinto pursuant to the underlying agreement, paying the vendor an aggregate of USD 120,000 (paid) and issuing an aggregate of 650,000 common shares to the vendor, as follows:
			-           150,000 common shares on TSXV acceptance (issued); -           100,000 common shares on or before May 28, 2004 (issued);
			-           200,000 common shares on or before November 28, 2004 (issued); and -           200,000 common shares on or before November 28, 2005 (issued).
			The Company determined not to exercise the option from Rio Tinto, and terminated the underlying agreement with Rio Tinto. In addition, the Company abandoned all but five of the concessions (3,200 hectares) held by Minera Koripampa del Peru S.A. (“Koripampa”), (which retained concessions form part of the Company’s Iron Sands project (see note 6(c)(iii)).

23

CARDERO RESOURCE CORP.

(AN EXPLORATION STAGE COMPANY)

Notes to Consolidated Financial Statements

Years Ended October 31, 2010, 2009 and 2008

6.	RESOURCE PROPERTIES (Continued)
	(c)	Peru (Continued)
		ii.	Pampa de Pongo Property, Caraveli Province, Peru
			Pursuant to an option agreement dated February 2, 2004 between the Company and a private Peruvian company, the Company can acquire a 100% interest in mineral concessions covering approximately 7,970 hectares in Caraveli Province, Peru. The private Peruvian company holds the exclusive right and option to acquire a 100% interest in these concessions from Rio Tinto in consideration of the payment to Rio Tinto of aggregate payments of USD 500,000 over four years as follows:
				USD 50,000 on or before January 27, 2005 (paid);
				USD 50,000 on or before January 27, 2006 (paid);
				USD 100,000 on or before January 27, 2007 (paid); and
				USD 300,000 on or before January 27, 2008 (paid).
			The Company can earn a 100% interest in the property by assuming all of the obligations of the private company pursuant to the underlying agreement with Rio Tinto, and making the following payments and share issuances:
			Payments aggregating USD 130,900 as follows:
				USD 65,900 on or before March 12, 2004 (for back taxes on the property) (paid); and
				USD 65,000 on or before March 12, 2004 (paid).
			Issuance of an aggregate of 70,000 common shares, as follows:
				35,000 shares on or before March 12, 2004 (issued); and
				35,000 shares on or before September 12, 2004 (issued).
			In January 2008, the Company gave notice to Rio Tinto that it was exercising the option, and made the final USD 300,000 payment as required to do so. Rio Tinto transferred title to the concessions to a Peruvian subsidiary of the Company in November 2008, subject to their continuing right of first refusal concerning any disposition of these concessions by the Company.
			In the summer of 2008, the Company made applications for ten additional concessions surrounding the Rio Tinto concessions (19,900 hectares), all of which form part of the Pampa de Pongo property.
			On October 24, 2008, the Company entered into an agreement with Nanjinzhao Group Co., Ltd., (“Nanjinzhao”), a private Chinese enterprise located in Zibo City, Shandong Province, PRC, whereby the Company agreed to sell the Pampa de Pongo property to Nanjinzhao for USD 200 million (subject to Rio Tinto declining to exercise its right of first refusal in respect thereof). The agreement requires an initial deposit of USD 10 million, payable on or before March 17, 2009, with a final payment of USD 190 million due on or before September 17, 2009. During the initial three-month period, Nanjinzhao will obtain the appropriate Chinese governmental consents to the transaction. The Pampa de Pongo property will be transferred to a Peruvian subsidiary of Nanjinzhao once the USD 10 million deposit has been received. The agreement permits Cardero to decline to proceed with the transaction at any time prior to the receipt of the USD 190 million final payment, provided that, if such decision is made at any time after the initial USD 10 million deposit has been paid, Cardero is required to return the deposit and pay Nanjinzhao an additional USD 20 million as a break-up fee. Upon repayment of the deposit (and break-up fee, if required), the Pampa de Pongo property will be retransferred to the Company. The Company will pay a finder’s fee to an arm’s length private company in consideration of the finder introducing Cardero to Nanjinzhao and providing ongoing advice in the negotiations. On December 17, 2008, the Company received

24

CARDERO RESOURCE CORP.

(AN EXPLORATION STAGE COMPANY)

Notes to Consolidated Financial Statements

Years Ended October 31, 2010, 2009 and 2008

6.	RESOURCE PROPERTIES (Continued)
	(c)	Peru (Continued)
		ii.	Pampa de Pongo Property, Caraveli Province, Peru (Continued)
			notification from Rio Tinto that it was declining to exercise its right of first refusal with respect to the October 24, 2008 transaction between the Company and Nanjinzhao.
			The Company, Cardero Iron Peru and Zibo Hongda Mining Co., Ltd. (“Hongda”), a subsidiary of Nanjinzhao, agreed to amend the provisions of the October 24, 2008 sale agreement among the Company, Cardero Iron Peru and Nanjinzhao (the interest of Nanjinzhao in which was assigned to Hongda on April 3, 2009) for the purchase by Hongda of the Pampa de Pongo Iron Deposit in Peru.
			Hongda had requested a purchase price reduction due to difficult global economic conditions that have significantly adversely impacted iron ore prices. Following negotiations, Cardero and Cardero Iron Peru agreed to revise the final sale price to USD 100 million (of which USD 2 million had already been paid).
			Accordingly, on May 21, 2009 Hongda paid the required USD 10 million deposit to Cardero Iron Peru, which is non-refundable unless either (i) Cardero terminates the agreement or (ii) Rio Tinto exercises its right of first offer. Due to the new lower purchase price, pursuant to its right of first offer Rio Tinto had another 45-day period (expired on July 9, 2009) to match the revised terms. The Rio Tinto right of first offer expired unexercised, and therefore the USD 10 million deposit from Hongda is non-refundable unless Cardero chooses to terminate the purchase agreement.
			The balance of the purchase price of USD 88 million was split into three payments and paid as follows:
				USD 18 million, received on December 17, 2009;
				USD 40 million, received on December 17, 2009; and
				USD 30 million, to be received on December 31, 2009 (received January 11, 2010).
			As of October 31, 2009, the payments received to date of $13,898,800 (USD 12 million) were recognized in other income, net of related property costs of $4,889,658 and transaction costs of $411,487, for a gain of $8,597,655 before applicable income taxes.
			During the year ended October 31, 2010, payments received of $93,607,400 (USD 88 million) have been recognized in other income, net of related property costs of $645,276 and transaction costs of $5,234,967, for a gain of $87,727,157 before applicable income taxes.
		iii.	Iron Sands Project, Nazca and Caraveli Provinces, Peru
			The Company’s Iron Sands Project consists of approximately 32,000 hectares of unconsolidated and semi-consolidated mineral bearing sands, the rights to which are encompassed by certain of the mineral claims comprising the Carbonera and Daniella properties (note 6(c)(i)), and an additional 39 mineral claims acquired by staking at a cost of USD 77,000, in the Departments of Arequipa, (Caraveli Province) and Ica (Nazca Province), Peru. As a result of work to date, some of the foregoing concessions have been dropped, and the property now consists of 16 concessions (12,100 hectares in four areas) owned 100% by the Company and five concessions (3,600 hectares in two areas) held under option as described below.
			The Company has assumed, from a private Peruvian company, all rights and obligations under an agreement dated December 16, 2005 between a private Peruvian company and Minera Ataspacas S.A. (“Minera Ataspacas”), an arm’s length private Peruvian company, whereby the private Peruvian company has the option to acquire, from Minera Ataspacas, an initial 70% interest in five mineral

25

CARDERO RESOURCE CORP.

(AN EXPLORATION STAGE COMPANY)

Notes to Consolidated Financial Statements

Years Ended October 31, 2010, 2009 and 2008

6.	RESOURCE PROPERTIES (Continued)
	(c)	Peru (Continued)
		iii.	Iron Sands Project, Nazca and Caraveli Provinces, Peru (Continued)
			sand concessions (3,600 hectares total) surrounded by certain of the Company’s mineral tenures noted above. In order to exercise the option, the Company is required to pay a total of USD 6,830,000 over five years to December 15, 2010 (with an initial payment of USD 20,000 on or before December 16, 2005 (paid)) and incur exploration expenditures of not less than USD 250,000 over the same period, as follows and as amended (see below):
				USD 80,000 on or before December 16, 2006 (paid);
				USD 100,000 on or before December 16, 2007 (paid);
				USD 150,000 on or before December 16, 2008 (paid);
				USD 500,000 on or before December 16, 2009 (paid); and
				USD 6,000,000 on or before December 16, 2011 (note 13(b));
				USD 50,000 on or before December 16, 2007 (incurred);
				USD 50,000 on or before December 16, 2008 (incurred);
				USD 50,000 on or before December 16, 2009 (incurred);
				USD 50,000 on or before December 16, 2010 (incurred); and
				USD 50,000 on or before December 16, 2011 (incurred).
			Upon the Company having acquired the 70% interest, a joint venture company will be formed with Minera Ataspacas, and each party will thereafter be required to contribute its share of ongoing expenditures or be diluted. If either party is diluted to less than 10%, such interest will be converted to a 2% NSR royalty. If Minera Ataspacas is reduced to the 2% NSR, the Company may purchase half the NSR (1%) for USD 2,000,000 within 24 months of the exercise of the option, and the remaining half (1%) for USD 8,000,000 within 36 months of the exercise of the option.
			The Company entered into an agreement dated October 20, 2005 with the Peruvian subsidiary of a public B.C. company (the “Optionee”), whereby the Company has granted the Optionee the right to earn a 70% interest in the “hard rock” mineral rights (thereby excluding the unconsolidated and semi-consolidated mineral sands on such claims) accruing to certain of the mineral claims comprising the Iron Sands Project (plus additional claims acquired from Koripampa (note 6(c)(i)).
			In order to exercise the option, the Optionee is required to incur an aggregate of USD 3,000,000 in expenditures over four years to November 18, 2009 and perform all of the obligations of the Company under the underlying agreements with respect to the Carbonera and Daniella properties (note 6(c)(i)), including making all payments and incurring all exploration expenditures required thereunder. Upon the Optionee having earned its 70% interest, the Optionee and the Company will incorporate a new Peruvian company to hold such rights, in which the Optionee and the Company will hold a 70% and a 30% interest therein, respectively. Each party will thereafter be required to contribute its pro rata share of future expenditures, and a party failing to contribute will have its interest in the joint venture company diluted. At such point as a party’s interest in the joint venture company is reduced to 10%, such interest will be acquired by the joint venture company in exchange for the grant to the diluted party of a 1% NSR. The Optionee terminated the agreement and returned its interest in the applicable concessions on April 16, 2007.
			In November 2009, the Company entered into agreements with Minera Ataspacas and others (as amended) regarding its option on certain of the concessions comprised in its Iron Sands Project, Peru. Pursuant to two agreements dated November 13, 2009, the original option agreement of December 16, 2005 with Minera Ataspacas was amended to provide that the Company may now acquire a 100%

26

CARDERO RESOURCE CORP.

(AN EXPLORATION STAGE COMPANY)

Notes to Consolidated Financial Statements

Years Ended October 31, 2010, 2009 and 2008

6.	RESOURCE PROPERTIES (Continued)
	(c)	Peru (Continued)
		iii.	Iron Sands Project, Nazca and Caraveli Provinces, Peru (Continued)
			interest in the shares of a new Peruvian company (into which Minera Ataspacas will transfer a 100% interest in the five concessions subject to the option in favour of the Company) by paying to the shareholders of such new company the sum of USD 500,000 upon execution (paid) and USD 6,000,000 on or before December 16, 2011.
		iv.	Amable Maria Property, Peru
			The Amable Maria Property consists of 37 mining concessions (approximately 29,620 hectares) located in the Provinces of Chanchamayo and Jauja, Department of Junin, Peru, and acquired by the Company through staking and application therefor. After an unsuccessful search for a joint venture partner, the property was abandoned in July 2009, and the Company has written off the associated costs of $473,795 at October 31, 2009.
	(d)	United States of America
		i.	TiTac Property, Minnesota
			Pursuant to an option agreement dated July 1, 2008 (as amended on July 24, 2008) between the Company and an arm’s length private mineral owner, the Company has a two-year option to enter into a mining lease for an aggregate of 1,402 acres (567 hectares) of mineral rights located in Louis County, Minnesota. The mining lease will grant a lease over any mineral substance of a metalliferous nature, including those intermingled or associated materials or substances, recovered from each ton of crude ore for the purpose of extracting iron (essentially, iron, titanium and vanadium).
			The option agreement requires an initial payment of USD 5,000 on execution (paid) plus an extension payment of USD 25,000 due on the first anniversary of the agreement in order to extend the option for an additional year (option exercised). There are no work commitments under the option, but the Company is required to comply with all laws and to maintain specified insurance in place during the option term. The Company exercised the option to enter into the mineral lease on July 1, 2009.
			The initial term of the mining lease is for a period of 20 years, provided that the lease may be extended for an additional five-year period if the Company gives notice at least 180 days prior to the end of such term, and has either paid to the owner at least USD 10,000,000 in royalties over the initial term or pays to the owner the difference between the royalties actually paid and USD 10,000,000. In like manner, the lease can be extended for up to three additional five-year terms, provided that the appropriate notice is given and that the Company has paid to the owner at least USD 5,000,000 in royalties during the previous five-year term (or pays any deficiency in cash).
			On May 29, 2009, the Company, through Cardero Iron US, exercised its option to enter into a mining lease with respect to the TiTac property in Minnesota, and made the initial USD 2,500 payment required upon execution of the lease (which is dated July 1, 2009).
			The Company considers this an active property, and plans a work program during the fiscal year ending October 31, 2011.

27

CARDERO RESOURCE CORP.

(AN EXPLORATION STAGE COMPANY)

Notes to Consolidated Financial Statements

Years Ended October 31, 2010, 2009 and 2008

6.	RESOURCE PROPERTIES (Continued)
	(d)	United States of America (Continued)
		ii.	Longnose Property, Minnesota
			Pursuant to an agreement dated November 26, 2008 between the Company and an arm’s length individual on behalf of an arm’s length B.C. company, the Company was granted the option to acquire up to an 85% interest in the interest of the optionor in certain existing mineral leases, and in a lease to be entered into, covering 100% of the fee mineral rights (approximately 200 acres) located in St. Louis County, Minnesota, just north of the town of Hoyt Lakes. The Company can earn an initial 70% interest by incurring cumulative expenditures of USD 1,850,000 as follows:
			-	USD 100,000 on or before December 8, 2009 (incurred);
			-	USD 250,000 on or before December 8, 2010 (incurred);
			-	USD 500,000 on or before December 8, 2011(incurred); and
			-	USD 1,000,000 on or before December 8, 2012.
			A payment of USD 50,000 (paid) to the optionor is required on or before August 15, 2009 (and each and every August 28 thereafter) to be used by the optionor to make the annual USD 50,000 advance royalty payment due to the underlying landowners. The Company can earn an additional 15% interest (85% overall) by delivering a feasibility study (no time limit for delivery). Upon the Company having earned a 70% or 85% interest, the optionor can elect to convert its interest to a 10% net profits interest (if the Company elects not to earn the additional 15% interest) or a 5% net profits interest (if the Company elects to earn the full 85% interest). If the optionor does not so elect, upon the Company having earned its 70% or 85% interest, as applicable, the Company and the optionor will enter into a joint venture, with each party being responsible for its pro rata share of all joint venture expenditures. If a party to the joint venture is diluted to a 10% or lesser interest, such interest will be converted to a 2.5% net profits interest.
			During the year ended October 31, 2010, the Company issued 75,000 common shares valued at $111,500 as a finder’s fee in connection with the acquisition of its interests in the TiTac and Longnose properties in Minnesota.

(e)	Title and environmental
	Although the Company has taken steps to verify the title to mineral properties in which it has or had a right to acquire an interest in accordance with industry standards for the current stage of exploration of such properties, these procedures do not guarantee title (whether of the Company or of any underlying vendor(s) from whom the Company may be acquiring its interest). Title to mineral properties may be subject to unregistered prior agreements or transfers, and may also be affected by undetected defects or the rights of indigenous peoples. Environmental legislations are becoming increasingly stringent and costs and expenses of regulatory compliance are increasing. The impact of new and future environmental legislations on the Company’s operations may cause additional expenses and restrictions. If the restrictions adversely affect the scope of exploration and development on the mineral properties, the potential for production on the property may be diminished or negated.
(f)	Asset retirement obligations
	The Company is not aware of any AROs as of October 31, 2010 and 2009.

28

CARDERO RESOURCE CORP.

(AN EXPLORATION STAGE COMPANY)

Notes to Consolidated Financial Statements

Years Ended October 31, 2010, 2009 and 2008

7.	CAPITAL STOCK
	(a)	Authorized
		An unlimited number of common shares without par value.
		During the year ended October 31, 2010, the Company launched a normal course issuer bid to purchase up to 4,500,000 of its common shares through the facilities of the TSX. During the year ended October 31, 2010, the Company purchased 312,300 common shares for cancellation, pending to return to treasury.
	(b)	Share purchase warrants
		The following common share purchase warrants entitle the holders thereof to purchase one common share for each warrant. Warrants transactions are as follows:

	2010				2009
				Weighted				Weighted
				Average				Average
	Number of			Exercise	Number of			Exercise
	Warrants			Price	Warrants			Price
Warrants outstanding, beginning of year	4,303,100		$	1.47	4,395,600		$	1.47
Exercised	(67,125	)	$	1.35	(92,500	)	$	(1.38	)
Expired	(4,235,975	)	$	1.48	-			-
Warrants outstanding, end of year	-		$	-	4,303,100		$	1.47

Details of warrants outstanding are as follows:

	2010			2009
	Number of		Exercise	Number of		Exercise
Expiry date	Warrants		Price	Warrants		Price
March 1, 2010	-	$	-	3,628,000	$	1.50
March 1, 2010	-	$	-	675,100	$	1.35
Warrants outstanding, end of year	-			4,303,100

At October 31, 2010 there were no outstanding warrants. The aggregate intrinsic value of outstanding warrants at October 31, 2009 was $Nil.

7.	CAPITAL STOCK
	(c)	Stock options
		The Company has a stock option plan whereby the Company may grant options to directors, officers, employees and consultants to purchase common shares, provided that the aggregate number of shares subject to such options may not exceed 10% of the common shares outstanding at the time of any grant (not including agent or broker options). The exercise price of each option is required to be set at the higher of the closing price of the Company’s common shares on the trading day prior to the date of grant and the five-day volume-weighted average trading price for the five trading days prior to the date of grant (without any discounts). The option term and vesting period is determined by the Board of Directors within regulatory guidelines (the maximum term is ten years). All options are recorded at fair value when granted and are vested at the date for grant.
		A summary of the status of the stock option plan as of October 31, 2010 and 2009 and changes during the years ended on those dates is presented below:

29

CARDERO RESOURCE CORP.

(AN EXPLORATION STAGE COMPANY)

Notes to Consolidated Financial Statements

Years Ended October 31, 2010, 2009 and 2008

7.	CAPITAL STOCK
	(c)	Stock options (Continued)

	2010					2009
				Weighted					Weighted
				Average					Average
	Number of			Exercise		Number of			Exercise
	Options			Price		Options			Price
Options outstanding, beginning of year	5,500,000		$	1.77		5,687,500		$	1.93
Expired and cancelled	(3,700,000	)	$	(2.01	)	(1,962,500	)	$	(1.78	)
Exercised	-		$	-		(25,000	)	$	(1.47	)
Granted	3,510,000		$	1.21		1,800,000		$	1.27
Options outstanding, end of year	5,310,000		$	1.23		5,500,000		$	1.77

The weighted average remaining contractual life of options outstanding at October 31, 2010 was 1.3 years (2009 – 1 year).

Stock options outstanding are as follows:

		2010				2009
				Exercisable				Exercisable
		Exercise	Number of	at Year-		Exercise	Number of	at Year-
Expiry Date		Price	Options	End		Price	Options	End
January 16, 2010	$	1.50	-	-	$	1.50	500,000	500,000
July 21, 2010	$	2.04	-	-	$	2.04	2,000,000	2,000,000
August 8, 2010	$	2.18	-	-	$	2.18	1,200,000	1,200,000
December 9, 2010 (note 13(d))	$	1.16	575,000	575,000	$	1.16	575,000	575,000
April 9, 2011	$	1.39	225,000	225,000	$	1.39	225,000	225,000
September 11, 2011	$	1.30	1,000,000	1,000,000	$	1.30	1,000,000	1,000,000
December 1, 2011	$	1.31	360,000	360,000			-	-
February 2, 2012	$	1.41	500,000	500,000			-	-
July 27, 2012	$	1.16	1,525,000	1,525,000			-	-
August 11, 2012	$	1.16	1,125,000	1,125,000			-	-
			5,310,000	5,310,000			5,500,000	5,500,000

At October 31, 2010, the aggregate intrinsic value of outstanding and exercisable stock options is $258,000 (2009 - $46,000).

The Company uses the fair value method for determining stock-based compensation for all options granted during the fiscal years. The fair value was determined using the Black-Scholes option pricing model based on the following assumptions:

	2010	2009	2008
Expected life (years)	2.0	2.0	2.0
Interest rate	1.43%	1.32%	3.01%
Volatility (average)	72.33%	102.04%	88.37%
Dividend yield	0.00%	0.00%	0.00%

Stock-based compensation charges for the year ended October 31, 2010 totalled $1,695,941 (2009 -$1,192,109, 2008 - $3,789,920), of which $1,106,844 (2009 - $648,761, 2008 - $1,241,469) was allocated to salary expenses, $217,132 (2009 - $492,953, 2008 - $2,361,536) was allocated to consulting expense, and $371,965 (2009 - $50,395, 2008 - $186,915) was allocated to investor relations expense. The weighted average fair value of options granted during the year was $0.48 (2009 - $0.66) .

30

CARDERO RESOURCE CORP.

(AN EXPLORATION STAGE COMPANY)

Notes to Consolidated Financial Statements

Years Ended October 31, 2010, 2009 and 2008

8.	RELATED PARTY TRANSACTIONS
	During the years ended October 31, 2010, 2009 and 2008, the Company incurred the following expenses to officers or directors of the Company or companies with common directors:

		2010		2009		2008
Consulting fees	$	224,159	$	90,000	$	90,000
Professional fees	$	87,056	$	136,425	$	88,275

At October 31, 2010, there was $7,700 (2009 - $18,900) included in accounts payable and accrued liabilities. Professional fees include amounts paid to a law firm of which a director is a shareholder.

Amounts due from related parties are comprised as follows:

		2010		2009
Unsecured promissory notes, 1% per annum, due the earlier of 30 days after demand or the due date, if applicable:
Trevali	$	78,227	$	290,003
Wealth		305,871		121,393
Dorato		143,193		25,490
Indico		468,819		418
Abzu		208,345		-
IMM		18,820		-
Directors, employees and other		138,275		150,652
	$	1,361,550	$	587,956

The Company recovered $894,131 during the year ended October 31, 2010 (2009 - $764,875, 2008 - $222,785) in rent and administration costs from Wealth, ITH, Dorato, Indico, Trevali, Balmoral Resources Inc., Abzu and Lawrence W. Talbot Law Corporation (“LWTLC”), companies with common officers or directors.

These charges were measured by the exchange amount, which is the amount agreed upon by the transacting parties.

Mr. Stephan Fitch, a director of the Company, is a director and significant shareholder of a private company that is the major shareholder (67%) of IMM. The Company has a 15% interest in IMMG, a subsidiary of IMM, and has the option to acquire an additional 15% interest by issuing 1,000,000 common shares prior to December 31, 2009 (note 5). This transaction was approved by the Company’s audit committee and Board of Directors (other than Mr. Fitch, who abstained from voting in each case). The Company considered the collectability of advances totalling $468,099 to IMMG to be doubtful and, accordingly, wrote them off during the year ended October 31, 2009.

Effective October 1, 2005, the Company retained Mr. Carlos Ballon of Lima, Peru, to provide management services on behalf of the Company in Peru through his private Peruvian company, Koripampa, for a fee of USD 10,000 per month (reduced to USD 7,500 per month starting from March 2007), which has been expensed to consulting fees. Mr. Ballon became President of Cardero Peru in April 2006. Accordingly, Mr. Ballon is a related party with respect to the Company. Prior to Mr. Ballon becoming a related party, the Company entered into a number of mineral property acquisition/option agreements with either Koripampa or Sudamericana de Metales Peru S.A., another private Peruvian company controlled by Mr. Ballon. Such property transactions include those with respect to the Carbonera and Daniella Properties (note 6(c)(i)), the Pampa de Pongo Property (note 6(c)(ii)), the Katanga Property and the Corongo Property.

The presidents of MMC and Cardero Argentina provide management services for USD 3,750 each per month, which is expensed to consulting fees or capitalized to property costs, depending upon the nature of the services.

31

CARDERO RESOURCE CORP.

(AN EXPLORATION STAGE COMPANY)

Notes to Consolidated Financial Statements

Years Ended October 31, 2010, 2009 and 2008

8.	RELATED PARTY TRANSACTIONS (Continued)
	The Company has entered into a retainer agreement dated May 1, 2007 with LWTLC, pursuant to which LWTLC agrees to provide legal services to the Company. Pursuant to the retainer agreement, the Company has agreed to pay LWTLC a minimum annual retainer of $82,500 (plus applicable taxes and disbursements). The retainer agreement may be terminated by LWTLC on reasonable notice, and by the Company on one year’s notice (or payment of one year’s retainer in lieu of notice).
9.	GEOGRAPHIC SEGMENTED DATA
	The Company operates in one industry segment, the mineral resources industry, and in five geographical segments, Canada, Peru, Mexico, Argentina and the United States. All current exploration activities are conducted in the affected jurisdictions outside of Canada. The significant asset categories identifiable with these geographical areas are as follows:

		2010
		Canada/US		Peru		Argentina		Mexico		Total
Resource properties	$	2,869,893	$	10,254,095	$	2,471,635	$	261,127	$	15,856,750
Cash		6,192,603		46,042,361		16,496		12,543		52,264,003
Investments		65,922,190		-		-		-		65,922,190
Other		1,027,574		930,802		47,991		155,844		2,162,211
	$	76,012,260	$	57,227,258	$	2,536,122	$	429,514	$	136,205,154

		2009
		Canada/US		Peru		Argentina		Mexico		Total
Resource properties	$	309,347	$	8,727,626	$	894,114	$	7,568,505	$	17,499,592
Cash		5,672,162		59,040		69,706		22,288		5,823,196
Investments		23,406,055		-		-		-		23,406,055
Other		973,482		93,077		148,183		128,086		1,342,828
	$	30,361,046	$	8,879,743	$	1,112,003	$	7,718,879	$	48,071,671

10. INCOME TAXES

		2010			2009			2008
Income tax expense (benefits)	$	20,715,743		$	130,966		$	(4,874,132	)
Permanent differences		(255,155	)		(69,679	)		(200,337	)
Stock-based compensation		487,583			359,620			1,194,583
Non-taxable portion of capital gains		(135,075	)		(410,004	)		(40,805	)
Change in timing differences on mineral properties		5,463,032			-			1,464,775
Write down of mineral property		2,443,199			924,735			-
Future income taxes on sale of Pampa de Pongo		-			(2,564,900	)		-
Other temporary differences		714,802			398,566			442,504
Change in timing differences		206,620
Effect of tax rates in other jurisdictions		(62,996	)		(23,470	)		(2,375	)
Effect of rate reduction		(316,272	)		62,945			1,606,754
Change in valuation allowance		(5,879,979	)		1,923,341			775,079
	$	23,381,502		$	732,120		$	366,046

32

CARDERO RESOURCE CORP.

(AN EXPLORATION STAGE COMPANY)

Notes to Consolidated Financial Statements

Years Ended October 31, 2010, 2009 and 2008

10.	INCOME TAXES (Continued)
	The components of future income tax assets (liabilities) are as follows:

		2010			2009
Future income tax assets
Non-capital loss carry-forwards	$	9,584,878		$	7,257,958
Difference between undepreciated capital cost over net book value of property and equipment		56,628			39,262
Cumulative eligible capital deduction		13,678			13,678
Share issue costs		154,416			242,007
Tax value of resource properties in excess of book values		-			453,032
Other		297,085			236,652
Total future income tax assets		10,106,685			8,242,589
Valuation allowance		(586,039	)		(6,286,632	)
Net future income tax assets	$	9,520,646		$	1,955,957
Future income tax liabilities
Book value of investments in excess of tax values	$	(4,649,040	)	$	(1,955,957	)
Book value of resource properties in excess of tax values		(4,871,606	)
Timing of revenue recognition on sale of property		-			(2,564,900	)
Total future income tax liabilities		(9,520,646	)		(4,520,857	)
Net income tax assets (liabilities)	$	-		$	(2,564,900	)

The valuation allowance reflects the Company’s estimate that the tax assets, more likely than not, will not be realized.

The Company has available approximate non-capital losses that may be carried forward to apply against future years' income for income tax purposes in all jurisdictions. The losses expire as follows:

Available to		Canada		Foreign		Total
2011	$	-	$	599,748	$	599,748
2012		-		1,465,295		1,465,295
2013		-		894,185		894,185
2014		1,446,622		693,716		2,140,338
2015		2,950,454		511,021		3,461,475
2016		-		1,580,780		1,580,780
2017		-		356,852		356,852
2018		-		918,397		918,397
2019		-		477,096		477,096
2020		-		1,066,883		1,066,883
2026		2,850,458		-		2,850,458
2027		3,086,818		69,804		3,156,622
2028		3,824,078		354,362		4,178,440
2029		2,043,413		230,673		2,414,842
2030		5,854,150		551,050		6,475,567
Deferred expiry		-		1,866,055		1,866,055
	$	22,055,993	$	11,635,917	$	33,903,033

33

CARDERO RESOURCE CORP.

(AN EXPLORATION STAGE COMPANY)

Notes to Consolidated Financial Statements

Years Ended October 31, 2010, 2009 and 2008

11.	COMMITMENTS
	The Company is committed to monthly lease payments of $11,907 for its premises at 1901 – 1177 West Hastings Street, Vancouver, under its current lease, which expired August 31, 2010. On September 8, 2008, the Company sub-leased the premises to another company for the remaining term of the lease with the landlord’s consent. The Company entered into a sub-lease dated May 14, 2008 for new office space located at 1920 – 1188 West Georgia Street, Vancouver. The new sub-lease commenced August 1, 2008 for a term of 51 months. The initial lease payments are $14,654 per month for basic rent and $9,623 per month for estimated operating costs, commencing in September 2008.
	Other commitments are disclosed elsewhere in these consolidated financial statements as appropriate.
12.	RISK AND CAPITAL MANAGEMENT; FINANCIAL INSTRUMENTS
	The Company manages its capital structure, and makes adjustments to it, based on the funds available to the Company in order to support future business opportunities. The Company defines its capital as shareholders’ equity. The Board of Directors does not establish quantitative return on capital criteria for management, but rather relies on the expertise of the Company’s management to sustain future development of the business.
	The Company currently has no source of revenues; as such, the Company is dependent upon external financings or the sale of assets (or an interest therein) to fund activities. In order to carry future projects and pay for administrative costs, the Company will spend its existing working capital and raise additional funds as needed. Management reviews its capital management approach on an ongoing basis and believes that this approach, given the relative size of the Company, is reasonable. There were no changes in the Company’s approach to capital management during the year ended October 31, 2010. The Company is not subject to externally imposed capital requirements.
	The Company classified its cash and cash equivalents as held-for-trading; amounts receivable as loans and receivables; and accounts payable and accrued liabilities as other financial liabilities. The classification of resource related investments is set out in note 4. The carrying values of cash and cash equivalents, accounts receivable, and accounts payable and accrued liabilities approximate their fair values due to the short-term maturity of these financial instruments. The fair values of amounts due from related parties have not been disclosed, as their fair values cannot be reliably measured since the parties are not at arm’s length.
	CICA Handbook Section 3862 establishes a fair value hierarchy that prioritizes the inputs to valuation techniques used to measure fair value as follows:
	Level 1 – quoted prices (unadjusted) in active markets for identical assets or liabilities;
	Level 2 – inputs other than quoted prices included in Level 1 that are observable for the asset or liability, either directly (i.e., as prices) or indirectly (i.e., derived from prices); and
	Level 3 – inputs for the asset or liability that are not based on observable market data (unobservable inputs).
	The following table sets forth the Company’s financial assets measured at fair value by level within the fair value hierarchy.

		Level 1		Level 2		Level 3		Total
Cash and cash equivalents	$	52,264,003	$	-	$	-	$	52,264,003
Resource related investments		57,041,708		-		-		57,041,708
Resource related investments		-		3,643,942		-		3,643,942
	$	109,305,711	$	3,643,942	$	-	$	112,949,653

The Company’s exposure to risk on its financial instruments is summarized below:

34

CARDERO RESOURCE CORP.

(AN EXPLORATION STAGE COMPANY)

Notes to Consolidated Financial Statements

Years Ended October 31, 2010, 2009 and 2008

12.	RISK AND CAPITAL MANAGEMENT; FINANCIAL INSTRUMENTS (Continued)
	(a)	Credit risk
		The Company manages credit risk, in respect of cash and cash equivalents, by purchasing highly liquid, short-term investment grade securities held at major financial institutions in Canada and Peru in accordance with the Company’s investment policy. In regards to amounts receivable, the Company is not exposed to significant credit risk, as they are primarily due from governmental agencies.
		Concentration of credit risk exists with respect to the Company’s cash and cash equivalents, as all amounts in Canada and Peru are held at major financial institutions. The Company’s concentration of credit risk and maximum exposure thereto is as follows relating to funds held in Canada, Peru and other countries:

		2010		2009
Bank accounts - Canada	$	6,035,679	$	5,672,162
Bank accounts - Peru		46,042,361		59,040
Bank accounts - Others		185,963		91,994
	$	52,264,003	$	5,823,196

	The credit risk associated with cash and cash equivalents is minimized substantially by ensuring that these financial assets are placed with major financial institutions with strong investment-grade ratings given by a primary ratings agency. The Company does not hold any asset-backed securities.
	With respect to the $1,486,512 (2009 - $587,956) due from related parties, the credit risk has been assessed as low by management as the Company has strong working relationships with the related parties involved.
(b)	Liquidity risk
	Liquidity risk is the risk that the Company will encounter difficulty in setting its commitments. The Company’s approach to managing liquidity risk is to provide reasonable assurance that it will have sufficient funds to meet liabilities when due. The Company manages its liquidity risk by forecasting cash flows from operations and anticipated investing and financing activities. The Company maintains sufficient cash and cash equivalents at October 31, 2010 of $52,264,003 (2009 - $5,823,196) in order to meet short-term business requirements. At October 31, 2010, the Company had accounts payable and accrued liabilities of $832,087 (2009 - $568,951), which are due within 30 days.
(c)	Market risk
	Market risk is the risk that the fair value or future cash flows of a financial instrument will fluctuate because of changes in market prices. Market risk comprises three types of risk: interest rate risk, foreign currency risk and other price risk.
	i.	Interest rate risk
		The Company’s cash and cash equivalents consists of cash held in bank accounts and guaranteed investment certificates that earn interest at variable interest rates. Due to the short-term nature of these financial instruments, fluctuations in market rates do not have a significant impact on estimated fair values as of October 31, 2010 Future cash flows from interest income on cash and cash equivalents will be affected by interest rate fluctuations. The Company manages interest rate risk by maintaining an investment policy that focuses primarily on preservation of capital and liquidity.

35

CARDERO RESOURCE CORP.

(AN EXPLORATION STAGE COMPANY)

Notes to Consolidated Financial Statements

Years Ended October 31, 2010, 2009 and 2008

12.	RISK AND CAPITAL MANAGEMENT; FINANCIAL INSTRUMENTS (Continued)
	(c)	Market risk (Continued)
		ii.	Foreign currency risk
			The Company is exposed to foreign currency risk to the extent that monetary financial instruments are denominated in Mexican, Argentinean and Peruvian currencies. The Company has not entered into any foreign currency contracts to mitigate this risk as it believes this risk is minimized by the amount of cash held in these foreign jurisdictions. The Company’s sensitivity analysis suggests that a consistent 5% change in the rate of exchange in all foreign jurisdictions where it has assets employed would change mineral properties and foreign exchange gain or loss by $2,332,000 (2009 - $519,590).
		iii.	Other price risk
			Other price risk is the risk that the fair or future cash flows of a financial instrument will fluctuate due to changes in market prices, other than those arising from interest rate risk or foreign currency risk. The Company’s investments are carried at market value and are, therefore, directly affected by fluctuations in the market value of the underlying securities. The Company’s sensitivity analysis suggests that a 1% change in market prices would change the value of the resource related investments by $570,417, and the change on resource related investments in warrants cannot be predicted.
13.	SUBSEQUENT EVENTS
	Subsequent to October 31, 2010, the Company:
	(a)	Acquired an aggregate of 8,634,007common shares of Abzu Gold Ltd. (“Abzu Gold”), of which included 3,782,000 shares of Abzu Gold were issued upon exercise of 3,782,000 previously purchased Totem subscription receipts (note 4(h)) and the balance were received upon the purchase by Abzu Gold of the Company’s 9,000,002 shares of Abzu (note 5(a)). On December 21, 2010, Totem acquired Abzu and changed its name to “Abzu Gold Inc.” with Abzu being maintained as a subsidiary Accordingly, Abzu Gold now owns all of the issued shares of Abzu, and the Company holds 16.32% of Abzu Gold.
	(b)	Entered into an agreement with Minera Ataspacas and others regarding its option on certain of the concessions comprised in its Iron Sands project, Peru (note 6(c)(iii)). Pursuant to such agreement, the agreements of November 13, 2009 have been amended to extend the date for the payment of the balance of the purchase price to December 18, 2011. The Company paid the sum of USD 800,000 upon execution of the amending agreement, of which USD 150,000 was applied to the purchase price (thus reducing it from USD 6,150,000 to USD 6,000,000) and USD 650,000 was the consideration for the extension of the payment date for the balance of the purchase price from December 18, 2010 to December 18, 2011.
	(c)	Entered into an amending agreement dated December 1, 2010 amending the agreement with Ethos Capital Corp. pursuant to grant options to earn an interest in the Company’s Corrales and Santa Teresa Silver-Lead-Zinc projects in Mexico (Note 6(a)(iv)) to provide that Ethos is required to pay an aggregate of $300,000 (instead of $500,000) and deliver an aggregate of 1,100,300 (instead of 1,434,000) Ethos common shares in order to exercise the option.
	(d)	Issued 575,000 common shares at $1.16 per share pursuant to the exercise of stock options originally issued on December 9, 2008.
	(e)	Exercised 5,875,000 Kria warrants at a cost of $1,175,000 (note 4(f)).
	(f)	Exercised 67,000 Trevali warrants at a cost of $80,400 (note 4(b)).

36

CARDERO RESOURCE CORP.

(AN EXPLORATION STAGE COMPANY)

Notes to Consolidated Financial Statements

Years Ended October 31, 2010, 2009 and 2008

13.	SUBSEQUENT EVENTS (Continued)
	(g)	Entered into a loan agreement with Kria whereby Cardero has advanced Kria USD 8,000,000 (the “Loan”) to fund the USD 8,000,000 property payment due by Kria to Xstrata Canada Corporation (“Xstrata”) on or before January 16th, 2011 under the terms of the revised Halfmile and Stratmat property purchase agreement dated July 15, 2009, between Kria and Xstrata. The Loan will bear interest at 10% per annum, calculated monthly, not in advance and shall be repayable on or before January 14, 2012. As security for the Loan, Kria has granted in favour of the Company a first charge, mortgage and security interest over all its assets and undertakings. In connection with the Loan, Kria has agreed to issue to the Company approximately 6,400,000 common share purchase warrants of Kria (the “Bonus Warrants”). Each Bonus Warrant will entitle the holder to acquire a common share of Kria at an exercise price of $0.25 until January 14, 2012. As the Company currently holds approximately 19.9% of the issued and outstanding common shares of Kria, the issuance of the Bonus Warrants and any potential exercise of the Bonus Warrants for common shares of Kria will remain subject to receipt of disinterested shareholder approval by the Kria shareholders. Upon receipt of disinterested shareholder approval and the issuance of the Bonus Warrants, the interest rate of the Loan will retroactively be reduced to 8% to be calculated monthly, and not in advance.
	(h)	Participated in a private placement in Coalhunter (note 5(b)) and acquired 5,600,000 special warrants of Coalhunter (“Special Warrants”) at a cost of $2,800,000 on December 16, 2010. Each Special Warrant is exercisable to acquire one common share of Coalhunter, and will be automatically exercised upon the third business day after the issuance of a receipt for a prospectus of Coalhunter qualifying the issuance of the common shares upon the exercise of the Special Warrants. If such receipt has not been issued by June 27, 2011, each Special Warrant will thereafter be exercisable to acquire 1.1 common shares, and if such receipt has not been issued by September 27, 2011, each Special Warrant will thereafter be exercisable to acquire 1.11 common shares.
	(i)	Pursuant to its “top-up” right, on December 21, 2010, Cardero acquired by private placement an additional 3,608,143 common shares of Coalhunter at a cost of $0.30 per share, for an additional investment of $1,082,443.
	(j)	Entered into a lease dated November 18, 2010 for office space located on the 23rd floor of 1177 West Hastings Street for a term commencing on April 1, 2011 for a period of ten years to March 31, 2021 (subject to renewal for an additional five years). The rent for the first year is $312,579, plus operating costs.
14.	COMPARATIVE FIGURES
	Certain of the figures for 2009 and 2008 have been reclassified to conform to the presentation adopted for the current year.
15.	DIFFERENCES BETWEEN CANADIAN AND US GAAP
	(a)	Differences in accounting principles
		i.	Exploration expenditures
			Under Canadian GAAP, acquisition costs and exploration expenditures are capitalized. Under US GAAP, exploration costs incurred in locating areas of potential mineralization are expensed as incurred.
			Commercial feasibility is established in compliance with the Securities and Exchange Commission (“SEC”) Industry Guide 7, which consists of identifying that part of mineral deposit that could be economically and legally extracted or produced at the time of the reserve determination. After an area of interest has been assessed as commercially feasible, expenditures specific to the area of interest for further development are capitalized. In deciding when an area of interest is likely to be commercially feasible, management may consider, among other factors, the results of pre-feasibility studies, detailed analysis of drilling results, the supply and cost of required labour and equipment, and whether necessary mining and environmental permits can be obtained.

37

CARDERO RESOURCE CORP.

(AN EXPLORATION STAGE COMPANY)

Notes to Consolidated Financial Statements

Years Ended October 31, 2010, 2009 and 2008

15.	DIFFERENCES BETWEEN CANADIAN AND US GAAP (Continued)
	(a)	Differences in accounting principles (Continued)
		i.	Exploration expenditures (Continued)
			Under US GAAP, mining projects are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amounts of these assets may not be recoverable. If estimated future cash flows expected to result from the use of the mining project or property, and their eventual disposition are less than the carrying amount of the mining project or property, an impairment is recognized based upon the estimated fair value of the mining project or property. Fair value generally is based on the present value of estimated future net cash flows for each mining project, property, calculated using estimated mineable reserves, mineral resources, based on engineering reports, projected rates of production over the estimated mine, recovery rates, capital requirements, remediation costs and future prices considering the Company’s hedging and marketing plans. At October 31, 2010, all mineral properties considered active under US GAAP had a book value of $3,179,687 (2009 - $5,708,015) (note 6), after all applicable impairment charges.
		ii.	Reconciliation of total assets, liabilities and shareholders’ equity as of October 31:

		2010			2009
Total assets per Canadian GAAP	$	136,205,154		$	48,071,671
Exploration expenditures on resource properties expensed under US GAAP		(12,677,063	)		(11,791,577	)
Total assets per US GAAP	$	123,528,091		$	36,280,094
Total liabilities per Canadian and US GAAP	$	27,679,401		$	3,133,851
Total shareholders’ equity per Canadian GAAP		108,525,753			44,937,820
Exploration expenditures on resource properties expensed under US GAAP		(12,677,063	)		(11,791,577	)
Total shareholders’ equity per US GAAP		95,848,690			33,146,243
Total liabilities and shareholders’ equity per US GAAP	$	123,528,091		$	36,280,094

iii.	Reconciliation of net income (loss) and comprehensive income (loss) reported in Canadian GAAP and US GAAP:
	Statements of operations for the years ended October 31:

		2010			2009			2008
Reconciliation of net income (loss) from Canadian to US GAAP
Net income (loss) per Canadian GAAP	$	44,950,970		$	(254,628	)	$	(15,829,662	)
Exploration and development costs		(5,815,991	)		(2,789,143	)		(4,324,116	)
Reverse exploration and developments costs written-off		4,930,506			1,668,856			4,177,437
Exploration and development costs recovered		-			3,399,882			-
Total difference		(885,485	)		2,279,595			(146,679	)
Net income (loss) per US GAAP	$	44,065,485		$	2,024,967		$	(15,976,341	)
Weighted average number of common shares outstanding		58,571,515			58,421,309			53,918,438
Basic and diluted income (loss) per share in accordance with Canadian GAAP	$	0.77		$	(0.01	)	$	(0.29	)
Total differences		(0.02	)		0.04			(0.01	)
Basic and diluted income (loss) per share in accordance with US GAAP	$	0.75		$	0.03		$	(0.30	)

38

CARDERO RESOURCE CORP.

(AN EXPLORATION STAGE COMPANY)

Notes to Consolidated Financial Statements

Years Ended October 31, 2010, 2009 and 2008

15.	DIFFERENCES BETWEEN CANADIAN AND US GAAP (Continued)
	(a)	Differences in accounting principles (Continued)
		iii.	Reconciliation of net income (loss) and comprehensive income (loss) reported in Canadian GAAP and US GAAP (continued):
			Statements of comprehensive income (loss) for the years ended October 31:

		2010			2009		2008
Comprehensive income (loss) in accordance with Canadian GAAP	$	62,175,067		$	10,131,128	$	(17,903,922	)
Total difference in net income (loss) between Canadian and US GAAP		(885,485	)		2,279,595		(146,679	)
Total comprehensive income (loss) in accordance with US GAAP	$	61,289,582		$	12,410,723	$	(18,050,601	)

iv. Reconciliation of cash flows in accordance with Canadian GAAP and US GAAP: Statements of cash flows for years ended October 31:

		2010			2009			2008
Net cash used in operating activities of continuing operations in accordance with Canadian GAAP	$	(10,923,832	)	$	(5,057,303	)	$	(4,044,963	)
Adjustments to net loss involving use of cash
Write-off of capitalized resource property exploration costs		(5,738,164	)		(2,919,150	)		(4,203,524	)
Net cash used in operating activities of continuing operations in accordance with US GAAP		(16,661,996	)		(7,976,453	)		(8,248,487	)
Net cash provided by (used in) investing activities of continuing operations in accordance with Canadian GAAP		60,525,140			9,459,769			(7,436,865	)
Reclassification of capitalized resource property exploration costs		5,738,164			2,919,150			4,203,524
Net cash provided by (used in) investing activities of continuing operations in accordance with US GAAP		66,263,304			12,378,919			(3,233,341	)
Net cash flows provided by financing activities of continuing operations in accordance with Canadian and US GAAP		(283,075	)		164,250			11,982,499
Effect of foreign exchange on cash in accordance with Canadian and US GAAP		(2,877,426	)		(32,360	)		(36,315	)
Net increase in cash and cash equivalents in accordance with Canadian and US GAAP		46,440,807			4,534,356			464,356
Cash and cash equivalents, beginning of year in accordance with Canadian and US GAAP		5,823,196			1,288,840			824,484
Cash and cash equivalents, end of year in accordance with Canadian and US GAAP	$	52,264,003		$	5,823,196		$	1,288,840

v.

Cumulative Development Stage Reporting

The Company is not required and has opted to not report such information for Canadian reporting and for US GAAP purposes; the Company is considered an exploration stage company. Statement of Financial Accounting Standards No. 7 – “Accounting and Reporting by Development Stage Enterprises” requires the disclosure of cumulative-to-date information for each line item on the statements of operations and cash flow plus annual summaries of each component of shareholders’ equity since inception. Under Canadian GAAP, Accounting Guideline “AcG 11 – Enterprises in the Development Stage”, issued by the Canadian Institute of Chartered Accountants, does not require reporting of this information. Had the consolidated financial statements been prepared in accordance with US GAAP such information would have been disclosed.

39

CARDERO RESOURCE CORP.

(AN EXPLORATION STAGE COMPANY)

Notes to Consolidated Financial Statements

Years Ended October 31, 2010, 2009 and 2008

15.	DIFFERENCES BETWEEN CANADIAN AND US GAAP (Continued)
	(a)	Differences in accounting principles (Continued)
		vi.	Income Taxes
			Under Canadian GAAP, future tax assets and liabilities are recorded at substantively enacted tax rates. Under US GAAP, deferred tax assets and liabilities are recorded at enacted tax rates. There were no significant differences between enacted and substantively enacted tax rates for any of the periods presented.
			In 2006, FASB issued FIN 48, Accounting for Uncertainty in Income Taxes, an Interpretation of FASB Statement 109. This interpretation prescribes a recognition threshold and measurement criteria for the financial statement recognition of a tax position taken or expected to be taken in a tax return. This interpretation was effective for the company on February 1, 2008. The company is required to determine whether it is more likely than not that a tax position will be sustained upon examination and such positions that meet this threshold will be measured at the most likely amount to be realized upon settlement.
			The Company has reviewed its tax positions and determined that the application of FIN 48 does not result in any material adjustment for US GAAP purposes
		vii.	Derivatives
			Under US GAAP the company is required to adopt EITF Issue No. 07-5, Determining Whether an Instrument (or embedded Feature) is Indexed to an Entity’s Own Stock. The standard provides guidance on when certain contingent and other adjustment features in equity-linked financial instruments are indexed solely to an entity’s own stock. Such adjustment features also include strike prices which are denominated in a foreign currency. The adoption of this Statement did not have a material impact on the consolidated financial statements.
		viii.	Marketable Securities
			Prior to June 1, 2007, under Canadian GAAP marketable securities and long-term investments were carried at the lower of cost or market, and adjustments to the carrying value are shown as an expense on the statement of operations. Under US GAAP marketable equity securities are carried at market value, and changes to the market value are shown as a component of shareholder's equity (if the securities are classified as available-for-sale securities) or as gain or loss in the statement of operations (if the securities are classified as trading securities). Effective June 1, 2007, the Company's accounting for financial instruments, equity and comprehensive income under US GAAP is substantially equivalent to the accounting under Canadian GAAP.
	(b)	Recent US accounting pronouncements
		i.	In May 2009, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Codification (“ASC”) 855-10, Subsequent Events (“ASC 855-10”) (formerly Statement of Financial Accounting Standards (“SFAS”) Statement No 165), which establishes principles and requirements for subsequent events. In particular, ASC 855-10 sets forth: (a) the period after the balance sheet date during which management of a reporting entity shall evaluate events or transactions that may occur for potential recognition or disclosure in the financial statements; (b) the circumstances under which an entity shall recognize events or transactions occurring after the balance sheet date in its financial statements; and (c) the disclosures that an entity shall make about events or transactions that occurred after the balance sheet date. ASC 855-10 also requires disclosure of the date through which an entity has evaluated subsequent events and the basis for that date. As a result of the adoption of this new standard, the Company evaluated subsequent events to January 26, 2011, the date these consolidated financial statements were available for issue.

40

CARDERO RESOURCE CORP.

(AN EXPLORATION STAGE COMPANY)

Notes to Consolidated Financial Statements

Years Ended October 31, 2010, 2009 and 2008

15.	DIFFERENCES BETWEEN CANADIAN AND US GAAP (Continued)
	(b)	Recent US accounting pronouncements
		ii.	In June 2009, the FASB issued new guidance, which is now a part of ASC 860-10 (formerly SFAS Statement No 166), to improve the relevance, representational faithfulness and comparability of the information that a reporting entity provides in its financial statements about a transfer of financial assets; the effects of a transfer on its financial position, financial performance and cash flows; and a transferor’s continuing involvement, if any, in transferred financial assets. The FASB undertook this project to address (1) practices that have developed since the issuance of FASB Statement No. 140,
			Accounting for Transfers and Servicing of Financial Assets and Extinguishments of Liabilities
			(which is now a part of ASC 860-10), that are not consistent with the original intent and key requirements of that Statement and (2) concerns of financial statement users that many of the financial assets (and related obligations) that have been derecognized should continue to be reported in the financial statements of transferors. This new guidance is effective for fiscal years beginning after November 15, 2009 and is not expected to have a material impact on the Company’s consolidated financial statements.
		iii.	In June 2009, the FASB issued new guidance, which is now part of ASC 810-10 (formerly SFAS Statement No. 167), to improve financial reporting by enterprises involved with variable interest entities. The FASB undertook this project to address (1) the effects on certain provisions of FASB Interpretation No. 46 (revised December 2003), Consolidation of Variable Interest Entities (which is now part of ASC 810-10), as a result of the elimination of the qualifying special-purpose entity, and (2) constituent concerns about the application of certain key provisions of ASC 810-10, including those in which the accounting and disclosures under ASC 810-10 do not always provide timely and useful information about an enterprise’s involvement in a variable interest entity. This new guidance is effective as of the beginning of each reporting entity’s first annual reporting period that begins after November 15, 2009, for interim periods within that first annual reporting period, and for interim and annual reporting periods thereafter. Earlier application is prohibited. This new guidance is not expected to have a material impact on the Company’s consolidated financial statements.
		iv.	In June 2009, the FASB issued new guidance, which is now part of ASC 105-10 (the “Codification”) (formerly Statement of Financial Accounting Standards No. 168, The FASB Accounting Standards CodificationTM and the Hierarchy of Generally Accepted Accounting Principles), which will become the source of authoritative US GAAP recognized by the FASB to be applied by non-governmental entities. Rules and interpretive releases of the SEC under authority of federal securities laws are also sources of authoritative GAAP for SEC registrants. On the effective date of the Codification, the Codification will supersede all then-existing non-SEC accounting and reporting standards. All other non-grandfathered, non-SEC accounting literature not included in the Codification will become non-authoritative. The Codification is effective for financial statements issued for interim and annual periods ending after September 15, 2009. The adoption of the Codification only had the effect of amending references to authoritative accounting guidance in the Company’s consolidated financial statements.
		v.	In August 2009, the FASB issued Accounting Standards Update (“ASU”) No. 2009-05, Measuring Liabilities at Fair Value (“ASU 2009-05”). This update provides amendments to ASC 820, Fair Value Measurements and Disclosure, for the fair value measurement of liabilities when a quoted price in an active market is not available. ASU 2009-05 is effective for reporting periods beginning after August 28, 2009. This new guidance does not have a material impact on the Company’s consolidated financial statements.

41

CARDERO RESOURCE CORP.

(AN EXPLORATION STAGE COMPANY)

Notes to Consolidated Financial Statements

Years Ended October 31, 2010, 2009 and 2008

15.	DIFFERENCES BETWEEN CANADIAN AND US GAAP (Continued)
	(b)	Recent US accounting pronouncements (Continued)
		vi.	In January 2010, the FASB issued ASU No. 2010-06 (“ASU 2010-06”) applicable to FASB ASC 820-10, Fair Value Measurements and Disclosures. The guidance requires entities to disclose significant transfers in and out of fair value hierarchy levels and the reasons for the transfers and to present information about purchases, sales, issuances and settlements separately in the reconciliation of fair value measurements using significant unobservable inputs (Level 3). Additionally, the guidance clarifies that a reporting entity should provide fair value measurements for each class of assets and liabilities and disclose the inputs and valuation techniques used for fair value measurements using significant other observable inputs (Level 2) and significant unobservable inputs (Level 3). This guidance is effective for interim and annual periods beginning after December 15, 2009, except for the disclosures about purchases, sales, issuances and settlements in the Level 3 reconciliation, which will be effective for interim and annual periods beginning after December 15, 2010. As this guidance provides only disclosure requirements, the adoption of this standard will not impact the Company’s consolidated results of operations, cash flows or financial positions.
		vii.	In February 2010, the FASB issued ASU No. 2010-09, Subsequent Events: Amendments to Certain Recognition and Disclosure Requirements (“ASU 2010-09”), which amends ASC Topic 855 (“ASC 855”) to address certain implementation issues related to an entity’s requirement to perform and disclose subsequent events procedures. The amendments in ASU 2010-09 remove the requirement for an SEC filer to disclose a date through which subsequent events have been evaluated in both issued and revised financial statements. The new guidance did not have an impact on the Company’s consolidated financial statements or results of operations.
		viii.	In April 2010, the FASB issued ASU 2010-13, Compensation—Stock Compensation (Topic 718): Effect of Denominating the Exercise Price of a Share-Based Payment Award in the Currency of the Market in Which the Underlying Equity Security Trades (“ASU 2010-13”). ASU 2010-13 provides amendments to Topic 718 to clarify that an employee share-based payment award with an exercise price denominated in currency of a market in which a substantial portion of the entity’s equity securities trades should not be considered to contain a condition that is not a market, performance or service condition. Therefore, an entity would not classify such an award as liability if it otherwise qualifies as equity. The amendments in this update are effective for fiscal years, and interim periods within those fiscal years, beginning on or after December 15, 2010. The Company does not expect the adoption of this ASU to have a material impact on the Company’s consolidated financial statements.

42

EX-3

CARDERO RESOURCE CORP.
Form 51-102F1
Management’s Discussion and Analysis
For the year ended October 31, 2010

INTRODUCTION

This Management Discussion and Analysis (“MD&A”) for Cardero Resource Corp. (“Cardero” or the “Company”) for the year ended October 31, 2010 has been prepared by management, in accordance with the requirements of National Instrument 51-102, as of January 26, 2011, and compares its financial results for the year ended October 31, 2010 to the previous year. This MD&A provides a detailed analysis of the business of Cardero and should be read in conjunction with the Company’s audited consolidated financial statements for the years ended October 31, 2010 and 2009. The Company’s reporting currency is the Canadian dollar and all amounts in this MD&A are expressed in Canadian dollars. The Company reports its financial position, results of operations and cash-flows in accordance with Canadian generally accepted accounting principles.

Forward-Looking Statements

     This AIF contains forward-looking statements and forward-looking information (collectively, “forward-looking statements”) within the meaning of applicable Canadian and US securities legislation. These statements relate to future events or the future activities or performance of the Company. All statements, other than statements of historical fact 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. Forward-looking statements are typically identified by words such as: believe, expect, anticipate, intend, estimate, postulate, plans and similar expressions, or which by their nature refer to future events. These forward looking statements include, but are not limited to, statements concerning:

• the Company’s strategies and objectives, both generally and specifically in respect of Pampa el Toro and the Minnesota Iron/Titanium properties;

• the potential for the expansion of the estimated resources at Pampa el Toro;

• the timing of decisions regarding the timing and costs of exploration programs with respect to, and the issuance of the necessary permits and authorizations required for, the Company’s ongoing exploration programs on its properties;

• the Company’s estimates of the quality and quantity of the resources at its mineral properties;

• the timing and cost of the planned future exploration programs at the Minnesota Iron/Titanium properties, and the timing of the receipt of results therefrom;

• the Company’s future cash requirements;

• the potential for further upgrading of the concentrate from Pampa el Toro and the potential for the commercial production of pig iron from Pampa el Toro concentrate;

• the potential for the commercial recovery of titanium and vanadium from the slag resulting from the processing of Pampa el Toro concentrate to make pig iron;

• general business and economic conditions; and

Cardero Resource Corp.
Form 51-102F1
Management Discussion & Analysis
Year ended October 31, 2010	Page 2

• the Company’s ability to meet its financial obligations as they come due, and to be able to raise the necessary funds to continue operations.

     Although the Company believes that such statements are reasonable, it can give no assurance that such expectations will prove to be correct. Inherent in forward looking statements are risks and uncertainties beyond the Company’s ability to predict or control, including, but not limited to, risks related to the Company’s inability to identify one or more economic deposits on its properties, variations in the nature, quality and quantity of any mineral deposits that may be located, variations in the market price 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, 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 identified herein under “Risk Factors”. The Company cautions investors that any forward-looking statements by the Company are not guarantees of future performance, and that actual results are likely to differ, and may differ materially, from those expressed or implied by forward looking statements contained in this MD&A. Such statements are based on a number of assumptions which may prove incorrect, including, but not limited to, assumptions about:

• the level and volatility of the price of commodities, and gold, silver, copper, iron ore, coal and vanadium and titanium in particular;

• general business and economic conditions;

• the timing of the receipt of regulatory and governmental approvals, permits and authorizations necessary to implement and carry on the Company’s planned exploration programs, particularly at the Minnesota Iron/Titanium properties;

• conditions in the financial markets generally;

• the Company’s ability to secure the necessary consulting, drilling and related services and supplies on favourable terms in connection with its ongoing and planned exploration programs;

• the Company’s ability to attract and retain key staff;

• the accuracy of the Company’s resource estimates (including with respect to size and grade) and the geological, operational and price assumptions on which these are based;

• the timing of the ability to commence and complete the planned work at the Minnesota Iron/Titanium properties;

• the anticipated terms of the consents, permits and authorizations necessary to carry out the planned exploration programs at the Company’s properties and the Company’s ability to comply with such terms on a safe and cost-effective basis;

• the ongoing relations of the Company with its underlying optionors/lessors and the applicable regulatory agencies;

• that the metallurgy and recovery characteristics of samples from certain of the Company’s mineral properties are reflective of the deposit as a whole;

• the Company’s ability to negotiate and enter into appropriate off-take agreements for the potential products from any operation at Pampa el Toro; and

Cardero Resource Corp.
Form 51-102F1
Management Discussion & Analysis
Year ended October 31, 2010	Page 3

• the Company’s ability to overcome any potential difficulties in adapting pilot scale operations and testing to commercial scale operations.

     These forward looking statements are made as of the date hereof and the Company does not intend and does not assume any obligation, to update these forward looking statements, except as required by applicable law. For the reasons set forth above, investors should not attribute undue certainty to or place undue reliance on forward-looking statements.

Caution Regarding Adjacent or Similar Mineral Properties

     This MD&A 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 mining guidelines of the US Securities and Exchange Commission (the “SEC”) set forth in the SEC’s Industry Guide 7 (“SEC Industry Guide 7”) strictly prohibit information of this type in documents filed with the SEC. As the Company meets the definition a “foreign private issuer” under applicable SEC rules and is preparing this MD&A pursuant to Canadian disclosure requirements under the Canada-U.S. Multi-Jurisdictional Disclosure System, this MD&A is not subject to the requirements of SEC Industry Guide 7. 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.

Caution Regarding Reference to Resources and Reserves

     National Instrument 43-101 Standards of Disclosure of Mineral Projects (“NI 43-101”) is a rule developed by the Canadian Securities Administrators which establishes 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 or incorporated by reference in this AIF have been prepared in accordance with NI 43-101 and the guidelines set out in 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 investors are cautioned that the requirements and terminology of NI 43-101 and the CIM Standards differ significantly from the requirements and terminology set forth in SEC Industry Guide 7. Accordingly, the Company’s disclosures regarding mineralization may not be comparable to similar information disclosed by companies subject to SEC Industry Guide 7. Without limiting the foregoing, while the terms “mineral resources”, “inferred mineral resources”, “indicated mineral resources” and “measured mineral resources” are recognized and required by NI 43-101 and the CIM Standards, they are not recognized by the SEC and are not permitted to be used in documents filed with the SEC by companies subject to SEC Industry Guide 7. Mineral resources which are not mineral reserves do not have demonstrated economic viability, and US investors are cautioned not to assume that all or any part of a mineral resource will ever be converted into reserves. Further, 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 resource category. Under Canadian rules, estimates of inferred mineral resources may not form the basis of a feasibility study or prefeasibility study, except in rare cases. The SEC normally only permits issuers to report mineralization that does not constitute SEC Industry Guide 7 compliant “reserves” as in-place tonnage and grade without reference to unit amounts. The term “contained ounces” is not permitted under the rules of SEC Industry Guide 7. In addition, the NI 43-101 and CIM Standards definition of a “reserve” differs from the definition in SEC Industry Guide 7. In SEC Industry Guide 7, a mineral reserve is defined as a part of a mineral deposit which could be economically and legally extracted or produced at the time the mineral reserve determination is made. The SEC has taken the position that mineral reserves for a mineral property may not be designated unless: (i) competent professional engineers conduct a detailed engineering and economic study, and the “bankable” or “final” feasibility study demonstrates that a mineral deposit can be mined profitably at a commercial rate; (ii) a historic three-year average commodity price is used in any reserve or cash flow analysis used to designate reserves; and (iii) the company has demonstrated that the mineral property will receive its governmental permits, and the primary environmental document has been filed with the appropriate governmental authorities.

Cardero Resource Corp.
Form 51-102F1
Management Discussion & Analysis
Year ended October 31, 2010	Page 4

Caution Regarding Historical Results

     Historical results of operations and trends that may be inferred from the discussion and analysis in this MD&A may not necessarily indicate future results from operations. In particular, the current state of the global securities markets may cause significant reductions in the price of the Company’s securities and render it difficult or impossible for the Company to raise the funds necessary to continue operations. See “Risk Factors - Share Price Volatility”.

All of the Company's public disclosure filings, including its most recent management information circular, material change reports, press releases and other information, may be accessed via www.sedar.com and readers are urged to review these materials, including the technical reports filed with respect to the Company’s mineral properties.

DATE

This MD&A reflects information available as at January 20, 2011.

Exploration Activities

Cardero is actively assessing, acquiring interests in and exploring a number of mineral exploration properties, primarily those it considers to be prospective for gold, copper and iron. At the present time, it is focusing its activities in Mexico, Argentina, Peru and the state of Minnesota in the United States, where it has established subsidiaries and the infrastructure to enable it to actively work in such countries. The Company, through its subsidiaries, holds, or has the right to acquire interests in, mineral properties in these countries. However, at the present time it does not consider all of these to be material as, in many cases, the properties are in the early stages of evaluation, or have not had sufficient work done on them by the Company to determine if they are material. Cardero presently considers its material properties to be the Pampa el Toro Iron Sands Project in Peru and the Minnesota Iron-Titanium properties.

		Total Costs as of		Total Costs to		Estimated Fiscal 2011
Property		October 31, 2009		October 31, 2010		Expenditures(1	)
Pampa el Toro Iron Sands - Marcona, Peru	$	8,727,626	$	10,254,095	$	2,000,000
Minnesota Iron-Titanium Projects, USA	$	309,347	$	2,869,892	$	1,000,000

Note: 1. This amount represents the estimated exploration expenditures for fiscal year ending October 31, 2011. Estimated expenditures are contingent upon ongoing successful results justifying further expenditures.

During the quarter October 31, 2010 and to January 20, 2011, the Company was primarily focussed on promoting the Pampa el Toro Iron Sands program as a viable project for the production of iron ore concentrate and/or pig iron to serve the needs of the People’s Republic of China (“PRC”), formulating and commencing the drilling programs for the Longnose and TiTac properties and planning and completing a drill program on the Organullo property in Argentina.

Cardero Resource Corp.
Form 51-102F1
Management Discussion & Analysis
Year ended October 31, 2010	Page 5

Material Mineral Properties

Longnose and Titac Iron Titanium Projects, Minnesota

The Company has received a NI 43-101 technical report dated January 27, 2011 entitled “Longnose and Titac Iron Titanium Exploration Project, Minnesota, USA – Exploration Results 2010” prepared by EurGeol Keith J. Henderson, P.Geo (the Company’s Vice-President, Exploration) and Stephen (Jayson) Ripke, QP, MMSA (the Vice-President, Technical, of Cardero Iron Ore Management (USA) Inc.) (the “Minnesota Report”). The information in this MD&A regarding the Titac & Longnose Iron Titanium Projects is based on information provided by the Minnesota Report. The following summary is from the Minnesota Report and the detailed disclosure in the Minnesota Report is incorporated into this MD&A by reference. Readers are encouraged to review the entire Minnesota Report, which is filed on SEDAR at www.sedar.com.

The Longnose and Titac properties are both located in northeastern Minnesota, roughly 25.5 miles (41 km) apart. The Longnose property is located in St. Louis County, Township 59N, Range 13W, Section 30; and the Titac property is located in St. Louis County, Township 55N, Range 14W, Section 34, and Township 54N, Range 14W, Section 3. The Longnose property is centered at: (Coordinate system: Universal Trans Mercator, Zone 15 North, North American 1983 Datum) 572200 metres East, 5268300 metres North. The Titac property is approximately centered at: (Coordinate system: Universal Trans Mercator, Zone 15 North, North American 1983 Datum) 568000 metres East, 5228000 metres North (see Figure 1).

The Company holds an option to acquire up to an 85% interest in the Longnose property by incurring USD 1,850,000 in expenditures (to acquire 70%) and delivering a feasibility study (to acquire an additional 15%). Upon the Company earning its 70% or 85% interest, the optionee of the Longnose property has the option to maintain its 30% or 15% interest and enter into a joint venture with the Company, or to convert its working interest to either a 10% or 5% net profits interest. Advance royalties and production royalties are payable to the underlying lessors of the properties (see Figure 2).

The Company holds a 100% leasehold interest in the Titac property under a mining lease dated July 1, 2009. The lease is for an initial term of 20 years, subject to extension for up to 20 additional years, and requires annual rental payments until commercial production and thereafter production royalty payments (minimum $200,000/year) (see Figure 3).

The Company has all required licenses, permits and registrations in place to carry out exploration and resource definition drilling. Additional permits will be required in the future to advance to the next stage.

The Longnose and Titac properties contain known areas of mineralization, which are being explored further in order to enable a resource estimation to be prepared.

Topographic relief on both properties is generally low, and the surface is flat-laying. Elevations on both properties range between 465 and 490 metres above mean sea level. The ground cover at both properties is a mixture of Palustrine, forested wetlands (Cowardin classification system), and higher dry forested ground. Overburden, consisting of glacial till, is present and the depth to bedrock is approximately 3 to 30 metres from surface.

Accessibility of both projects is excellent, with the Titac property located along a paved county highway, and the Longnose property located off of a paved county highway via a well maintained gravel road. The climate in northeastern Minnesota is mid-continental. Winter conditions usually begin in mid-December and last until mid-March, with frozen ground beginning in late-December to early-January. The spring thaw usually begins in mid-March to late-April, with stable, dry spring-summer-fall conditions occurring from late-April to mid-December.

Cardero Resource Corp.
Form 51-102F1
Management Discussion & Analysis
Year ended October 31, 2010	Page 6

The population of Aurora, Minnesota (the nearest major population centre) is approximately 1,850, and the nearby city of Hoyt Lakes (5 miles east of Aurora), Minnesota has a population of approximately 2,000 people.

The infrastructure in northeastern Minnesota related to mining activities is excellent, with low cost electricity, railroads, paved state and county highways, international shipping ports, mining professionals, mining vendors, and trained labor all readily available. International shipping ports are located along the north shore of Lake Superior, including Duluth/Superior, Silver Bay, Taconite Harbor, and Two Harbors, with linked rail systems to all.

Eighteen diamond drill core holes have been drilled at the Longnose property, including six holes drilled by the Company in 2010. Two bulk samples for metallurgical testing and TiO₂ recovery have been collected from the Longnose property by prior operators. The first bulk sample measured 32+ tons of material and the second bulk sample measured 60 tons. The University of Minnesota, Natural Resources Research Institute, Coleraine Minerals Research Laboratory houses what remains of both bulk samples. BHP Minerals International Inc. (BHP) held the Longnose property for some time in the 1990’s. Most of the work completed by BHP centered on metallurgy, and TiO₂ recovery. Their first investigation involved a smelting and sulfation-leaching process developed by the US Bureau of Mines. Their second investigation involved an oxidation-reduction roast followed by chemical leaching, using a process called “Murso”. A pre-NI 43-101 (non-NI 43-101 compliant) historical resource calculation was completed at Longnose by BHP. A BHP report dated November 11, 1992 estimates “probable reserves” of 27.57 MT (30.36 million short tons) grading 21.3% TiO₂. However, the authors of the Minnesota Report caution that both the BHP report and the included resource estimate were prepared before the introduction of NI 43-101, and are therefore historical in nature and the Company is not treating such resources as a current resource under NI 43-101. Investors are further cautioned that a qualified person has not yet completed sufficient work to be able to verify the historical resources, and therefore they should not be relied upon.

Exploration of the Titac property, historically known as Section 34, has been limited, though several exploratory bore holes and geophysical surveys have been completed. Six holes were drilled historically and the Company completed 30 holes in 2010. A ground magnetic survey conducted in the mid 1960’s.

The Longnose and Titac Properties are located within the Superior Province of the Canadian Shield, and are underlain by intrusive rocks generated during the formation of the Midcontinent Rift. Mineralization is hosted by Oxide-bearing Ultramafic Intrusions (OUI’s) that intruded into layered series intrusions of the Duluth Complex. OUIs are dominantly composed of coarse-grained to pegmatitic pyroxenite, peridotite, and dunite that contains roughly 15-40% titanium-iron oxide mineralization. Typically, zones of massive and semi-massive oxide are also present throughout the stratigraphy. Locally, some OUI’s also contain abundant copper-nickel sulfide mineralization as well (but this style of mineralization has not been intersected within the Company’s properties). Most OUI’s occur along the western margin of the southern portion of the Duluth Complex, and display numerous shapes (sheet-, funnel-, dike- and pipe-like geometries), and inclinations (flat-lying, moderately-dipping, and sub-vertical).

The Longnose and Titac OUls contain disseminated, semi-massive, and massive titanium-iron oxide mineralization. The Longnose property hosts a single intrusion which is at least 150 metres thick, dipping shallowly to the southeast. The Titac property contains at least two mineralized OUI’s (Titac North & Titac South). Titac North is at least 450 metres thick (open at depth) and has a vertical pipe-like geometry. Titac South is at least 490 metres thick, and also has a pipe-like geometry.

Cardero Resource Corp.
Form 51-102F1
Management Discussion & Analysis
Year ended October 31, 2010	Page 7

Mineralization at Longnose dominantly consists of disseminated to net-textured, medium to coarse-grained, magnetite and ilmenite, with some fraction of titaniferous magnetite. Olivine-rich ultramafic rocks (peridotite, feldspathic peridotite & dunite) host the majority of the titanium-iron oxide mineralization found in the Longnose OUI, and will often be net-textured with oxide minerals interstitial to silicates. Visual modal mineral calculations generally estimate that titanium-iron oxide minerals compose 15-35% of the peridotitic and dunitic rocks at Longnose. Numerous massive and semi-massive titanium-iron oxide horizons or zones (45-100% titanium-iron oxide) have been intersected in drill core. These massive and semi-massive oxides seem to be dominantly hosted by peridotite and dunite, though they have been intersected within zones of pyroxenite as well. It is clear that the main mineralized intrusion at Longnose is a thick, laterally and vertically continuous intrusion dominantly composed of a mixture of oxide-bearing peridotite, oxide-bearing dunite, massive oxide, and semi-massive oxide with between 15% and 100% titanium-iron oxide mineralization.

Titaniferous-iron oxide mineralization at the Titac property shares many similar characteristics of mineralization at the Longnose property. When mineralization is hosted by olivine-rich ultramafic rocks it is typically medium to coarse-grained, disseminated to net-textured, and interstitial to silicate minerals. The largest difference occurs with mineralization hosted by pyroxenite, in which the oxide mineralization typically occurs as medium to coarse-grained clumps or clots up to roughly 5 cm in size (typically 2-4 cm) at Titac.

The Titac intrusion also contains abundant copper-sulfide mineralization. Up to five modal percent (typically 1-2%) copper-sulfide mineralization has been observed, dominantly consisting of chalcopyrite and bornite. Two distinct types of chalcopyrite seem to be present including a bright, golden, metallic colored chalcopyrite and a second duller, brownish-bronze colored chalcopyrite. Bornite exhibits a deep blue-purple metallic color. Copper sulfides typically occur as medium to coarse-grained disseminations interstitial to silicates and oxides, but also occur as pegmatitic clots up to roughly 5 cm in size (typically 2-3 cm). Very fine-grained disseminations of pyrrhotite can occur near the contacts of the OUI and the country rock (in both OUI rocks and country rocks), and rarely fine-grained pyrite will fill micro-fractures (<1 to 2 mm thick) within the OUI.

The Longnose intrusion was partially defined by historical drilling. As a result, the internal stratigraphy and general attitude of the intrusion are relatively simple, and the overall attitude of the intrusion lends itself to shallow, regularly-spaced drilling. Drilling at the Titac property is much more complex because of the attitude, orientation, and stratigraphy of the Titac intrusions. Both Titac North and Titac South appear to be sub-vertical, pipe-like intrusions, with sub-vertical lithological zonation. Here it is more appropriate to drill multiple holes from a single drilling platform in a fan-like pattern. This drilling method was successful in defining the boundaries of the intrusion during drilling of the Titac South intrusion, and is recommended for any additional drilling on the remaining intrusions at Titac.

Both properties are at an advanced exploration stage.

During 2010, a total of 948.6 metres were completed at Longnose for six drillholes. At Titac North and South, a total of 10,557.9 metres were completed for thirty drillholes. All assay results from the 2010 drilling campaign have been received and are included in this report as comprehensive tables. A second drilling campaign is slated to begin in February 2011.

Both the Longnose and Titac OUI’s are geologically interpreted to be late-stage intrusions that cut early Duluth Complex stratigraphy, and are associated with magmatism generated by the 1.1 billion year old Midcontinent Rift system.

Cardero Resource Corp.
Form 51-102F1
Management Discussion & Analysis
Year ended October 31, 2010	Page 8

The drilling program conducted by the Company in 2010 confirmed strong titanium-iron-oxide mineralization at both the Longnose and Titac properties, and determined that the Titac property contains at least two intrusions with large zones of titanium-iron-oxide mineralization (Titac North and Titac South).

Detailed recommendations regarding drilling programs and other aspects of both properties are as follows:

• Drilling by the Company in 2010 at the Titac South intrusion has defined a large zone of titanium-iron mineralization, and identified an area to the northeast of the intrusion that merits additional drilling. A drilling program consisting of two drill holes is recommended to better define this northeastern area.

• A drilling program consisting of four drill holes at the Longnose property is recommended in order to both confirm historical drilling results, and to test continuity of mineralization within the intrusion.

• Upon completion of drilling these six holes, and obtaining assay data for these six holes, it is recommended that a resource calculation should be completed for Longnose and TiTac South. SRK Consulting have been retained to complete this work as independent consultants. Drilling by the Company in 2010 at the Titac North intrusion helped to confirm the presence of strong titanium-iron oxide mineralization, however definition drilling is not planned for the 2011 drill program. A future drill program, consisting of approximately 50 drill holes, will be sufficient to delineate additional resources at TiTac North.

• A re-interpretation of a historical (1967) ground magnetic data by Quantec Geoscience identified numerous outlying intrusions at Titac. An introductory exploration drilling program consisting of four drill holes is recommended to explore these areas.

• A petrographic study of the oxide and sulfide mineralization found at both properties should be conducted to identify the specific oxide and sulfide minerals present at both properties.

• Initial metallurgical and recovery testing should be conducted. Initial bulk samples should consist of 100 kilogram composites, collected from drill core sample coarse rejects, and represent average mineralization grades.

• Selective sample pulps should be assayed for platinum group elements contents.

A budget is presented to complete the recommended work program:

Recommended Item		US$
Longnose in-fill and step-out drilling (4 holes/1100 m @ $163/m*)		180,000
Titac South in-fill drilling (2 holes/500 m @ $163/m*)		82,000
Resource calculation & 43-101 Reporting		60,000
Titac outlying intrusions exploration drilling (4 holes/1200 m @ $163/m*)		200,000
Acquisition of additional mineral leases/property boundary survey		40,000
Mineralization study		15,000
Metallurgical testing		100,000
Platinum group element assays		12,000
TOTAL	$	689,000

*Drilling cost per metre includes: Site and Trail preparation, drilling, sampling, facility/vehicle lease, and staffing.

Cardero Resource Corp.
Form 51-102F1
Management Discussion & Analysis
Year ended October 31, 2010	Page 9

The Company intends to proceed with the recommended program in the Minnesota Report, and anticipates that the program will commence in February, 2011. All necessary permits are in place, and the Company has the funds to complete the proposed program.

Pampa El Toro Iron Sands Project, Peru

The Company’s Iron Sands project now comprises an aggregate of 21 concessions in two dune fields – Pampa el Toro and Carbonera. Of these concessions, 16 (12,100 hectares in four areas) are owned 100% by the Company and 5 concessions (3,600 hectares in 2 areas) are held under option from an arm’s length private Peruvian company. The Iron Sands project is located near the city of Nazca in the desert coastal region of southern Peru approximately 45 kilometres northeast of the port of San Juan and close to the large Marcona iron mine and the Pampa de Pongo iron deposit. The primary focus of the Company’s work during the quarter and to date continues to be the Pampa el Toro dune field.

During the quarter and to date the Company continued to promote the Pampa el Toro program as a viable project for the production of iron ore concentrate and/or pig iron to serve the needs of steelmakers located in the PRC, including a demonstration of concentrate production pilot plant operation. The Company also invested approximately $40,000 of additional capital in its Peru pilot plant to install concentrate screens to further demonstrate the necessary classification step that needs to be applied to the cleaned iron ore concentrate from the magnetic separation plant so as to achieve the final grade of 63~64% total iron. Demonstration of this step is important to any venture partner as it clearly shows that the final iron ore concentrate is of merchant grade quality suitable for offtake agreements.

At the present time, the Company is actively engaged in negotiations to secure a partner who can help move the project to a commercial stage and, although the Company is presently in discussions with interested entities (including conducting property visits), there can be no assurance that it will be able to do so.

Other Mineral Projects

Mexico

Baja IOCG

The Company has engaged personnel at the Colorado School of Mines (“CSM”) to review the results of work on the Baja IOCG project to date and determine potential additional areas for drill testing. In conjunction with this work, the Company plans to produce a comprehensive summary report outlining work completed to date and the work recommended by the CSM researcher.

Field work during the quarter and to date focused on the Fortinas prospect. Following an initial visit by CSM and Cardero staff in August 2010, fieldwork commenced in late November continuing through early December. Work consisted of mapping and sampling in an attempt to extend previously mapped NW Fortinas Breccia and mineralization exposed at surface. The Fortinas NW breccia is a tectonic regional structure in an andesitic/dacitic rock, related to Las Fortinas Fault (335º-350º/75º-80ºW). From north to south, the breccias zone has now been mapped as 1650 metres in length and is still open to the north. It reaches a maximum width of 350 metres, although brecciated outcrops are somewhat irregular and discontinuous at surface.

Cardero Resource Corp.
Form 51-102F1
Management Discussion & Analysis
Year ended October 31, 2010	Page 10

A total of 20 rock samples were collected during the work, including 19 channel samples of a minimum of 2 metres in length and 1 selective grab sample from a mineralized dump. Results are expected in the coming weeks and will be published via a news release when they are available.

Based on the work completed, the following work is recommended for completion in early 2011:

• Induced Polarization survey (IP)

• Ground magnetic survey

• Extension of mapping and sampling to the east

• Acquisition of additional satellite imagery

• 3 diamond drillholes to test targets arising from the work.

In addition to potentially completing this recommended program, the Company will continue to seek a joint venture partner to explore the larger project area further.

Corrales and Santa Teresa Projects Option

Ethos Capital Corp. (“Ethos”), the TSX Venture Exchange (“TSXV”) listed capital pool company to which the Company has optioned its Corrales and Santa Teresa zinc-lead-silver projects in Mexico as a qualifying transaction, received TSXV acceptance to the transaction on July 17, 2009. The Company understands that Ethos will be proceeding with the work program at Santa Teresa outlined in the Technical Report filed in support of its qualifying transaction (available on SEDAR) but, to the date of this MD&A, has not received any progress report or exploration data.

Argentina

Organullo

The Organullo Project is located in the Salta Province of north-western Argentina in the central South American Andes mountain ranges approximately 18 kilometres by road south of San Antonio de Los Cobres. The Company holds a 100% interest in the property, which covers approximately 6,100 hectares.

The positive results from surface exploration, conducted during 2009 and early 2010, indicated the potential for a large, bulk-tonnage gold system. In mid-2010, the Company commenced a 2,000 metre, 5-hole diamond drill program. The drilling was designed to test an approximately 2.1 -kilometre long by 800-metre wide north-south trending structural zone defined by the coincidence of significant historical drill intercepts, gold-in-rock surface geochemistry, and variably developed advanced argillic (alunite+/-dickite+/-pyrophyllite) and silica alteration in the vicinity of the former Julio Verne mine.

A total of 8 diamond drillholes were drilled during the program for a total of 2,053 metres, but drilling was hampered by technical difficulties and poor ground conditions. As a result, none of the drillholes tested the geophysical targets at depth. Significant intersections from the drilling completed are outlined in Table 1.

Cardero Resource Corp.
Form 51-102F1
Management Discussion & Analysis
Year ended October 31, 2010	Page 11

Table 1: Organullo 2010 Significant Intersections

HOLE	DEPTH	Depth (to)	Interval	Au (ppm)
	(from) metres	metres	(metres)
ORG10-02	3.80	37.20	33.40	0.165
ORG10-03	6.10	12.80	6.70	0.211
ORG10-04	7.80	91.30	82.50	0.109
ORG10-05	16.40	139.20	122.80	0.221
Includes	52.60	68.60	16.00	0.957
ORG10-05	190.90	256.00	65.10	0.429
Includes	208.75	226.10	17.35	0.834
ORG10-06	47.50	63.30	15.80	0.258
	78.30	193.90	115.60	0.200
Includes	78.30	101.90	23.60	0.585
ORG10-07	4.50	71.50	67.00	0.302
Includes	5.90	54.80	48.90	0.345
ORG10-08	0.0	445.0	445.0	0.142
Includes	47.10	353.60	306.50	0.168
	116.40	175.20	58.80	0.294

The grades intersected are not considered to be significant but since the priority targets remain untested, the property does warrant additional exploration. The Company has signed a number of confidentiality agreements and hopes to secure a joint venture partner during 2011, which would allow exploration to progress and allow Cardero to focus on core projects. No further work on this property is planned by Cardero.

Los Manantiales (Mina Angela) Project

On December 3, 2008, Hochschilds Mining Holdings Limited terminated its option to acquire an interest in the project, and returned all interest in the property to the Company. The Company is still awaiting receipt of all the data generated by Hochschilds in connection with its activities on the property as required by the option agreement. However, several attempts to secure such data have been unsuccessful. In lieu of receipt of a complete dataset, Cardero geologists have begun compilation and targeting at the project. The Company anticipates that it will commence an initial work program upon the completion of the data compilation and review, but this is not anticipated to be until the third quarter of 2011.

Minas Pirquitas

On July 17, 2009, the Company and Davcha Resources Pty. Ltd. finalized the formal agreement in connection with the option to Davcha to earn a 55% interest in the property. Davcha is the operator. The Company has been advised that Davcha has agreed to option its interest in the Minas Pirquitas property, and four other properties in the same region, to Artha Resources Corporation (“Artha”). Pursuant to the Cardero/Davcha agreement, Davcha is required to incur expenditures of USD 50,000 on or before July 14, 2010 and additional expenditures of USD 950,000 on or before July 14, 2013.

Artha has provided to the Company a technical report summarizing work completed to date and recommended future work. Work completed in 2009 resulted in the identification of three priority targets: Piquitas NW, Noelia, and Pirquitas South. In 2010, additional work was carried out, including mapping, sampling and geophysical surveys. Artha reports that their total expenditure to date has reached USD 433,820.

Cardero Resource Corp.
Form 51-102F1
Management Discussion & Analysis
Year ended October 31, 2010	Page 12

The following information is taken from the Artha report, and has not been verified by the Company. Geology in the property area is dominated by Ordovician sedimentary rocks, including sandstones and slates with sericite alteration and weak disseminated pyrite sulphides. Dominant structural trends are typical of the regional setting and are dominated by north-south and north-northeast – south-southwest trending faults and folds. In addition there are west-northwest trending fractures and shears, some of which are mineralized.

In the Pirquitas NW target, there is a good correlation between mineral occurrences and intense fracturing. The prospective area (1.7km x 1.0km) is located 2.6 kilometres northwest of the Pirquitas Mine. It consists of a core area with quartz-sericite breccias, veins and stockworks. Mineralization is dominated by iron oxides in quartz veins, fractures and breccias matrix. The presence of sulphides as pyrite, chalcopyrite, galena and sphalerite has been observed in quartz stockworks, veins and abandoned informal workings.

Rock sampling results include anomalous gold (10ppb - 2100 ppb Au); silver (3ppm - 23ppm Ag); arsenic (140ppm up to >10,000ppm As); antimony (30ppm - 433ppm Sb); zinc (103ppm - 17,350ppm Zn); lead (110ppm - 5,350ppm Pb); mercury (0.12ppm - 4.0ppm Hg) and bismuth (1.11ppm - 27.9 ppm Bi).

A geophysical Induced Polarization (IP) survey was conducted at Pirquitas NW, consisting of six dipole-dipole IP lines – a total of 10.2 line kilometers. Results indicate a 40-60 mV/V chargeability anomaly, 700m x 300m in size, coincident with a moderate resistivity zone that extends to the west and northwest of the surveyed area, at depth.

The interpretation reported by the Artha consultants in the report is that the geochemical anomalies in Pirquitas NW could be part of the same hydrothermal system responsible for mineralization in Pirquitas Mine. Therefore the target could represent a potential mineralized body, although this interpretation has not been verified on the ground by Cardero geologists.

The Pirquitas Sur target area consists of two veined zones. The Olga vein is a three-metre wide, brecciated structure that extends discontinuously for 200 metres along the Pirquitas Sur Fault. Mineralization consists of iron oxide and traces of pyrite infilling open space and fracture surfaces. The geochemical sampling on this vein reported weak anomalies in some elements: Arsenic (276ppm - 680ppm As); antimony (12.8ppm - 336ppm Sb) and a single value of mercury (0.5ppm Hg). No anomalous gold, silver, tin, lead, and zinc values were reported other than two weak anomalies of gold (11ppb Au and 37ppb Au) at the west end of the Pirquitas Sur Fault. Similarly, White Quartz Manto Veins occur as discontinuous lenticular veins, concordant with bedding. The veins are composed of fractured massive white quartz with traces of pyrite and iron oxide in fractures. The geochemical sampling of these veins detected only weak anomalies in mercury (0.49ppm Hg - 1.31ppm Hg) and antimony (21.2ppm Sb - 112.0ppm Sb); the rest of the elements do not show anomalous values.

Finally, sampling at the Noelia target totalled 212 samples in a 100x100m grid plus selective sampling on structures. Noelia is interpreted as a high-level low sulphidation epithermal system, related to quartz veinlets and silicified structures, controlled by E-W and NW-SE faults and fractures, sub-parallel to the Pirquitas Mine structural system. The anomaly forms a halo of quartz-sericite and silicification in an area of approximately 1.2 x 0.8km in size; the sets of veinlets have lengths between 100 to 500m and widths from 1.0 to 5.0m. Mineralization consists mostly of iron oxides in breccia matrix and in fractures.

The geochemical sampling defines an anomalous halo of copper-zinc-lead-arsenic-antimony-mercury. This anomaly has been interpreted as a distal or higher level expression of a Pirquitas-type tin-silver mineralized system. Artha’s consultants suggest that an economic mineralization zone could be found at depths between 100 and 300m below the surface. The main anomalies values reported were: copper (130ppm Cu and 753ppm Cu); lead (102ppm to 2380ppm Pb); zinc (100ppm to 227ppm Zn); antimony (101ppm to 805ppm Sb); arsenic (107ppm to 269ppm of As) and mercury (0.11ppm to 0.61ppm Hg). There is good correlation between Au-Ag-Bi-As-Sb-Hg-Mo-S-Tl and Cu-Cd-Zn-Mn.

Cardero Resource Corp.
Form 51-102F1
Management Discussion & Analysis
Year ended October 31, 2010	Page 13

A geophysical survey was carried out in this target: 16km of IP and Resistivity lines were completed, the results outlined interesting anomalies in chargeability and resistivity down to 250m depth; it could be interpreted as a silicified and mineralized vein structures.

No additional work is proposed for the Pirquitas Sur target. Recommendations for Pirquitas North and Noelia include additional mapping, trenching, geophysics and drilling. Six drillholes are proposed for Pirquitas NW for a total of 2,280 metres. Three drillholes are proposed for Noelia for a total of 1,500 metres. The Company understands that Artha plans to proceed with the recoimmended program, but no time frame has been provided.

Qualified Person(s) and Quality Control/Quality Assurance

EurGeol Keith Henderson, Cardero’s Vice President-Exploration and a qualified person as defined by National Instrument 43-101, has supervised the preparation of the scientific and technical information that forms the basis for the mineral property disclosure in this MD&A other than with respect to the test work on the Pampa el Toro concentrate and the mineral resource estimate for Pampa el Toro and the disclosure on the Pirquitas property. Mr. Henderson is not independent of the Company, as he is an employee and holds incentive stock options.

The work programs on the Company’s properties other than Pampa el Toro are designed and are supervised by Mr. Henderson, either alone or in conjunction with independent consultants. Mr. Henderson and such consultants, as applicable, are responsible for all aspects of the work, including the quality control/quality assurance program. On-site personnel at the various projects rigorously collect and track samples which are then sealed and shipped to ALS Chemex for assay. ALS Chemex’s quality system complies with the requirements for the International Standards ISO 9001:2000 and ISO 17025: 1999. Analytical accuracy and precision are monitored by the analysis of reagent blanks, reference material and replicate samples. Quality control is further assured by the use of international and in-house standards. Blind certified reference material is inserted at regular intervals into the sample sequence by Cardero personnel in order to independently assess analytical accuracy. Finally, representative blind duplicate samples are forwarded to ALS Chemex and an ISO compliant third party laboratory for additional quality control.

Risk Factors

The Company is in the business of acquiring, exploring and, if warranted, developing and exploiting natural resource properties, primarily in Mexico, Argentina, Peru and the United States. Due to the nature of the Company’s proposed business and the present stage of exploration of its mineral properties (which are primarily early to advanced stage exploration properties and, with the exception of the Pampa el Toro Iron Sands project in Peru, with no known resources and or known reserves), the following risk factors, among others, will apply:

     Resource Exploration and Development is Generally a Speculative Business: Resource exploration and development is a speculative business and involves a high degree of risk, including, among other things, unprofitable efforts resulting both from the failure to discover mineral deposits and from finding mineral deposits which, though present, are insufficient in size and grade at the then prevailing market conditions to return a profit from production. The marketability of natural resources which may be acquired or discovered by the Company will be affected by numerous factors beyond the control of the Company. These factors include market fluctuations, the proximity and capacity of natural resource markets, government regulations, including regulations relating to prices, taxes, royalties, land use, importing and exporting of minerals and environmental protection. The exact effect of these factors cannot be accurately predicted, but the combination of these factors may result in the Company not receiving an adequate return on invested capital.

Cardero Resource Corp.
Form 51-102F1
Management Discussion & Analysis
Year ended October 31, 2010	Page 14

     There are no known reserves and, other than on the Pampa el Toro Iron Sands Project, there are no known resources, on any of the Company’s properties. The majority of exploration projects do not result in the discovery of commercially mineable deposits of ore. Substantial expenditures are required to establish ore reserves through drilling and metallurgical and other testing techniques, determine metal content and metallurgical recovery processes to extract metal from the ore, and construct, renovate or expand mining and processing facilities. No assurance can be given that any level of recovery of ore reserves will be realized or that any identified mineral deposit, even it is established to contain an estimated resource, will ever qualify as a commercial mineable ore body which can be legally and economically exploited. 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.

     Fluctuation of Commodity Prices: Even if commercial quantities of mineral deposits are discovered by the Company, there is no guarantee that a profitable market will exist for the sale of the minerals produced. The Company’s long-term viability and profitability depend, in large part, upon the market price of minerals which have experienced significant movement over short periods of time, and are affected by numerous factors beyond the control of the Company, including international economic and political trends, expectations of inflation, currency exchange fluctuations, interest rates and global or regional consumption patterns, speculative activities and increased production due to improved mining and production methods. The recent price fluctuations in the price of all commodities for which the Company is presently exploring is an example of a situation over which the Company has no control and may materially adversely affect the Company in a manner that it may not be able to compensate for. The supply of and demand for minerals are affected by various factors, including political events, economic conditions and production costs in major producing regions. There can be no assurance that the price of any minerals produced from the Company’s properties will be such that any such deposits can be mined at a profit.

     Recent market events and conditions: From 2007 into early 2010, the U.S. credit markets have experienced serious disruption due to a deterioration in residential property values, defaults and delinquencies in the residential mortgage market (particularly, sub-prime and non-prime mortgages) and a decline in the credit quality of mortgage backed securities. These problems have led to a slow-down in residential housing market transactions, declining housing prices, delinquencies in non-mortgage consumer credit and a general decline in consumer confidence. These conditions caused a loss of confidence in the broader U.S. and global credit and financial markets and resulting in the collapse of, and government intervention in, major banks, financial institutions and insurers and creating a climate of greater volatility, less liquidity, widening of credit spreads, a lack of price transparency, increased credit losses and tighter credit conditions. Notwithstanding various actions by the U.S. and foreign governments, concerns about the general condition of the capital markets, financial instruments, banks, investment banks, insurers and other financial institutions caused the broader credit markets to further deteriorate and stock markets to decline substantially. In addition, general economic indicators have deteriorated, including declining consumer sentiment, increased unemployment and declining economic growth and uncertainty about corporate earnings.

     While these conditions appear to have improved slightly in later 2010, unprecedented disruptions in the credit and financial markets have had a significant material adverse impact on a number of financial institutions and have limited access to capital and credit for many companies. These disruptions could, among other things, make it more difficult for the Company to obtain, or increase its cost of obtaining, capital and financing for its operations. The Company’s access to additional capital may not be available on terms acceptable to it or at all.

Cardero Resource Corp.
Form 51-102F1
Management Discussion & Analysis
Year ended October 31, 2010	Page 15

     General Economic Conditions: The recent unprecedented events in global financial markets have had a profound impact on the global economy. Many industries, including the gold and base metal mining industry, are impacted by these market conditions. Some of the key impacts of the current financial market turmoil include contraction in credit markets resulting in a widening of credit risk, devaluations and high volatility in global equity, commodity, foreign exchange and precious metal markets, and a lack of market liquidity. A continued or worsened slowdown in the financial markets or other economic conditions, including but not limited to, consumer spending, employment rates, business conditions, inflation, fuel and energy costs, consumer debt levels, lack of available credit, the state of the financial markets, interest rates, and tax rates may adversely affect the Company’s growth and profitability. Specifically:

• The global credit/liquidity crisis could impact the cost and availability of financing and the Company’s overall liquidity

• the volatility of gold and other base metal prices may impact the Company’s future revenues, profits and cash flow

• volatile energy prices, commodity and consumables prices and currency exchange rates impact potential production costs

• the devaluation and volatility of global stock markets impacts the valuation of the Company’s common shares (“Common Shares”), which may impact the Company’s ability to raise funds through the issuance of Common Shares

These factors could have a material adverse effect on the Company’s financial condition and results of operations.

     Share Price Volatility: In 2008 and 2009, worldwide securities markets, particularly those in the United States and Canada, have experienced a high level of price and volume volatility, and the market price of securities of many companies, particularly those considered exploration or development stage companies, have experienced unprecedented fluctuations in price which have not necessarily been related to the operating performance, underlying asset values or prospects of such companies. Most significantly, the share prices of junior natural resource companies have experienced an unprecedented decline in value and there has been a significant decline in the number of buyers willing to purchase such securities. In addition, significantly higher redemptions by holders of mutual funds has forced many of such funds (including those holding the Company’s securities) to sell such securities at any price. As a consequence, despite the Company’s past success in securing significant equity financing, market forces may render it difficult or impossible for the Company to secure placees to purchase new share issues at a price which will not lead to severe dilution to existing shareholders, or at all.

Therefore, there can be no assurance that significant fluctuations in the trading price of the Company’s common shares will not occur, or that such fluctuations will not materially adversely impact on the Company’s ability to raise equity funding without significant dilution to its existing shareholders, or at all.

     Permits and Licenses: The operations of the Company will require licenses and permits from various governmental authorities. There can be no assurance that the Company will be able to obtain all necessary licenses and permits that may be required to carry out exploration, development and mining operations at its projects, on reasonable terms or at all. Delays or a failure to obtain such licenses and permits, or a failure to comply with the terms of any such licenses and permits that the Company does obtain, could have a material adverse effect on the Company.

Cardero Resource Corp.
Form 51-102F1
Management Discussion & Analysis
Year ended October 31, 2010	Page 16

     Acquisition of Mineral Properties under Agreements: The agreements pursuant to which the Company has the right to acquire a number of its properties provide that the Company must make a series of cash payments and/or share issuances over certain time periods, expend certain minimum amounts on the exploration of the properties or contribute its share of ongoing expenditures. Failure by the Company to make such payments, issue such shares or make such expenditures in a timely fashion may result in the Company losing its interest in such properties. There can be no assurance that the Company will have, or be able to obtain, the necessary financial resources to be able to maintain all of its property agreements in good standing, or to be able to comply with all of its obligations thereunder, with the result that the Company could forfeit its interest in one or more of its mineral properties.

     Title Matters: The acquisition of title to mineral properties in Mexico, Peru and Argentina is a very detailed and time-consuming process. Title to, and the area of, mineral concessions may be disputed. While the Company has diligently investigated title to all mineral properties in which it has an interest and, to the best of its knowledge, title to all such properties is in good standing or, where not yet granted, the application process appears to be proceeding normally in all the circumstances, this should not be construed as a guarantee of title or that any such applications for concessions will be granted. Title to mineral properties may be affected by undetected defects such as aboriginal or indigenous peoples’ land claims, or unregistered agreements or transfers. The Company has not obtained title opinions for the majority of its mineral properties. Not all the mineral properties in which the Company has an interest have been surveyed, and their actual extent and location may be in doubt.

     Surface Rights and Access: Although the Company acquires the rights to some or all of the minerals in the ground subject to the mineral tenures that it acquires, or has a right to acquire, in most cases it does not thereby acquire any rights to, or ownership of, the surface to the areas covered by its mineral tenures. In such cases, applicable mining laws usually provide for rights of access to the surface for the purpose of carrying on mining activities, however, the enforcement of such rights through the courts can be costly and time consuming. It is necessary to negotiate surface access or to purchase the surface rights if long-term access is required. There can be no guarantee that, despite having the right at law to access the surface and carry on mining activities, the Company will be able to negotiate satisfactory agreements with any such existing landowners/occupiers for such access or purchase of such surface rights, and therefore it may be unable to carry out planned mining activities. In addition, in circumstances where such access is denied, or no agreement can be reached, the Company may need to rely on the assistance of local officials or the courts in the applicable jurisdiction, the outcomes of which cannot be predicted with any certainty. The inability of the Company to secure surface access or purchase required surface rights could materially and adversely affect the timing, cost or overall ability of the Company to develop any mineral deposits it may locate. This is a particular problem in many areas of Mexico, Argentina and Peru, where blockades of access to the Company’s properties, hostile actions by local communities and the potential unwillingness of local police or governmental officials to assist a foreign company against its own citizens can result in the Company being unable to carry out any exploration activities despite being legally authorized to do so and having complied with all applicable local laws and requirements.

     No Assurance of Profitability: The Company has no history of production or earnings and due to the nature of its business there can be no assurance that the Company will be profitable. The Company has not paid dividends on its shares since incorporation and does not anticipate doing so in the foreseeable future. All of the Company’s properties are in the exploration stage and the Company has not defined or delineated any proven or probable reserves on any of its properties. None of the Company’s properties are currently under development. Continued exploration of its existing properties and the future development of any properties found to be economically feasible, will require significant funds. The only present source of funds available to the Company is through the sale of its equity securities or the sale or optioning of a portion of its interest in its mineral properties. Even if the results of exploration are encouraging, the Company may not have sufficient funds to conduct the further exploration that may be necessary to determine whether or not a commercially mineable deposit exists. While the Company may generate additional working capital through further equity offerings or through the sale or possible syndication of its properties, there is no assurance that any such funds will be available on favourable terms, or at all. At present, it is impossible to determine what amounts of additional funds, if any, may be required. Failure to raise such additional capital could put the continued viability of the Company at risk.

Cardero Resource Corp.
Form 51-102F1
Management Discussion & Analysis
Year ended October 31, 2010	Page 17

     Uninsured or Uninsurable Risks: Exploration, development and mining operations involve various hazards, including environmental hazards, industrial accidents, metallurgical and other processing problems, unusual or unexpected rock formations, structural cave-ins or slides, flooding, fires, metal losses and periodic interruptions due to inclement or hazardous weather conditions. These risks could result in damage to or destruction of mineral properties, facilities or other property, personal injury, environmental damage, delays in operations, increased cost of operations, monetary losses and possible legal liability. The Company may not be able to obtain insurance to cover these risks at economically feasible premiums or at all. The Company may elect not to insure where premium costs are disproportionate to the Company’s perception of the relevant risks. The payment of such insurance premiums and of such liabilities would reduce the funds available for exploration and production activities.

     Government Regulation: Any exploration, development or mining operations carried on by the Company will be subject to government legislation, policies and controls relating to prospecting, development, production, environmental protection, mining taxes and labour standards. The Company cannot predict whether or not such legislation, policies or controls, as presently in effect, will remain so, and any changes therein (for example, significant new royalties or taxes), which are completely outside the control of the Company, may materially adversely affect to ability of the Company to continue its planned business within any such jurisdictions.

     Foreign Countries and Political Risk: The Company has mineral properties located in Peru, Argentina, Mexico and the United States. In such countries, mineral exploration and mining activities may be affected in varying degrees by political or economic instability, expropriation of property and changes in government regulations such as tax laws, business laws, environmental laws and mining laws. Any changes in regulations or shifts in political conditions are beyond the control of the Company and may materially adversely affect it business, or if significant enough, may make it impossible to continue to operate in certain countries. Operations may be affected in varying degrees by government regulations with respect to restrictions on production, price controls, foreign exchange restrictions, export controls, income taxes, expropriation of property, environmental legislation and mine safety.

     Dependence Upon Others and Key Personnel: The success of the Company’s operations will depend upon numerous factors, many of which are beyond the Company’s control, including (i) the ability of the Company to enter into strategic alliances through a combination of one or more joint ventures, mergers or acquisition transactions; and (ii) the ability to attract and retain additional key personnel in exploration, mine development, sales, marketing, technical support and finance. These and other factors will require the use of outside suppliers as well as the talents and efforts of the Company. There can be no assurance of success with any or all of these factors on which the Company’s operations will depend. The Company has relied and may continue to rely, upon consultants and others for operating expertise.

     Exploration and Mining Risks: Fires, power outages, labour disruptions, flooding, explosions, cave-ins, landslides and the inability to obtain suitable or adequate machinery, equipment or labour are other risks involved in the operation of mines and the conduct of exploration programs. Substantial expenditures are required to establish reserves through drilling, to develop metallurgical processes, to develop the mining and processing facilities and infrastructure at any site chosen for mining. Although substantial benefits may be derived from the discovery of a major mineralized deposit, no assurance can be given that minerals will be discovered in sufficient quantities to justify commercial operations or that funds required for development can be obtained on a timely basis. The economics of developing mineral properties is affected by many factors including the cost of operations, variations of the grade of ore mined, fluctuations in the price of gold or other minerals produced, costs of processing equipment and such other factors as government regulations, including regulations relating to royalties, allowable production, importing and exporting of minerals and environmental protection. In addition, the grade of mineralization ultimately mined may differ from that indicated by drilling results and such differences could be material. Short term factors, such as the need for orderly development of ore bodies or the processing of new or different grades, may have an adverse effect on mining operations and on the results of operations. There can be no assurance that minerals recovered in small scale laboratory tests will be duplicated in large scale tests under on-site conditions or in production scale operations. Material changes in geological resources, grades, stripping ratios or recovery rates may affect the economic viability of projects.

Cardero Resource Corp.
Form 51-102F1
Management Discussion & Analysis
Year ended October 31, 2010	Page 18

     Currency Fluctuations: The Company presently maintains its accounts in Canadian dollars. Due to the nature of its operations in such countries, the Company also maintains accounts in U.S. dollars, Mexican and Argentinean pesos and Peruvian nuevo soles. The Company’s operations in the United States, Mexico, Argentina and Peru and its proposed payment commitments and exploration expenditures under many of the agreements pursuant to which it holds, or has a right to acquire, an interest in its mineral properties are denominated in U.S. dollars, making it subject to foreign currency fluctuations. Such fluctuations are out of its control and may materially adversely affect the Company’s financial position and results. The Company does not engage in any hedging programs with respect to currencies.

     Environmental Restrictions: The activities of the Company are subject to environmental regulations promulgated by government agencies in different countries from time to time. Environmental legislation generally provides for restrictions and prohibitions on spills, releases or emissions into the air, discharges into water, management of waste, management of hazardous substances, protection of natural resources, antiquities and endangered species and reclamation of lands disturbed by mining operations. Certain types of operations require the submission and approval of environmental impact assessments. Environmental legislation is evolving in a manner which means stricter standards, and enforcement, fines and penalties for non-compliance are more stringent. Environmental assessments of proposed projects carry a heightened degree of responsibility for companies and directors, officers and employees. The cost of compliance with changes in governmental regulations has a potential to reduce the profitability of operations.

     Regulatory Requirements: The activities of the Company are subject to extensive regulations governing various matters, including environmental protection, management and use of toxic substances and explosives, management of natural resources, exploration, development of mines, production and post-closure reclamation, exports, price controls, taxation, regulations concerning business dealings with indigenous peoples, labour standards on occupational health and safety, including mine safety, and historic and cultural preservation. Failure to comply with applicable laws and regulations may result in civil or criminal fines or penalties, enforcement actions thereunder, including orders issued by regulatory or judicial authorities causing operations to cease or be curtailed, and may include corrective measures requiring capital expenditures, installation of additional equipment, or remedial actions, any of which could result in the Company incurring significant expenditures. The Company may also be required to compensate those suffering loss or damage by reason of a breach of such laws, regulations or permitting requirements. It is also possible that future laws and regulations, or more stringent enforcement of current laws and regulations by governmental authorities, could cause additional expense, capital expenditures, restrictions on or suspension of the Company’s operations and delays in the exploration and development of the Company’s properties.

     Limited Experience with Development-Stage Mining Operations: The Company has limited experience in placing resource properties into production, and its ability to do so will be dependent upon using the services of appropriately experienced personnel or entering into agreements with other major resource companies that can provide such expertise. There can be no assurance that the Company will have available to it the necessary expertise when and if it places its resource properties into production.

Cardero Resource Corp.
Form 51-102F1
Management Discussion & Analysis
Year ended October 31, 2010	Page 19

     Estimates of Mineral Reserves and Resources and Production Risks: The mineral resource estimates presented in the Company’s filings with securities regulatory authorities, press releases and other public statements that may be made from time to time are based upon estimates made by Company personnel and independent geologists, and no assurance can be given that any particular level of recovery of minerals will in fact be realized or that an identified reserve or resource will ever qualify as a commercially mineable (or viable) deposit which can be legally and economically exploited. The estimating of mineral resources and mineral reserves is a subjective process and the accuracy of mineral resource and mineral reserve estimates is a function of the quantity and quality of available data, the accuracy of statistical computations, and the assumptions used and judgments made in interpreting available engineering and geological information. There is significant uncertainty in any mineral resource or mineral reserve estimate and the actual deposits encountered and the economic viability of a deposit may differ materially from the Company’s estimates. Accordingly, there can be no assurance that:

• these estimates will be accurate;

• reserves, resource or other mineralization figures will be accurate; or

• this mineralization could be mined or processed profitably.

Because the Company has not commenced production at any of its properties, and has not defined or delineated any proven or probable reserves on any of its properties, mineralization estimates for the Company’s properties may require adjustments or downward revisions based upon further exploration or development work or actual production experience. In addition, the grade of mineralization ultimately mined may differ from that indicated by drilling results and such differences could be material. There can be no assurance that minerals recovered in small-scale tests will be duplicated in large-scale tests under on-site conditions or in production scale. Production can be affected by such factors as permitting regulations and requirements, weather, environmental factors, unforeseen technical difficulties, unusual or unexpected geological formations and work interruptions. Short term factors, such as the need for orderly development of deposits or the processing of new or different grades, may have a material adverse effect on mining operations and on the results of operations. There can be no assurance that minerals recovered in small scale laboratory tests will be duplicated in large scale tests under on-site conditions or in production scale operations. Material changes in reserves or resources, grades, stripping ratios or recovery rates may affect the economic viability of projects. The estimated resources described in the Company’s filings with securities regulatory authorities, press releases and other public statements that may be made from time to time should not be interpreted as assurances of mine life or of the profitability of future operations. Estimated mineral resources and mineral reserves may have to be re-estimated based on changes in applicable commodity prices, further exploration or development activity or actual production experience. This could materially and adversely affect estimates of the volume or grade of mineralization, estimated recovery rates or other important factors that influence mineral resource or mineral reserve estimates. Market price fluctuations for gold, silver or base metals, increased production costs or reduced recovery rates or other factors may render any particular reserves uneconomical or unprofitable to develop at a particular site or sites. A reduction in estimated reserves could require material write downs in investment in the affected mining property and increased amortization, reclamation and closure charges.

     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. The failure to establish proven and probable reserves could restrict the Company’s ability to successfully implement its strategies for long-term growth.

     Enforcement of Civil Liabilities: As most of the assets of the Company and its subsidiaries are located outside of Canada and the United States, and certain of the directors and officers of the Company are resident outside of Canada and/or the United States, it may be difficult or impossible to enforce judgements granted by a court in Canada or the United States against the assets of the Company and its subsidiaries or the directors and officers of the Company residing outside of such country.

Cardero Resource Corp.
Form 51-102F1
Management Discussion & Analysis
Year ended October 31, 2010	Page 20

     Mining Industry is Intensely Competitive: The Company’s business of the acquisition, exploration and development of mineral properties is intensely competitive. The Company may be at a competitive disadvantage in acquiring additional mining properties because it must compete with other individuals and companies, many of which have greater financial resources, operational experience and technical capabilities than the Company. The Company may also encounter increasing competition from other mining companies in efforts to hire experienced mining professionals. Competition for exploration resources at all levels is currently very intense, particularly affecting the availability of manpower, drill rigs and helicopters. Increased competition could adversely affect the Company’s ability to attract necessary capital funding or acquire suitable producing properties or prospects for mineral exploration in the future.

     The Company may be a “passive foreign investment company” under the U.S. Internal Revenue Code, which may result in material adverse U.S. federal income tax consequences to investors in Common Shares that are U.S. taxpayers: Investors in Common Shares that are U.S. taxpayers should be aware that Cardero believes that it has been in one or more prior tax years, and may be in current and future tax years, a “passive foreign investment company” under Section 1297(a) of the U.S. Internal Revenue Code (a “PFIC”). However, no determination has been made regarding Cardero’s PFIC status for any particular tax year. If Cardero is or becomes a PFIC, generally any gain recognized on the sale of the Common Shares and any “excess distributions” (as specifically defined) paid on the Common Shares must be rateably allocated to each day in a U.S. taxpayer’s holding period for the Common Shares. The amount of any such gain or excess distribution allocated to prior years of such U.S. taxpayer’s holding period for the Common Shares generally will be subject to U.S. federal income tax at the highest tax applicable to ordinary income in each such prior year, and the U.S. taxpayer will be required to pay interest on the resulting tax liability for each such prior year, calculated as if such tax liability had been due in each such prior year. The amount of any such gain or excess distribution allocated to the tax year of disposition or distribution of the excess distribution and to years before the entity became a PFIC, if any, would be taxed as ordinary income.

Alternatively, a U.S. taxpayer that makes a “qualified electing fund” (a “QEF”) election with respect to Cardero generally will be subject to U.S. federal income tax on such U.S. taxpayer’s pro rata share of Cardero’s “net capital gain” and “ordinary earnings” (as specifically defined and calculated under U.S. federal income tax rules), regardless of whether such amounts are actually distributed by Cardero. U.S. taxpayers should be aware, however, that there can be no assurance that Cardero will satisfy record keeping requirements under the QEF rules or that Cardero will supply U.S. taxpayers with required information under the QEF rules, if Cardero is a PFIC and a U.S. taxpayer wishes to make a QEF election. As a second alternative, a U.S. taxpayer may make a “mark-to-market election” if Cardero is a PFIC and the Common Shares are “marketable stock” (as specifically defined). A U.S. taxpayer that makes a mark-to-market election generally will include in gross income, for each taxable year in which Cardero is a PFIC, an amount equal to the excess, if any, of (a) the fair market value of the Common Shares as of the close of such taxable year over (b) such U.S. taxpayer’s adjusted tax basis in the Common Shares.

The above paragraphs contain only a brief summary of certain U.S. federal income tax considerations. Investors should consult their own tax advisor regarding the PFIC rules and other U.S. federal income tax consequences of the acquisition, ownership, and disposition of Common Shares.

RESULTS OF OPERATIONS

During the year ended October 31, 2010, the Company had net income $44,950,970 or $0.77 per share as compared to a net loss of ($254,628) or $0.01 per share for 2009 and ($15,829,662) or $0.29 in 2008.

Cardero Resource Corp.
Form 51-102F1
Management Discussion & Analysis
Year ended October 31, 2010	Page 21

The following discussion explains the variations in the key components of these numbers but, as with most junior mineral exploration companies, the results of operations are not the main factor in establishing the financial health of the Company. Of far greater significance are the mineral properties in which the Company has, or may earn, an interest, its working capital and how many shares it has outstanding. Quarterly results can vary significantly depending on whether the Company has abandoned any properties or granted any stock options.

	2010	2009		2008
Net income (loss) for the year	44,950,970	(254,628	)	(15,829,662	)
Net income (loss) per share	0.77	(0.01	)	(0.29	)
Interest income	36	24,575		92,501
General & administrative costs	8,919573	6,922,387		8,999,874
Stock-based compensation component	1,695,941	1,192,109		3,789,920
Write-down of resource properties	8,498,083	3,070,287		5,366,125

Year ended October 31, 2010 compared to year ended October 31, 2009

In the year ended October 31, 2010, the Company had a net income of $44,950,970 compared to a net loss of $254,628 for the year ended October 31, 2009. The following discussion explains the variations in key components of these numbers.

During the year ended October 31, 2010, payments received of $93,607,400 (USD 88,000,000) from the sale of Pampa de Pongo property were recognized in other income, net of related property costs of $645,276 and transaction costs of $5,234,967 for a gain of $87,727,517 (2009 - $8,597,655, 2008 - $nil) and before applicable income taxes.

The Company’s general and administrative costs were $8,919,573, compared to $6,922,387 in 2009. The major expense categories involved in this increase were consulting fees of $1,828,250 (2009 - $1,276,789), salaries of $3,238,965 (2009 - $2,215,861) and investor relations of $1,184,166 (2009 - $601,191). All of these categories were affected by $811,000 in bonuses paid to its directors ($93,600), employees ($687,400) and consultants ($30,000) during the year versus $Nil in the comparative period.

Consulting fees primarily increased due to:

i)	personnel costs in Peru have been recorded in consulting in 2010 ($523,020) whereas in 2009 similar costs of $450,807 were recorded as salaries;
ii)	stock-based compensation charges of $217,132 (2009 - $492,953);
iii)	additional consultants at head office which accounts for $339,426 of increased cost; and
iv)	a bonus allocation of $30,000.

Salary costs primarily increased due to:

i)	a $458,083 increase in stock-based compensation on options granted to employees (2010 - $1,106,844, 2009 - $648,761);
ii)	a bonus allocation of $781,000 in fiscal 2010;
iii)	a net decrease of approximately $134,000 in salaries attributable to the subsidiaries; and
iv)	a net decrease due to the reclassification of personnel costs in Peru referred to above.

Cardero Resource Corp.
Form 51-102F1
Management Discussion & Analysis
Year ended October 31, 2010	Page 22

Investor relations primarily increased due to:

i)	a $321,570 increase in stock-based compensation on options granted (2010 - $371,965, 2009 - $50,395);
ii)	an increase in Company promotion costs of $193,832 (2010 – $226,668, 2009 - $32,836); and
iii)	an increase in travel and trade show activity of approximately $86,378.

Office expenses primarily increased due to:

i)	an upgrade of computer equipment of approximately $60,000 in 2010;
ii)	donations of $68,500 in 2010 ($6,200 in 2009);
iii)	a rent increase $45,229 (2010 – $143,423, 2009 - $98,194);
iv)	a general increase in head office costs not recovered from affiliated companies, together with bank transaction charges in Peru associated with the increase in funds on deposit there.

During the year ended October 31, 2010, the Company wrote off the property costs related to the Baja IOCG project, Mexico, in the amount of $8,498,083 (2009 - $3,070,287 the Chingolo and Huachi in Argentina as well as Amable Maria in Peru) as a result of disappointing exploration results to date.

Other gain (loss) items also include an unrealized gain (loss) of $1,346,746 (2009 - $349,424, 2008 - $(1,800,000)) in derivative investments, being the fair value of share purchase warrants, together with a loss of $483,461 (2009 - $795,000, 2008 - $Nil) relating to losses associated with investments accounted for using the equity method (2010 - Coalhunter and Abzu; 2009 – IMMG).

A significant portion of the cash the Company held during 2010 was in US dollars in Peru. Due to the substantial volatility of currency values during the period, the Company recognized a $3,832,001 foreign exchange loss (2009 – a loss of $418,566), of which $2,877,426 was unrealized (2009 - $32,360).

During the fiscal year ended October 31, 2010, the Company realized $939,651 of investment income from sales of ITH (99,000 shares), Trevail (155,000 shares), Corvus (1,414,900 shares), and Dorato (225,000 shares) common shares, versus an investment income of $2,718,254 on the sale of ITH (1,481,800 shares) and Wealth (2,580,500 shares) in 2009 and investment income of $258,920 in 2008.

Three months ended October 31, 2010 compared to three months ended October 31, 2009

During the three months ended October 31, 2010, the Company had a net income of $834,517 compared to a net loss of $1,840,937 for the three months ended October 31, 2009.

General and administrative expenses remained comparable in total (2010 - $2,073,166, 2009 - $2,062,086), however, the undernoted variances occurred in individual categories:

• Salary costs increased to $710,000 (2009 - $478,300) as the 2009 figure had been reduced by the impact of cost recoveries at the Company’s US subsidiaries which did not recur in 2010;

• Consulting fees decreased to $448,982 (2009 - $465,664) primarily due to stock based compensation which impacted 2009 but not the current quarter, offset by the reclassification of personnel costs in Peru and additional consulting costs at the head office;

Cardero Resource Corp.
Form 51-102F1
Management Discussion & Analysis
Year ended October 31, 2010	Page 23

• Professional fees increased to $317,182 (2009 - $185,445) due to quarterly auditor review of financial statements and increased audit costs; and

• The Company incurred bad debt expense of $468,099 in 2009 that did not recur in the current quarter.

Other items showed a gain of $1,007,443 in the current quarter versus a loss of $1,012,226 in the comparable quarter of 2009. Significant areas of change include:

• Foreign exchange resulted in a loss of $325,266 (2009 – ($15,161)) compared to a small gain the previous year;

• Realized gains from the sale of available-for-sale investments were $641,042 (2009 - $335,765);

• Resource property write-offs amounts to $17,195 (2009 - $473,795);

• Unrealized gains on derivative investments (warrants) were $1,140,163 (2009 - $Nil); and

• Losses on investments accounted for using the equity method were $463,337 (2009 - $778, 825).

SUMMARY OF QUARTERLY RESULTS

The table below sets out the quarterly results, expressed in Canadian dollars, for the past three fiscal years:

Fiscal 2010

		First Quarter			Second Quarter			Third Quarter			Fourth Quarter
Total revenue	$	411		$	(993	)		426			192
Gain (loss) on resource property transactions		89,406,016			(780,415	)		(891,388	)		(7,056	)
Gain on sale of investments		136,092			162,517			-			641,042
Net income (loss)		62,261,575			(14,053,095	)		(4,092,028	)		834,517
Net income per share		1.06			(0.24	)		(0.07	)		0.01
Comprehensive income (loss)		69,081,221			(11,456,150	)		(6,854,748	)		11,404,744
Fiscal 2009
		First Quarter			Second Quarter			Third Quarter			Fourth Quarter
Total revenue	$	7,131		$	5,446		$	(135	)		12,133
Gain (loss) on resource property transactions		-			-			8,731,350			(133,695	)
Gain on sale of investment		660,103			1,722,356			-			335,795
Net income (loss)		(2,997,821	)		193,054			4,391,076			(1,840,937	)
Net loss per share		(0.05	)		0.00			0.08			(0.03	)
Comprehensive income (loss)		1,400,502			(671,416	)		6,506,293			2,895,749
Fiscal 2008
		First Quarter			Second Quarter			Third Quarter			Fourth Quarter
Total revenue	$	3,593		$	17,427		$	14,721		$	56,760
Gain on sale of investment		-			66,963			81,014			110,943
Net income (loss)		(1,788,629	)		(3,834,843	)		(3,744,818	)		(6,461,372	)
Net loss per share		(0.04	)		(0.07	)		(0.07	)		(0.11	)
Comprehensive income (loss)		(1,058,629	)		(7,285,919	)		(2,259,782	)		(7,299,592	)

Notes:

1)	There were no discontinued operations or extraordinary items in the periods under review.
2)	The basic and diluted losses per share were the same in each of the periods.

Cardero Resource Corp.
Form 51-102F1
Management Discussion & Analysis
Year ended October 31, 2010	Page 24

The variation seen over such quarters is primarily dependent upon the success of the Company’s ongoing property evaluation program and the timing and results of the Company’s exploration activities on its then current properties, none of which are possible to predict with any accuracy. There are no general trends regarding the Company’s quarterly results, and the Company’s business of mineral exploration is not seasonal. Quarterly results can vary significantly depending on whether the Company has abandoned any properties or granted any stock options or paid any employee bonuses and these are the factors that account for material variations in the Company’s quarterly net losses, none of which are predictable. In addition, results in fiscal 2010 were significantly influenced by the one-time sale of the Pampa de Pongo property. While the Company may seek, in the future, to sell some or all of the interests in other of its mineral properties, the timing and potential effect of any such sale is impossible to predict. The write-off of mineral properties can have a material effect on quarterly results as and when they occur. Another factor which can cause a material variation in net loss on a quarterly basis is the grant of stock options due to the resulting stock-based compensation charges which can be significant when they arise. The payment of employee bonuses (which tend to be awarded in July), being once-yearly charges, can also materially affect operating losses for the quarters in which they occur. General operating costs other than the specific items noted above tend to be quite similar from period to period. The variation in income is related solely to the interest earned on funds held by the Company, which is dependent upon the success of the Company in raising the required financing for its activities which will vary with overall market conditions, and is therefore difficult to predict.

LIQUIDITY AND CAPITAL RESOURCES

The Company has no revenue generating operations from which it can internally generate funds. To date, the Company’s ongoing operations have been predominantly financed by the sale of its equity securities by way of private placements and the subsequent exercise of share purchase warrants and broker options issued in connection with such private placements. However, the exercise of warrants/options is dependent primarily on the market price and overall market liquidity of the Company’s securities at or near the expiry date of such warrants/options (over which the Company has no control) and therefore there can be no guarantee that any existing warrants/options will be exercised. In addition, the Company can raise funds through the sale of interests in its mineral properties (as, for example, with the sale of the Pampa de Pongo project). The Company has completed the sale of Pampa de Pongo, and received the final payment of USD 88 million on account of the USD 100 million purchase price in the fiscal year ending October 31, 2010, which raised $88,372,433 net of costs.

The Company expects that it will operate at a loss for the foreseeable future, notwithstanding the income recognized on the Pampa de Pongo transaction in the third quarter of fiscal 2009 and in the first quarter of fiscal 2010. The Company currently has no funding commitments or arrangements for additional financing at this time (other than the potential exercise of outstanding options or warrants or the sale of some or all of its investments) and there is no assurance that the Company will be able to obtain additional financing on acceptable terms, if at all. There is significant uncertainty that the Company will be able to secure any additional financing required for the development of any of its mineral properties, or to develop any advanced properties that it may acquire. The quantity of funds to be raised and the terms of any proposed equity financing that may be undertaken will be negotiated by management as opportunities to raise funds arise. Specific plans related to the use of proceeds will be devised once financing has been completed and management knows what funds will be available for these purposes.

As at October 31, 2010, the Company reported cash and cash equivalents of $52,264,003 compared to $61,804,055 at July 31, 2010 and $5,823,196 as at October 31, 2009. The change in cash over the year is comprised of funds provided from investing activities of $60,525,140 (principally from the proceeds of the Pampa de Pongo transaction), less $10,923,832 used in operations and $283,075 used in financing activities due to the normal course issuer bid. As at October 31, 2010, the Company had working capital of $26,549,076, compared to working capital of $36,026,076 at July 31, 2010 and $3,803,620 at October 31, 2009.

Cardero Resource Corp.
Form 51-102F1
Management Discussion & Analysis
Year ended October 31, 2010	Page 25

The Company has no exposure to any asset-backed commercial paper. Other than cash held by its subsidiaries for their immediate operating needs in the United States, Mexico, Peru and Argentina, all of the Company’s cash reserves are on deposit with major financial institutions or invested in Government of Canada Treasury Bills or Banker’s Acceptances issued by major Canadian chartered banks. The Company does not believe that the credit, liquidity or market risks with respect thereto have increased as a result of the current market conditions. However, in order to achieve greater security for the preservation of its capital, the Company has, of necessity, been required to accept lower rates of interest which has also lowered its potential interest income.

The following table discloses the Company’s contractual obligations for mineral property lease and option payments and committed operating lease obligations. The Company does not have any long-term debt or loan obligations. Under the terms of certain option agreements and mineral property leases, the Company is required to make certain scheduled acquisition payments, incur certain levels of expenditures, and make lease and/or advance royalty payments as summarized in the table below in order to maintain and preserve the Company’s interests in the related mineral properties. If the Company is unable or unwilling to make any such payments or incur such expenditures, the Company would lose or forfeit its rights to acquire or hold the related mineral properties. However, such payments are optional, and the Company can choose not to make such payments.

Contractual Obligations	Payments Due by Period(3 )
	Total	Prior to October 31,	November 1,	November 1, 2014
		2011(9 months)	2011 to October	to October 31,
			31, 2014 (36	2017 (36 months)
			months)
Mineral Property Leases/Options(1)(2)	6,415,800	52,800	6,171,000	192,000
Operating Lease Obligations	3,164,540	681,794	1,473,088	1,009,658
Total Contractual Obligations	9,580,340	734,594	7,644,088	1,201,658

Notes:

1.	Does not include required work expenditures, as it is assumed that the required expenditure level is significantly below the work which will actually be carried out by the Company.
2.	Does not include potential royalties that may be payable (other than annual minimum royalty payments).
3.	Assumes CAD and USD at par.

OFF BALANCE-SHEET ARRANGMENTS

The Company has no off-balance sheet arrangements.

TRANSACTIONS WITH RELATED PARTIES

		2010		2009
Consulting fees	$	224,159	$	90,000
Professional fees	$	87,056	$	136,425

Cardero Resource Corp.
Form 51-102F1
Management Discussion & Analysis
Year ended October 31, 2010	Page 26

At October 31, 2010, there was $7,700 (2009 - $18,900) included in accounts payable and accrued liabilities. Professional fees include amounts paid to a law firm of which a director is a shareholder.

Amounts due from related parties are comprised as follows:

		2010		2009
Unsecured promissory notes, 1% per annum, due the earlier of 30 days after demand or the due date, if applicable:
Trevali Resource Corp.	$	78,227	$	290,003
Wealth Minerals Ltd.		305,871		121,393
Dorato Resources Inc.		143,193		25,490
Indico Resources Ltd.		468,819		418
Abzu Resources Ltd.		208,345		-
International Minerals & Mines Ltd.		18,820		-
Directors, employees and other		138,275		150,652
	$	1,361,550	$	587,956

The Company recovered $894,131 during the year ended October 31, 2010 (2009 - $764,875) in rent and administration costs from Wealth Minerals Ltd. (“Wealth”), International Tower Hill Mines Ltd. (“ITH”), Dorato Resources Inc. (“Dorato”), Indico Resources Ltd. (“Indico”), Trevali Resources Corp. (“Trevali”), Balmoral Resources Ltd. (“Balmoral”), Abzu Gold Ltd. (“Abzu”), and Lawrence W. Talbot Law Corporation (“LWTLC”), companies with common officers or directors.

These charges were measured by the exchange amount, which is the amount agreed upon by the transacting parties.

Mr. Stephan Fitch, a director of the Company, is a director and significant shareholder of a private company which is the major shareholder (67%) of International Minerals and Mines Ltd. (“IMM”). The Company has a 15% interest in IMM Gold Limited (“IMMG”) (a subsidiary of IMM) which was purchased from IMM. This transaction was approved by the Company’s audit committee and board of directors (other than Mr. Fitch, who abstained from voting in each case). The Company has determined that it has an obligation to issue an additional 214,843 common shares to IMM pursuant to the acquisition of its initial 15% investment in IMMG, the final issuance of which is currently the subject of on-going negotiations with IMM. The Company determined not to acquire an additional 15% interest in IMMG and did not therefore issue the additional 1,000,000 common shares on or before December 31, 2009.

Effective October 1, 2005, the Company retained Mr. Carlos Ballon of Lima, Peru, to provide management services on behalf of the Company in Peru through his private Peruvian company, Minera Koripampa del Peru S.A. (“Koripampa”), for a fee of USD 10,000 per month (reduced to USD 7,500 per month starting from March 2007), which has been expensed to consulting fees. Mr. Ballon became President of Cardero Peru S.A. (“Cardero Peru”) in April 2006. Accordingly, Mr. Ballon is a related party with respect to the Company. Prior to Mr. Ballon becoming a related party, the Company entered into a number of mineral property acquisition/option agreements with either Koripampa or Sudamericana de Metales Peru S.A., another private Peruvian company controlled by Mr. Ballon. Such property transactions include those with respect to the Carbonera and Daniella Properties, the Pampa de Pongo Property, the Katanga Property and the Corongo Property.

The presidents of Minerales y Metales California S.A.C. (“MMC”) and Cardero Argentina S.A. (“Cardero Argentina”) provide management services for USD 3,750 each per month, which is expensed to consulting fees or capitalized to property costs, depending upon the nature of the services.

Cardero Resource Corp.
Form 51-102F1
Management Discussion & Analysis
Year ended October 31, 2010	Page 27

The Company has entered into a retainer agreement dated May 1, 2007 with LWTLC, pursuant to which LWTLC agrees to provide legal services to the Company. Pursuant to the retainer agreement, the Company has agreed to pay LWTLC a minimum annual retainer of $82,500 (plus applicable taxes and disbursements). The retainer agreement may be terminated by LWTLC on reasonable notice, and by the Company on one year’s notice (or payment of one year’s retainer in lieu of notice).

PROPOSED TRANSACTIONS

Although the Company is currently investigating/negotiating a number of additional property acquisitions, and is entertaining proposals for the sale or option/joint venture of one or more of its properties, as at the date of this MD&A there are no proposed transactions where the Board of Directors, or senior management who believe that confirmation of the decision by the Board is probable, have decided to proceed with.

CRITICAL ACCOUNTING ESTIMATES

The preparation of financial statements in conformity with Canadian generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosures of contingent assets and liabilities at the date of the financial statements, and the reported amounts of revenues and expenses during the reporting period. Areas requiring the use of estimates in the preparation of the Company’s financial statements include the rates of amortization for equipment, the potential recovery of resource property interests, the assumptions used in the determination of the fair value of SBC and the determination of the valuation allowance for future income tax assets. Management believes the estimates used are reasonable; however, actual results could differ materially from those estimates and, if so, would impact future results of operations and cash flows.

CHANGES IN ACCOUNTING POLICIES

There have been no changes in the Company’s accounting policies since November 1, 2009, being the start of the Company’s most recently completed fiscal year.

FINANCIAL INSTRUMENTS AND OTHER INSTRUMENTS

The Company’s cash and resource related investments in common shares of public companies are classified within Level 1 of the fair value hierarchy because they are valued using quoted market prices.

The Company’s equity investments, resource related investments in warrants and accounts payable, are classified at Level 2 of the fair value hierarchy because they are derived directly from the prices of services provided by these parties; however, this is not readily measurable in an active market. The Company does not believe that it is exposed to any material risk with respect thereto.

The Company’s cash at October 31, 2010 was $52,264,003 of which $46,228,324 was held in US, Mexican, Argentinean and Peruvian currencies.

The Company’s receivables and payables at October 31, 2010 were normal course business items that are settled on a regular basis. The Company’s investments in ITH, Corvus Gold Ltd. (“Corvus), Trevali, Wealth, Indico, Dorato and Kria Resources Ltd. (“Kria”) are carried at quoted market value or an estimate thereof, and are classified as “available-for-sale” for accounting purposes. The Company’s investment in Ethos is classified as “held-for-trading” for accounting purposes. All resource related investments in warrants are classified as held-for-trading and are considered derivative financial instruments where changes to the fair value are included in net income. The Company has no current plans to dispose of any significant portion of its resource-related investments, but may determine to do so if necessary to raise funds for its ongoing operations.

Cardero Resource Corp.
Form 51-102F1
Management Discussion & Analysis
Year ended October 31, 2010	Page 28

MATERIAL PROCEEDINGS

The Company is not a party to any material proceedings.

EVALUATION OF DISCLOSURE CONTROLS AND PROCEDURES

Disclosure controls and procedures are controls and other procedures that are designed to provide reasonable assurance that all relevant information required to be disclosed in the Company’s reports filed or submitted as part of the Company’s continuous disclosure requirements is gathered and reported to senior management, including the Company’s Chief Executive Officer and Chief Financial Officer, on a timely basis so that appropriate decisions can be made regarding public disclosure and such information can be recorded, processed, summarized and reported within the time periods specified by applicable regulatory authorities.

Management of the Company, with the participation of the Chief Executive Officer and the Chief Financial Officer, has evaluated the effectiveness of the Company’s disclosure controls and procedures as at October 31, 2010 as required by Canadian and US securities laws. Based on that evaluation, the Chief Executive Officer and the Chief Financial Officer have concluded that, as of October 31, 2010, the disclosure controls and procedures were effective.

CHANGES IN INTERNAL CONTROL OVER FINANCIAL REPORTING

Internal control over financial reporting means a process designed by, or under the supervision of, the Company’s certifying officers, and effected by the Company’s board of directors, management and other personnel, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with the Company’s GAAP and includes those policies and procedures that:

(a)	pertain to the maintenance of records that in reasonable detail accurately and fairly reflect the transactions and dispositions of the assets of the Company;
(b)	are designed to provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with the Company’s GAAP, and that receipts and expenditures of the Company are being made only in accordance with authorizations of management and directors of the Company; and
(c)	are designed to provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use or disposition of the Company’s assets that could have a material effect on the annual financial statements or interim financial statements.

The Chief Executive Officer and Chief Financial Officer have concluded that there has been no change in the Company’s internal control over financial reporting during the period beginning on November 1, 2009 and ended on October 31, 2010, that has materially affected, or is reasonably likely to materially affect, the Company’s internal control over financial reporting.

TRANSITION TO INTERNATIONAL FINANCIAL REPORTING STANDARDS

General

The Canadian Accounting Standards Board has confirmed that effective on January 1, 2011, IFRS replaced Canadian Generally Accepted Accounting Policies (GAAP) as the basis for accounting for publicly accountable enterprises. The first period reported under IFRS by the Company will be the three month period ended January 31, 2012 and the Company’s first fiscal year end date under IFRS will be the fiscal year ending October 31, 2012.

Cardero Resource Corp.
Form 51-102F1
Management Discussion & Analysis
Year ended October 31, 2010	Page 29

The change from Canadian GAAP to IFRS will be a significant undertaking and may have significant effects on the Company’s accounting, internal controls, disclosure controls and financial statement presentation.

The Company commenced transition plan development in November 2009. The Company has determined its preliminary IFRS policy decisions and significant expected accounting differences, based on an analysis of the current IFRS standards, and the following section outlines each of these. As the conversion work continues, additional differences between Canadian GAAP and IFRS may be identified. As a result, these accounting policy choices may change prior to the adoption of IFRS on November 1, 2011. Although the Company has identified key accounting policy differences, the impact of these differences to its financial statements has not been determined at this time. Decisions with respect to accounting policy changes, outlined below, may change once management has quantified and thoroughly analyzed the effects of such changes and has presented them for final review and approval by the Company’s Audit Committee.

First-time Adoption of IFRS (IFRS 1)

In the first year of transition to IFRS, a company is allowed to elect certain exceptions from IFRS in order not to apply each IFRS on a retrospective basis. IFRS 1 has certain mandatory exemptions as well as limited optional exemptions. Based on analysis to date, the Company expects to apply the following optional exemptions under IFRS 1 that will be significant in preparing the financial statements under IFRS:

• Business Combinations – A company may elect, on transition to IFRS, to either restate all past business combinations in accordance with IFRS 3 “Business Combinations” or to apply an optional exemption from applying IFRS 3 to past business combinations. The Company will elect, on transition to IFRS, to apply the optional exemption such that transactions entered into prior to the transition date of November 1, 2010 will not be restated.

• Share-Based Payments – A company may elect not to apply IFRS 2 “Share-Based Payments” to equity instruments which vested before the transition date to IFRS. The Company will elect, on transition to IFRS, to apply the optional exemption such that equity instruments which vested prior to the transition date of November 1, 2010, will not be restated.

IFRS to Canadian GAAP differences

The following is the preliminary difference between the Company’s Canadian GAAP accounting policies and the policy choices available under IFRS. Based on analysis to date, management believes they may not be material:

Share-based payments – Canadian GAAP allows certain policy choices in the calculation of stock based compensation. The Company currently amortizes grants in their entirety on a straight-line basis over the vesting term. IFRS standards require each tranche in the grant to be amortized over its respective vesting period. As a result of these changes, share-based compensation expense will be accelerated under IFRS. In addition, unvested options at November 1, 2011 will be revalued under IFRS, with consequent adjustments to opening retained earnings. The Company currently vests options at the date of the grant.

Cardero Resource Corp.
Form 51-102F1
Management Discussion & Analysis
Year ended October 31, 2010	Page 30

Additional Impacts of Adopting IFRS

The Company has determined that the main impact of IFRS on the Company will involve a significant increase in note disclosure as well as certain presentation differences.

Current IFRS Transition Work

• The Company is now quantifying the known differences between IFRS and Canadian GAAP.

• The Company’s finance group is continuing its education program to increase its understanding of IFRS.

• The Company will continue to review all proposed and continuing IFRS amendments by the various regulatory bodies and update or revise the project plan accordingly to ensure it accomplishes a timely and efficient transition to IFRS.

• The Company’s IFRS conversion project is currently on target to meet the changeover date of November 1, 2011.

DISCLOSURE OF OUTSTANDING SHARE DATA

1. Authorized and Issued capital stock:

As at October 31, 2010:

Authorized	Issued			Book Value
An unlimited number of common shares without par value	58,373,302	(1)	$	69,890,946
As at January 26, 2011:
Authorized	Issued			Book Value
An unlimited number of common shares without par value	58,948,302	(1)	$	70,949,740

(1) These numbers assume that the 312,300 common shares purchased by the Company under its normal course issuer bid, which commenced June 16, 2010 and runs until June 15, 2011 (“NCIB”), will be cancelled and returned to treasury (which has not yet happened). These 312,300 shares, together with any additional shares which may be purchased under the current NCIB, will be cancelled and returned to treasury upon the expiry of the current NCIB.

2. Options Outstanding: As at October 31, 2010:

Number	Exercise Price	Expiry Date
575,000	$1.16	December 9, 2010
225,000	$1.39	April 9, 2011
1,000,000	$1.30	September 11, 2011
360,000	$1.31	December 11, 2011
500,000	$1.41	February 1, 2012
1,525,000	$1.16	July 27, 2012
1,125,000	$1.16	August 11, 2012
5,310,000

Cardero Resource Corp.
Form 51-102F1
Management Discussion & Analysis
Year ended October 31, 2010	Page 31

As at January 20, 2011:

Number	Exercise Price	Expiry Date
225,000	$1.39	April 9, 2011
1,000,000	$1.30	September 11, 2011
360,000	$1.31	December 11, 2011
500,000	$1.41	February 1, 2012
1,525,000	$1.16	July 27, 2012
1,125,000	$1.16	August 11, 2012
4,735,000

3. As at October 31 and January 20, 2011, there were no warrants/agent’s warrants outstanding.

The number of options remaining available for grant as at October 31, 2010 and 2009 were 527,330 and 354,348, respectively.

NYSE AMEX CORPORATE GOVERNANCE

The Company’s common shares are listed on the NYSE Amex LLC (“NYSE Amex”). Section 110 of the NYSE Amex Company Guide permits NYSE Amex to consider the laws, customs and practices of foreign issuers in relaxing certain NYSE Amex listing criteria, and to grant exemptions from NYSE Amex listing criteria based on these considerations. A company seeking relief under these provisions is required to provide written certification from independent local counsel that the non-complying practice is not prohibited by home country law. A description of the significant ways in which the Company’s governance practices differ from those followed by domestic companies pursuant to NYSE Amex standards is posted on the Company’s website at www.cardero.com and a copy of such description is available by written request made to the Company.

ADDITIONAL SOURCES OF INFORMATION

Additional disclosures pertaining to the Company, including its most recent Annual Information Form, financial statements, management information circular, material change reports, press releases and other information, are available on the SEDAR website at www.sedar.com or on the Company’s website at www.cardero.com. Readers are urged to review these materials, including the technical reports filed with respect to the Company's mineral properties.

EX-5

	TECHNICAL REPORT
	LONGNOSE AND TITAC IRON-TITANIUM
	EXPLORATION PROJECT, MINNESOTA, USA
	EXPLORATION RESULTS 2010
	Effective Date
	January 27, 2011
	Prepared for:
	Cardero Resource Corporation
	Suite 1920 – 1188 West Georgia Street
	Vancouver, BC, V6E 4A2
	Tel: +1 604 408 7488
	Fax: +1 604 408 7499
	www.cardero.com
	Authors:
	EurGeol Keith Henderson PGeo
	Stephen (Jayson) Ripke QP, MMSA

Table Contents

1 Summary	1
2 Introduction	6
3 Reliance On Other Experts	7
4 Property Description and Location	8
Introduction	8
Land Description and Cardero Holdings	8
Longnose Interest	9
TiTac Interest	10
Property Boundaries	10
Licenses, Permits and Registrations	12
Known Mineralized Zones	12
5 Accessibility, Climate, Local Resources, Infrastructure & Physiography	14
Accessibility and Physiography	14
Climate	14
Local Resources and Infrastructure	15
6 History	17
Titaniferous Iron Oxide Mineralization in the Duluth Complex	17
Longnose Property	17
Titac Property	19
7 Geologic Setting	21
Regional Geology	21
Local Geology	23
Geology of the Longnose Property	23
Geology of the Titac Property	25
8 Deposit Types	30
9 Mineralization	32
Mineralization at Longnose	32
Mineralization at Titac	32
10 Exploration	34
11 Drilling	36
Introduction	36
Longnose Drilling Results	38

ii

Titac Drilling Results	39
12 Sampling Method and Approach	45
Drill Core and Sample Interval Preparation	45
Sample Collection and Preparation	46
13 Sample Preparation, Analyses and Security	47
Sample Analysis	47
Sample Security	48
14 Data Verification	49
Quality Control Procedures	49
15 Adjacent Properties	53
16 Mineral Processing and Metallurgical Testing	54
17 Mineral Resource and Reserve Estimates	55
18 Other Relevant Data and Information	56
19 Interpretation and Conclusions	57
20 Recommendations	58
21 References	60
22 Date and Signature Page	62
23 Additional Requirements for Technical reports on Development Properties and Production properties	63
24 Certificates of Authors	64

iii

List of Tables

Table	Page
Table 5-1: Monthly average temperatures and precipitation	15
Table 11-1: Technical Specification of Longnose & Titac Diamond Drillholes	37
Table 11-2: Drillcore assay results for Longnose	39
Table 11-3: Re-assays of Historical Longnose Drill Core	39
Table 11-4: Drillcore Assay Results for Titac North	41
Table 11-5: Drillcore Assay Results for Titac South	41
Table 13-1: Analytes and Ranges of ALS Laboratory Group (ME-ICP06)	47
Table 13-2: Analytes and Ranges of ALS Laboratory Group (ME-4ACD81)	47
Table 13-3: Analytes and Ranges of ALS Laboratory Group (ME-MS81)	48

iv

List of Figures

Figure	Page
Figure 4-1: Location of Longnose and Titac Properties	8
Figure 4-2: Longnose Property Boundary with Drill Collar Locations	11
Figure 4-3: Titac Property Boundary with Drill Collar Locations	12
Figure 6-1: Location of Historic Drillholes & Bulk test Pits, Longnose	19
Figure 6-2: Location of Historic Drillholes, Titac	20
Figure 7-1: Bouguer Gravity Anomaly, Mid Continent Rift, USA	21
Figure 7-2: Geologic map of northeastern Minnesota	22
Figure 7-4: Schematic Cross-Section, Longnose	24
Figure 7-5: Rock Classification Scheme for Duluth Comples	25
Figure 7-6: Magnetic Map of Titac Property	26
Figure 7-7: Schematic Cross-Section, Titac South	28
Figure 7-8: Schematic Cross-Section, Titac North	29
Figure 10-1: Re-interpretation of 1967 ground magnetic data	35
Figure 14-1: Quality Control Procedures Instituted by Cardero	49
Figure 14-2: Scatterplot graphs of TiO2 and FeO3	50
Figure 14-3: TiO2 data presented for certified reference materials	51
Figure 14-4: TiO2 and FeO3 presented for Blank Samples	52

v

1 Summary

The Longnose and Titac properties are both located in northeastern Minnesota, roughly 25.5 miles (41 km) apart.

The Longnose property is located in St. Louis County, Township 59N, Range 13W, Section 30; and the Titac property is located in St. Louis County, Township 55N, Range 14W, Section 34, and Township 54N, Range 14W, Section 3. The Longnose property is centered at: (Coordinate system: Universal Trans Mercator, Zone 15 North, North American 1983 Datum) 572200 metres East, 5268300 metres North.

The Titac property is approximately centered at: (Coordinate system: Universal Trans Mercator, Zone 15 North, North American 1983 Datum) 568000 metres East, 5228000 metres North.

The Company holds an option to acquire up to an 85% interest in the Longnose property by incurring USD 1,850,000 in expenditures (to acquire 70%) and delivering a feasibility study (to acquire an additional 15%). Upon the Company earning its 70% or 85% interest, the optionee of the Longnose property has the option to maintain its 30% or 15% interest and enter into a joint venture with the Company, or to convert its working interest to either a 10% or 5% net profits interest. Advance royalties and production royalties are payable to the underlying lessors of the properties.

The Company holds a 100% leasehold interest in the Titac property under a mining lease dated July 1, 2009. The lease is for an initial term of 20 years, subject to extension for up to 20 additional years, and requires annual rental payments until commercial production and thereafter production royalty payments (minimum $200,000/year).

The Company has all required licenses, permits and registrations in place to carry out exploration and resource definition drilling. Additional permits will be required in the future to advance to the next stage.

The Longnose and Titac properties contain known areas of mineralization, which are being explored further in order to enable a resource estimation to be prepared.

Topographic relief on both properties is generally low, and the surface is flat-laying. Elevations on both properties range between 465 and 490 metres above mean sea level. The ground cover at both properties is a mixture of Palustrine, forested wetlands (Cowardin classification system), and higher dry forested ground. Overburden, consisting of glacial till, is present and the depth to bedrock is approximately 3 to 30 metres from surface.

Accessibility of both projects is excellent, with the Titac property located along a paved county highway, and the Longnose property located off of a paved county highway via a well maintained gravel road.

The climate in northeastern Minnesota is mid-continental. Winter conditions usually begin in mid-December and last until mid-March, with frozen ground beginning in late-December to early-January. The spring thaw usually begins in mid-March to late-April, with stable, dry spring-summer-fall conditions occurring from late-April to mid-December.

1

The population of Aurora, Minnesota (the nearest major population centre) is approximately 1,850, and the nearby city of Hoyt Lakes (5 miles east of Aurora), Minnesota has a population of approximately 2,000 people.

The infrastructure in northeastern Minnesota related to mining activities is excellent, with low cost electricity, railroads, paved state and county highways, international shipping ports, mining professionals, mining vendors, and trained labor all readily available. International shipping ports are located along the north shore of Lake Superior, including Duluth/Superior, Silver Bay, Taconite Harbor, and Two Harbors, with linked rail systems to all.

Eighteen diamond drill core holes have been drilled at the Longnose property, including six holes drilled by the Company in 2010. Two bulk samples for metallurgical testing and ^TiO2 recovery have been collected from the Longnose property by prior operators. The first bulk sample measured 32+ tons of material and the second bulk sample measured 60 tons. The University of Minnesota, Natural Resources Research Institute, Coleraine Minerals Research Laboratory houses what remains of both bulk samples.

BHP Minerals International Inc. (BHP) held the Longnose property for some time in the 1990’s. Most of the work completed by BHP centered on metallurgy, and TiO₂ recovery. Their first investigation involved a smelting and sulfation-leaching process developed by the US Bureau of Mines. Their second investigation involved an oxidation-reduction roast followed by chemical leaching, using a process called “Murso”. A pre-NI 43-101 (non-NI 43-101 compliant) historical resource calculation was completed at Longnose by BHP. A BHP report dated November 11, 1992 estimates “probable reserves” of 27.57 MT (30.36 million short tons) grading 21.3% TiO₂.

However, the authors caution that both the BHP report and the included resource estimate were prepared before the introduction of NI 43-101, and are therefore historical in nature and the Company is not treating such resources as a current resource under NI 43-101. Investors are further cautioned that a qualified person has not yet completed sufficient work to be able to verify the historical resources, and therefore they should not be relied upon.

Exploration of the Titac property, historically known as Section 34, has been limited, though several exploratory bore holes and geophysical surveys have been completed. Six holes were drilled historically and the Company completed 30 holes in 2010. A ground magnetic survey conducted in the mid 1960’s.

The Longnose and Titac Properties are located within the Superior Province of the Canadian Shield, and are underlain by intrusive rocks generated during the formation of the Midcontinent Rift. Mineralization is hosted by Oxide-bearing Ultramafic Intrusions (OUI’s) that intruded into layered series intrusions of the Duluth Complex. OUIs are dominantly composed of coarse-grained to pegmatitic pyroxenite, peridotite, and dunite that contains roughly 15-40% titanium-iron oxide mineralization. Typically, zones of massive and semi-massive oxide are also present throughout the stratigraphy. Locally, some OUI’s also contain abundant copper-nickel sulfide mineralization as well (but this style of mineralization has not been intersected within the Company’s properties). Most OUI’s occur along the western margin of the southern portion of the Duluth Complex, and display numerous shapes (sheet-, funnel-, dike- and pipe-like geometries), and inclinations (flat-lying, moderately-dipping, and sub-vertical).

2

The Longnose and Titac OUls contain disseminated, semi-massive, and massive titanium-iron oxide mineralization. The Longnose property hosts a single intrusion which is at least 150 metres thick, dipping shallowly to the southeast. The Titac property contains at least two mineralized OUI’s (Titac North & Titac South). Titac North is at least 450 metres thick (open at depth) and has a vertical pipe-like geometry. Titac South is at least 490 metres thick, and also has a pipe-like geometry.

Mineralization at Longnose dominantly consists of disseminated to net-textured, medium to coarse-grained, magnetite and ilmenite, with some fraction of titaniferous magnetite. Olivine-rich ultramafic rocks (peridotite, feldspathic peridotite & dunite) host the majority of the titanium-iron oxide mineralization found in the Longnose OUI, and will often be net-textured with oxide minerals interstitial to silicates. Visual modal mineral calculations generally estimate that titanium-iron oxide minerals compose 15-35% of the peridotitic and dunitic rocks at Longnose. Numerous massive and semi-massive titanium-iron oxide horizons or zones (45-100% titanium-iron oxide) have been intersected in drill core. These massive and semi-massive oxides seem to be dominantly hosted by peridotite and dunite, though they have been intersected within zones of pyroxenite as well. It is clear that the main mineralized intrusion at Longnose is a thick, laterally and vertically continuous intrusion dominantly composed of a mixture of oxide-bearing peridotite, oxide-bearing dunite, massive oxide, and semi-massive oxide with between 15% and 100% titanium-iron oxide mineralization.

Titaniferous-iron oxide mineralization at the Titac property shares many similar characteristics of mineralization at the Longnose property. When mineralization is hosted by olivine-rich ultramafic rocks it is typically medium to coarse-grained, disseminated to net-textured, and interstitial to silicate minerals. The largest difference occurs with mineralization hosted by pyroxenite, in which the oxide mineralization typically occurs as medium to coarse-grained clumps or clots up to roughly 5 cm in size (typically 2-4 cm) at Titac.

The Titac intrusion also contains abundant copper-sulfide mineralization. Up to five modal percent (typically 1-2%) copper-sulfide mineralization has been observed, dominantly consisting of chalcopyrite and bornite. Two distinct types of chalcopyrite seem to be present including a bright, golden, metallic colored chalcopyrite and a second duller, brownish-bronze colored chalcopyrite. Bornite exhibits a deep blue-purple metallic color. Copper sulfides typically occur as medium to coarse-grained disseminations interstitial to silicates and oxides, but also occur as pegmatitic clots up to roughly 5 cm in size (typically 2-3 cm). Very fine-grained disseminations of pyrrhotite can occur near the contacts of the OUI and the country rock (in both OUI rocks and country rocks), and rarely fine-grained pyrite will fill micro-fractures (<1 to 2 mm thick) within the OUI.

The Longnose intrusion was partially defined by historical drilling. As a result, the internal stratigraphy and general attitude of the intrusion are relatively simple, and the overall attitude of the intrusion lends itself to shallow, regularly-spaced drilling. Drilling at the Titac property is much more complex because of the attitude, orientation, and stratigraphy of the Titac intrusions. Both Titac North and Titac South appear to be sub-vertical, pipe-like intrusions, with sub-vertical lithological zonation. Here it is more appropriate to drill multiple holes from a single drilling platform in a fan-like pattern. This drilling method was successful in defining the boundaries of

3

the intrusion during drilling of the Titac South intrusion, and is recommended for any additional drilling on the remaining intrusions at Titac.

Both properties are at an advanced exploration stage.

During 2010, a total of 948.6 metres were completed at Longnose for six drillholes. At Titac North and South, a total of 10,557.9 metres were completed for thirty drillholes. All assay results from the 2010 drilling campaign have been received and are included in this report as comprehensive tables.

A second drilling campaign is slated to begin in February 2011.

Both the Longnose and Titac OUI’s are geologically interpreted to be late-stage intrusions that cut early Duluth Complex stratigraphy, and are associated with magmatism generated by the 1.1 billion year old Midcontinent Rift system.

The drilling program conducted by the Company in 2010 confirmed strong titanium-iron-oxide mineralization at both the Longnose and Titac properties, and determined that the Titac property contains at least two intrusions with large zones of titanium-iron-oxide mineralization (Titac North and Titac South).

Detailed recommendations regarding drilling programs and other aspects of both properties are as follows:

• Drilling by the Company in 2010 at the Titac South intrusion has defined a large zone of titanium-iron mineralization, and identified an area to the northeast of the intrusion that merits additional drilling. A drilling program consisting of two drill holes is recommended to better define this northeastern area.
• A drilling program consisting of four drill holes at the Longnose property is recommended in order to both confirm historical drilling results, and to test continuity of mineralization within the intrusion.
• Upon completion of drilling these six holes, and obtaining assay data for these six holes, it is recommended that a resource calculation should be completed for Longnose and TiTac South. SRK Consulting have been retained to complete this work as independent consultants. Drilling by the Company in 2010 at the Titac North intrusion helped to confirm the presence of strong titanium-iron oxide mineralization, however definition drilling is not planned for the 2011 drill program. A future drill program, consisting of approximately 50 drill holes, will be sufficient to delineate additional resources at TiTac North.
• A re-interpretation of a historical (1967) ground magnetic data by Quantec Geoscience identified numerous outlying intrusions at Titac. An introductory exploration drilling program consisting of four drill holes is recommended to explore these areas.
• A petrographic study of the oxide and sulfide mineralization found at both properties should be conducted to identify the specific oxide and sulfide minerals present at both properties.
• Initial metallurgical and recovery testing should be conducted. Initial bulk samples should consist of 100 kilogram composites, collected from drill core sample coarse rejects, and represent average mineralization grades.

4

     •   Selective sample pulps should be assayed for platinum group elements contents.

A budget is presented to complete the recommended work program:

Recommended Item	US$
Longnose in-fill and step-out drilling (4 holes/1100 m @ $163/m*)	$180,000
Titac South in-fill drilling (2 holes/500 m @ $163/m*)	$82,000
Resource calculation & 43-101 Reporting	$60,000
Titac outlying intrusions exploration drilling (4 holes/1200 m @ $163/m*)	$200,000
Acquisition of additional mineral leases/property boundary survey	$40,000
Mineralization study	$15,000
Metallurgical testing	$100,000
Platinum group element assays	$12,000
TOTAL	$689,000
*Drilling cost per metre includes: Site and Trail preparation, drilling, sampling, facility/vehicle lease, and staffing

5

2 Introduction

This technical report for the Titac and Longnose properties, located in Minnesota, USA, has been prepared for Cardero Resource Corp. (“Cardero” or the “Company”) in support of the disclosure on the TTC and LNG properties required in the Company’s Annual Information Form for the year ended October 31, 2010. Cardero Resource Corp. is a mineral exploration company with corporate headquarters in Vancouver, B.C., Canada, and is listed on the Toronto Stock Exchange and the NYSE-Amex Stock Exchange. The Titac and Longnose property interests are held by Cardero Iron Ore (USA) Inc., a wholly owned indirect subsidiary of Cardero (“CIOUS”), and work on the properties is carried on through Cardero Iron Ore Management (USA) Inc., an indirectly wholly owned subsidiary of Cardero.

This report relies on historical assay data collected from drilling on the properties from the 1950’s to the 1970’s, re-logging of the drill core in the 2000’s, and re-assaying of the coarse rejects and quarter core of historical drill cores in 2009, which has come from a variety of sources, including the Minnesota Department of Natural Resources and other governmental sources, publicly available information, the underlying land owners of the Titac and Longnose properties and personal communications with geologists and other professionals active in the area. In addition, this report incorporates data from drill testing of the two properties commissioned by Cardero in 2010.

Stephen “Jayson” Ripke visited the Longnose and Titac properties in the summer of 2009 to conduct property surveys. Mr. Ripke visited the Longnose and Titac properties in December of 2009 to communicate with and secure sub-contractors to conduct the drill program and all associated work. Mr. Ripke visited the Longnose and Titac properties numerous times throughout the year 2010 to review drilling, drill core logging, sample collection, and data collection procedures regarding the 2010 drill program.

Keith J. Henderson has not visited the Longnose and Titac properties. However, Mr. Henderson has been involved with every aspect of the data review and exploration on both properties.

The Longnose and Titac properties are both located in northeastern Minnesota, roughly 25.5 miles (41 km) apart near Aurora, Minnesota (Fig. 1-1). They represent two of the numerous OUIs hosted by the Duluth Complex, which feature strong titaniferous-iron oxide mineralization. Exploration of both properties is at an advanced stage. At the Longnose property a total of 17 diamond drill holes have been completed: 11 by Northern Illinois Corp. (Nicor) and American Shield Corp., dating back to the mid-1970’s, and six by Cardero in 2010. At the Titac property 36 diamond drill holes have been completed: six by United States Steel Corp. dating to the late 1960’s, and 30 by Cardero in 2010.

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3 Reliance On Other Experts

The authors have relied on information provided by the Company regarding the property holdings, lease agreements and the legal status of the title to the Titac and Longnose properties, including preliminary title work carried out by Minnesota counsel to the Company.

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4 Property Description and Location

Introduction

The Longnose and Titac properties are both located in northeastern Minnesota, roughly 25.5 miles (41 km) apart near Aurora, Minnesota (Fig. 4-1). The Longnose property is located in St. Louis County, Township 59N, Range 13W, Section 30; and the Titac property is located in St. Louis County, Township 55N, Range 14W, Section 34, and Township 54N, Range 14W, Section 3.

Figure 4-1: Location of the Longnose and Titac properties.

The Longnose property is centered at: (Coordinate system: Universal Trans Mercator, Zone 15 North, North American 1983 Datum) 572200 metres East, 5268300 metres North. The Titac property is approximately centered at: (Coordinate system: Universal Trans Mercator, Zone 15 North, North American 1983 Datum) 568000 metres East, 5228000 metres North. CIOUS holds an option to acquire an interest in mineral leases on 280 acres (113 hectares) at the Longnose property, and has a mineral lease on 1402 acres (567 hectares) at the Titac property.

Land Description and Cardero Holdings

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Minerals in Minnesota are typically held as fee simple interests, either as part of the overall land estate or as a separate property interest. In many cases, ownership of the mineral estate has been severed from the surface estate, and may be held by a different owner. Although title to the mineral estate is often held by the State of Minnesota or the US Federal government, there are significant areas of private mineral ownership in Minnesota. Thus, there is often split-estate ownership, where as the person or entity owning the surface may be, and often is, different than the person or entity that owns the mineral rights. Additionally, mineral rights themselves may also be split (e.g. the hydrocarbon rights owner may be different than the non-hydrocarbon mineral rights owner). United States law indicates that in split-estate situations mineral rights are the dominant estate and have precedence over all other property rights (including surface). However, the mineral rights owner must have due regard for the surface estate and only occupy/use those portions of the surface that are necessary for minerals development.

Land holdings at the Longnose property are primarily a split-estate wherein ALLETE, Inc. (ALLETE; a Minnesota corporation) (“Allete”) holds the surface rights, and a collection of individuals and other corporations holds the mineral rights (although Allete also holds an interest in some of the minerals). CIOUS has entered a ground license agreement with Allete dated January 12, 2010, pursuant to which CIOUS pays Allete a fixed fee per bore hole drilled, and agreed to carry out all required reclamation and indemnify Allete. In addition, under the ground license CIOUS has a right of first refusal to match any offer that may be made by a third party to purchase the surface estate held by Allete over the Longnose property.

Land holdings at the Titac property are a split-estate wherein St. Louis County holds the surface rights, and a private mineral owner holds the mineral rights. CIOUS has entered into a land use agreement dated June 11, 2008 with St. Louis County, pursuant to which CIOUS pays St. Louis County a fixed fee per bore hole drilled, and agreed to carry out all required reclamation and indemnify St. Louis County.

Longnose Interest

Pursuant to an agreement dated November 26, 2008 and accepted on December 8, 2008 between Cardero Iron Ore Company Ltd. and Raymond L. Morley (on behalf of The Morley Group Inc.) ("Morley"), CIOUS has been granted the option to acquire up to an 85% interest in the interest of Morley in certain existing mineral leases, and in a lease to be entered into, covering 100% of the fee mineral rights (approximately 280 acres) located in St. Louis County, Minnesota just north of the town of Hoyt Lakes and referred to as the “Longnose” property.

CIOUS can earn an initial 70% interest by incurring cumulative expenditures of USD 1,850,000 over 4 years to December 8, 2012 (USD 250,000 on or before December 8, 2010), and paying USD 50,000 to Morley on or before August 15, 2009 (and each and every August 15th thereafter) to be used by Morley to make the annual USD 50,000 advance royalty payment due to the underlying landowners under the existing leases. CIOUS can earn an additional 15% interest (for 85% overall) by delivering a feasibility study (no time limit for delivery). Upon CIOUS having earned a 70% or 85% interest, Morley can elect to convert its interest to a 10% net profits interest (if CIOUS elects not to earn the additional 15% interest) or a 5% net profits interest (if CIOUS elects to earn the full 85% interest). If Morley does not so elect, upon CIOUS having earned its 70% or 85% interest, as applicable, CIOUS and Morley will enter into a joint venture, with each party being responsible for its pro rata share of all joint venture expenditures.

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If a party to the joint venture is diluted to a 10% or lesser interest, such interest will be converted to a 2.5% net profits interest. To October 31, 2010, CIOUS has incurred an aggregate of USD 1,284,104 in expenditures and made all of the required USD 50,000 payments to August 15, 2010.

TiTac Interest

CIOUS has entered into a mining lease with a private mineral owner over an aggregate of 1,402 acres (567 hectares) of mineral rights located sections 2 and 3 of Township 54 North and sections 34 and 35 of Township 55 North, all Range 14 West, St. Louis County, Minnesota. The mining lease covers any mineral substance of a metalliferous nature, including those intermingled or associated materials or substances, recovered from each tone of crude ore for the purpose of extracting iron (essentially, iron, titanium and vanadium). All other minerals are reserved to the private mineral owner.

The initial term of the mining lease is for a period of 20 years, provided that the lease may be extended for an additional 5 year period if CIOUS gives notice at least 180 days prior to the end of such term, and has either paid to the owner at least USD 10,000,000 in royalties or pays to the owner the difference between the royalties actually paid and USD 10,000,000. In like manner, the lease can be extended for up to three additional 5 year terms, provided that the appropriate notice is given and that CIOUS has paid to the owner at least USD 5,000,000 in royalties during the previous 5 year term (or pays any deficiency in cash). CIOUS can terminate the lease at any time on sixty days' notice. CIOUS is required to make a bonus payment of USD 2,500 upon entering into the lease, plus yearly rental payments under the lease of the greater of USD 2,500 and USD 2/acre in years one and two, the greater of USD 5,000 and USD 5/acre in years three through five, the greater of USD 7,500 or USD 10/acre in years six through ten, the greater of USD 10,000 or USD 25/acre in years eleven through fifteen and the greater of USD 50,000 or USD 50/acre in years sixteen through twenty. These rental payments cease upon the commencement of commercial production, following which yearly minimum royalty payments of USD 200,000 apply. Following the commencement of commercial production, CIOUS is required to pay a royalty of USD 0.85 per ton of crude iron ore (adjusted quarterly based on variation in the quoted price of certain iron ore products) and 5% of the net return values (calculated in accordance with the provisions of the lease) for any other products produced (subject to a minimum royalty of USD 0.02 per pound of titanium). CIOUS is required to incur minimum work expenditures of USD 50,000 prior to the second anniversary of the lease, and USD 50,000 per year thereafter (any deficiency being payable in cash to the owner). To October 31, 2010, CIOUS had incurred an aggregate of USD 1,263,218 in expenditures and made all of the required rental payments to July 1, 2010.

Property Boundaries

Properties in Minnesota are defined using the Township and Range, Section, quarter-section, quarter-section, quarter-section method. Sections are marked by corner posts; however corner posts are not always present. CIOUS has conducted a geographical location survey on the Longnose and Titac properties. This survey mainly focused on locating historical drill collars and the original sampling grid cut baseline. An in-depth property boundary survey has not been completed; however the property boundaries have been located on aerial photographs (Figs 4-2 & 4-3).

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FIG 4-2 Longnose Property boundary with drill collar locations.

FIG 4-3 Titac Property boundary with drill collar locations.

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Licenses, Permits and Registrations

All licenses, permits, and registrations required to conduct exploratory drilling in Minnesota have been obtained by CIOUS, and are up to date. The required licenses, permits, and registrations that CIOUS has obtained are listed below.

1.	Licensed Exploratory Borer with the Minnesota Department of Natural Resources (MDNR); License number: A10-0102 (annual renewal).
2.	Licensed Explorer Company with the Minnesota Department of Health (MDH); License number 2850 (annual renewal).
3.	Licensed Explorer Responsible Individual with the Minnesota Department of Health: License number: 2841 (Chris White; lifetime license).
4.	Permit for drilling in wetlands with the United States Army Corp of Engineers for both properties (Permit expires on August 22, 2011).
5.	Road Use Permit with the U.S. Forest Service for use of F.S.R. 117 to access the Longnose property (annual renewal).
6.	Special Uses Permit with the U.S. Forest Service for use of spur off of F.S.R. 117 to access the Longnose property (3-year permit with annual renewal).
7.	Permit with the St. Louis County highway department to install temporary gravel access points along St. Louis County highway 4 to access specific areas of the Titac property (renewed as required).
8.	Storm Water Pollution Prevention Plan Permit (SWPPP) with the Minnesota Pollution Control Agency for each property (permit open until project completion, must notify MPCA upon completion of project for closure of permit).

MDH regulations require that CIOUS must file a drill plan with the MDNR and the MDH at least 14 days prior to drilling operations, and the Explorer Responsible Individual must file well abandonment forms with the MDNR and the MDH within 30 days of completing each drill hole, and that exploratory bore holes must be sealed upon completion of drilling in compliance with MDH rules and regulations. Upon filling an initial drill plan CIOUS may begin drilling operations after 14 days, and may revise, or expand the drill plan by notifying the MDNR and MDH within 1 day of executing the new drill plan.

MPCA regulations state that any ground disturbance greater than 1 acre requires the development, approval, and institution of a SWPPP. The plan must be drafted by a person, or persons certified by the MPCA, and a certified SWPPP site manager must oversee implementation of the plan, and application of the plan throughout the duration of the project. This plan must be modified as the project progresses to reflect any change in operations that warrant additional or different pollution prevention measures. CIOUS’s consulting geologist, Chris White, has obtained the proper certification with the MPCA to draft the SWPP, and to act as the SWPPP site manager; and Warren Johnson, a CIOUS contractor, is a certified SWPPP contractor with the MPCA. Chris White has been retained by CIOUS to oversee the overall and day-to-day project operations, and Warren Johnson’s company has been retained to install all drill trails and drill pads at the Longnose and Titac properties.

Known Mineralized Zones

Mineralization at the Longnose property is roughly centered at: (Coordinate system: Universal Trans Mercator, Zone 15 North, North American 1983 Datum) 572100 metres East, 5268300

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metres North. Known zones of mineralization at the Titac property are roughly centered at: (Coordinate system: Universal Trans Mercator, Zone 15 North, North American 1983 Datum), 568130 metres East, 5228310 metres North (Titac North); and 568000 metres East, 5227500 metres North (Titac South). There have been no commercial mining operations at either property.

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5 Accessibility, Climate, Local Resources, Infrastructure & Physiography

Accessibility and Physiography

Topographic relief on both properties is generally low, and the surface is flat-laying. Elevations on the Longnose property range between 465 metres and 480 metres, while elevations on the Titac property range between 470 metres and 490 metres. The ground cover at both properties is a mixture of Palustrine, forested wetlands (Cowardin classification system), and higher dry forested ground. Longnose creek runs through the Longnose property, and Bug creek runs through the Titac property. Overburden, consisting of glacial till composed of pebbles, cobbles, and boulders within a sand and clay matrix, covers much of both properties. At the Longnose property, bedrock is locally exposed to the north-northwest with up to roughly 3 metres of overburden. The bedrock surface gently dips to the south-southeast where overburden thickens to roughly 20 metres. Depth to bedrock at the Titac property is generally between 20 metres and 30 metres.

Accessibility of both projects is excellent, with the Titac property located along a paved county highway, and the Longnose property located off of a paved county highway via a well maintained gravel road.

The Longnose and Titac properties are located roughly 25.5 miles (40.6 km) apart. The Longnose property is located roughly 10 miles (15.7 km) east of Aurora, Minnesota; and the Titac property is located roughly 24.5 miles (39.4 km) south of Aurora, Minnesota. CIOUS is leasing a large portion of an old school building (Cina Building, 200 S. 2^nd St. E., Aurora, MN 55705) in Aurora, Minnesota that serves as a field office, a drill core logging, preparation, and sampling facility, and a drill core, coarse sample, and sample pulp storage facility.

To access the Longnose property from Aurora, MN: Beginning at the intersection between St. Louis County highway 99 and St. Louis County highway 110, travel east on St. Louis County highway 110 for 5.1 miles (8.2 km) to St. Louis County highway 666. Turn left, traveling north on St. Louis County highway 666 for 2.8 miles (4.5 km) to Forest Service Road 117. Turn right, traveling east on Forest Service Road 117 for 3.5 miles (5.6 km) to an unnamed spur which travels north. Turn right, traveling north on the unnamed spur for 0.3 miles (0.5 km) to an open equipment staging area.

To access the Titac property from Aurora, MN: Beginning at the intersection between St. Louis County highway 99 and St. Louis County highway 110, travel south on St. Louis County highway 99 for 11.0 miles (17.7 km). Turn right, traveling west on St. Louis County highway 16 for 2.2 miles (3.5 km). Turn left, traveling south on St. Louis County highway 4 for 16.6 miles (26.7 km) to Marshall Trail.

Climate

The climate in northeastern Minnesota is mid-continental. Winter conditions usually begin in mid-December and last until mid-March, with frozen ground beginning in late-December to early-January. The spring thaw usually begins in mid-March to late-April, with stable, dry spring-summer-fall conditions occurring from late-April to mid-December. Table 5-1 below displays the monthly average temperatures and precipitation for the Hoyt Lakes area.

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Table 5-1: Average monthly temperatures and precipitation for the Hoyt Lakes, Minnesota area

MONTH	Avg. High Temp (degrees F)	Avg. Low Temp (degrees F)	Avg. Precipitation (inches)
January	16	-14	0.76
February	24	-8	0.7
March	35	6	0.99
April	51	22	1.57
May	65	33	3.05
June	73	43	4.49
July	77	48	4.42
August	75	45	4.29
September	65	36	4
October	52	26	2.9
November	34	12	1.33
December	20	-5	0.61

Local Resources and Infrastructure

The population of Aurora, Minnesota is approximately 1,850, and the nearby city of Hoyt Lakes, Minnesota (5 miles east of Aurora) has a population of approximately 2,000 people. Duluth, Minnesota (pop. 84,419) is located roughly 75 miles (120.7 km) south of the Longnose property, and 30 miles (48.3 km) south of the Titac property. Virginia, Minnesota (pop. 8,481) is located roughly 35 miles (56.3 km) west of the Longnose property, and 70 miles (112.7 km) west-northwest of the Titac property.

Northeastern Minnesota has been supporting mining activities since the Soudan mine opened in 1882. Currently, northeastern Minnesota facilitates six taconite (iron ore) mines located roughly within 60 miles (96.5 km) west of the Longnose property and roughly within 100 miles (161 km) west-northwest of the Titac property in the Iron Range of Minnesota in the Virginia, and Hibbing, Minnesota area. When at full production, the taconite (iron ore) mining industry directly employs nearly 4,000 people in northeastern Minnesota.

The infrastructure in northeastern Minnesota related to mining activities is excellent with low cost electricity, railroads, paved state and county highways, international shipping ports, mining professionals, mining vendors, and trained labor all readily available. International shipping ports are located along the north shore of Lake Superior including Duluth/Superior, Silver Bay, Taconite Harbor, and Two Harbors with linked rail systems to all.

Northeastern Minnesota is easily accessible through air travel with three airports located within 60 miles (96.5 km) of Hoyt Lakes, Minnesota including the Eveleth Virginia Municipal Airport located in Virginia, Minnesota; the Range Regional Airport (RRA), located in Hibbing, Minnesota; and the Duluth International Airport (DIA), located in Duluth, Minnesota. Commercial flights are offered by Delta Airlines at RRA and DIA, and also by Allegiant Air at DIA. The Minneapolis/St. Paul airport is located approximately 200 miles (321.7 km) south of

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Hoyt Lakes, Minnesota. Connecting flights are available from Minneapolis/St. Paul to both DIA, and RRA.

The Laskin Energy Center is located near Hoyt Lakes, Minnesota (less than 10 miles, or 16 km, from the Longnose property), providing 110 megawatts of electric service, and a 138KVA electricity transmission line runs within 3.1 miles (5 km) of the Longnose property. The DM&IR (Canadian National) railway services the Laskin Energy Park, located next to the Laskin Energy Center and a rail spur runs within 1.3 miles (2 km) of the Longnose property. The Laskin Energy Park also provides natural gas, water and waste water, and industrial steam power services.

The Erie plant (formerly owned by LTV Steel Mining Company and currently owned by Polymet Mining Corporation), a large crushing, grinding, and milling facility, is located roughly 4 miles (6.4 km) west-northwest of the Longnose property. The Erie plant was built in the 1950’s, and processed roughly 100,000 tons of taconite (low-grade iron) ore per day until 2001 when LTV Steel Mining Company filed for bankruptcy. Polymet intends to use the Erie plant to process the copper-nickel-platinum group element ore from its NorthMet deposit, and estimates that the plant will provide 400 full-time jobs.

The Steel Dynamics, Inc., Mesabi Nugget plant is located just north of Hoyt Lakes, Minnesota. Mesabi Nugget uses an innovative direct-reduction process to produce pig-iron nuggets. Production began at Mesabi Nugget in December of 2009, and the plant has a capacity to produce 500,000 tonnes of pig-iron nuggets a year. The Mesabi Nugget plant currently provides roughly 90 full-time jobs.

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6 History

Northeastern Minnesota has a strong history of iron and taconite mining, as well as copper, nickel, and platinum group element exploration. Titaniferous iron deposits were first discovered in northeastern Minnesota in the mid to late 1800’s in the northern portion of the Duluth Complex. Additional titaniferous iron deposits were discovered in the southern part of the Duluth Complex in the mid to late 1900’s during reconnaissance exploration for copper and nickel.

Titaniferous Iron Oxide Mineralization in the Duluth Complex

In 1967 several companies began exploring magnetic anomalies delineated from state geophysical surveys in the southern part of the Duluth Complex. Exploration drilling targeted these magnetic anomalies searching for copper-nickel sulfide mineralization. While copper-nickel sulfide mineralization was intersected in many drill holes, the magnetic anomalies were largely composed of titaniferous-iron oxide mineralization. At the time these intrusions were generally thought to be of little importance, because copper-nickel grades were too low to have economic significance during that time period. However, several titaniferous iron oxide intrusions have been explored in detail including the Longnose intrusion. The following summarizes the known history of the Longnose property, and the Titac property, respectively.

Longnose Property

Eighteen diamond drill cores have been drilled at the Longnose property. Bear Creek Mining Co. drilled the first hole in 1958 to investigate a magnetic high and electromagnetic anomaly. This first hole (A1-1) intersected titanium-iron-oxide mineralization to a depth of 335 feet (102.1 m), that was hosted by peridotite and pyroxenite. A decade later (1969), Exxon Corp. drilled a second hole (BA-6) on the property that intersected titanium-iron-oxide mineralization to a depth of 81 feet (24.7 m). American Shield Corp began exploration at Longnose in 1975, drilling a single hole (LN-1), and resumed drilling in 1984 via a joint venture agreement with Northern Illinois Corp. (Nicor); completing nine more drill holes on the property. Figure 6-1 displays the locations of historic drill holes on the Longnose property including: A1-1, BA-6, and LN-1 through LN-10 (taken from Patelke and Severson, 2005). Exploration drilling on the Longnose property halted until 2010, when CIOUS drilled six holes.

Two bulk samples for metallurgical testing and TiO₂ recovery have been collected from theLongnose property. The test pit locations are displayed in figure 6-1 (Patelke and Severson, 2001). The first bulk sample measured 32+ tons of material and was collected in 1984 by the American Shield Corp/Nicor joint venture. The second bulk sample measured 60 tons and was collected in 1999 by American Shield Corp. The University of Minnesota, Natural Resources Research Institute, Coleraine Minerals Research Laboratory houses what remains of both bulk samples.

BHP Minerals International Inc. (BHP) held the Longnose property for sometime in the 1990’s. Most of the work completed by BHP centered on metallurgy, and TiO₂ recovery. Their firstinvestigation involved a smelting and sulfation-leaching process developed by the US Bureau of Mines (Ulland, 2000). Their second investigation involved an oxidation-reduction roast followed by chemical leaching, using a process called “Murso” (Ulland, 2000). BHP apparently

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abandoned the Longnose project over a dispute regarding the ownership of the “Murso” technology (Ulland, 2000).

A pre-NI 43-101 guideline (non-NI 43-101 compliant) historical resource calculation was completed at Longnose by BHP. A BHP report dated November 11, 1992 estimates “probable reserves” of 30.36 MT grading at 21.3% TiO₂, with “an additional 20 MT of ore possible,” (Ulland, 2000). A second internal BHP document (Interoffice Correspondence; Subject: Status Minnesota Titanium Prospect (Longnose)), dated April 11, 1994 states “This is the largest known resource of (over 46% TiO₂) ilmenite in North America with 30 million tons identified in two deposits” (Ulland, 2000). However, the authors caution that both the BHP report and the included resource estimate were prepared before the introduction of NI 43-101, and are therefore historical in nature and Cardero is not treating such resources as a current resource under NI 43-101. Investors are further cautioned that a qualified person has not yet completed sufficient work to be able to verify the historical resources, and therefore they should not be relied upon.

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Figure 6-1: Map showing the locations of historic diamond drill holes and bulk sample test pits on the Longnose property, taken from Patelke and Severson, 2005.

Titac Property

Exploration of the Titac property, historically known as Section 34, has been limited, though several exploratory bore holes and geophysical surveys have been completed. United States Steel Corp. (USSC) drilled six holes into the Section 34 OUI following a ground magnetic survey conducted in the mid 1960’s. Exploration of Section 34 was part of a larger exploration program in which USSC drilled holes into numerous magnetic anomalies, delineated during state run airborne geophysical surveys, proximal to the western contact of the southern portion of the Duluth Complex. USSC was exploring for copper-nickel sulfides, which were intersected, however, as at the Longnose intrusion the magnetic anomalies were created by titanium-iron oxide mineralization. Three of the six initial drill holes at Titac (Section 34) intersected strong titanium-iron mineralization throughout their length, while the remaining three holes intersected

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various apophyses of titanium-iron mineralization (Severson, 1995). To the best of the authors’ knowledge no other exploration has been conducted at the Titac property (Section 34), until the recent (2009-2010) exploration by CIOUS, in which 30 boreholes were completed at the property.

Figure 6-2: Map showing the locations of historic diamond drill holes on the Titac property

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7 Geologic Setting

Regional Geology

The Longnose and Titac properties are located within the Superior Province of the Canadian Shield. The regional basement rocks are composed of Archean granitoid intrusions, metasedimentary rocks, and metavolcanic rocks; and Paleoproterozoic sedimentary rocks. Mafic flows, mafic and felsic intrusives, and related interflow sedimentary rocks cut these basement rocks during the development of the Mesoproterozoic Midcontinent Rift System (MCR).

The Midcontinent Rift System stretches from Lake Superior to Iowa (Fig. 7-1), and is largely buried by sediments; however MCR bedrock is relatively well exposed in the Lake Superior region. In northeastern Minnesota the MCR is dominantly composed of several groups of rocks including: the North Shore Volcanic Group (NSVG), the Beaver Bay Complex, and the Duluth Complex. The roof zone of the MCR is largely composed of NSVG lava flows, and the Duluth Complex is generally the intrusive equivalent of the NSVG lava flows.

Figure 7-1: Bouguer Gravity Anomaly shows the Mid Continent Rift extending from Lake Superior through Iowa, USA, from geo.umn.edu/mgs/nicegeo/pdfs/boug_grav.pdf.

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The multiple intrusions of the Duluth Complex occur within an arcing band from Duluth to near the Canadian border that is 270 km long and up to 40 km wide. In terms of areal exposure, it is the second largest mafic intrusive complex on Earth after the Bushveld Complex of South Africa. The Duluth Complex is typically subdivided into four intrusive series based on dominant lithology, general age, and internal structure. In order of relative decreasing age, these series are the felsic series, the early gabbroic series, the anorthositic series, and the layered series (Miller et al., 2002). Field evidence suggests that the layered series intruded into the anorthositic series, however U-Pd dates obtained by Paces and Miller (1993) show that the anorthositic series and the layered series are virtually identical in age. This indicates that the layered series likely intruded into the anorthositic series when it was still quite warm, and possibly semi-molten. The anorthositic series has not been subdivided into individual intrusions; however the layered series has been shown to consist of at least 12 distinct mafic layered intrusions (Miller et al., 2002; Fig. 7-2).

Figure 7-2: Geologic Map of northeastern Minnesota displaying the Duluth Complex and associated formations with the layered series intrusions defined: TI – Tuscarora intrusion, L1T – Lake One Troctolite, WLI – Wilder Lake intrusion, SKI – South Kawishiwi intrusion, BEI – Bald Eagle intrusion, OLI – Osier Lake intrusion, GLI – Greenwood Lake intrusion, PRI – Partridge River intrusion, WMI – Western Margin intrusion, BLI – Boulder Lake intrusion, DLS – Layered Series at Duluth (Miller et al. 2002).

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Local Geology

Several layered series intrusions host numerous OUI’s in the Duluth Complex, including (from north to south) the Partridge River intrusion, the Western Margin intrusion, and the Boulder Lake intrusion. All known OUI’s occur proximal to the western contact of the Duluth Complex in a straight line beginning just south of Babbitt, Minnesota, and ending just north of Duluth, Minnesota. Known OUI intrusions in the Duluth Complex include Section 17, Longear, Longnose, Section 22, Skibo, Water Hen, Section 34 (Titac), Boulder Creek, Boulder Lake North, and Boulder Lake South. Oxide Ultramafic intrusions cut the layered series intrusions, and are generally regarded as late occurring events in the development of the MCR. Geometrically, OUI’s have various shapes and sizes including pipe-like, sheet-like, and funnel-like, and their emplacement may be structurally controlled (Severson, 1995).

Geology of the Longnose Property

Outcropping bedrock is sparse on the Longnose property with regards for the Longnose intrusion itself, though several outcrops do exist toward the northern extents of the property, and country rock is exposed to the south of the intrusion. Most of the known geology of the Longnose intrusion comes from the 18 drill cores that have been drilled into and around the intrusion; 12 drill holes are historic, while six holes were drilled by Cardero in 2010. The Longnose OUI is dominantly hosted by troctolite and augite troctolite of the Partridge River intrusion. Drilling has indicated that the Longnose intrusion is approximately 762 metres long, by 426 metres wide, by 150 metres thick, and it appears to have a sheet-like geometry with a moderate southeastern dip (Fig. 7-4). The eastern, southeastern, and southern margins of the intrusion are not completely defined, and the intrusion may extend in these areas at depth. Lithologically, the OUI is composed of medium- to coarse-grained to pegmatitic pyroxenite, feldspathic pyroxenite, peridotite, feldspathic peridotite, dunite, semi-massive oxide, and massive oxide, as defined by the Severson and Hauck (1990) rock classification scheme for Duluth Complex rocks (Fig. 7-5). The core of the intrusion is composed of olivine-rich rocks (feldspathic peridotite, peridotite, and dunite), while the outer zones consist of predominantly pyroxenite. Massive and semi-massive oxides (Fig. 7-4) may be crudely layered or zoned throughout the intrusion. Contacts between country rock and the OUI are typically sharp (cm), and internal lithologic contacts of the OUI intrusion are also sharp (cm). Titanium-iron oxide mineralization is known to extend to a true depth of at least 150 metres, and may extend deeper to the east, southeast, and south of the intrusion (Fig. 7-4).

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Figure 7-4: Schematic cross-section through the Longnose Oxide-bearing Ultramafic Intrusion.

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Figure 7-5: Rock classification scheme for Duluth Complex rocks, after Severson and Hauck, 1990.

Geology of the Titac Property

Little was known about the Titac property at the time of CIOUS’s acquisition of the property. There is no exposed bedrock on the property, as glacial till covers the area, and only six diamond drill holes had been drilled on the property prior to 2010. Everything that is known about the geology of the property comes from geophysical surveys, six historic diamond drill holes, and 30 holes drilled by CIOUS in 2010 (Fig. 7-6).

A ground magnetic survey demonstrates that the Titac intrusion consists of numerous strongly magnetic intrusions (Fig. 7-6). Drill core shows that the Titac intrusion is hosted by troctolite and augite troctolite of the Western Margin intrusion, and that there is also a large fraction of anorthositic rocks, which are likely inclusions, or roof pendants of the anorthositic series within the Western Margin intrusion.

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Figure 7-6: Magnetic map of the Titac property from the re-interpreted 1967 USSC ground geophysical survey, showing survey, showing the Titac North, and Titac South OUIs, as well as the six historic diamond drill holes and 30 Cardero 2010 diamond drill holes on the property, and the location of the cross-sections in figures 7-8 (through Titac South) and 7-9 (through Titac North).

There are two large intrusions at Titac, herein referred to as Titac North and Titac South (Fig. 7-6), with numerous smaller intrusions to the west and northwest of the two main intrusions. Titac

26

North is roughly 500 metres north of Titac South. Titac North is roughly 600 metres long, between 180 metres and 330 metres wide, and is at least 450 metres thick (the deepest vertical hole at Titac North measures 275 metres in length, and ends in titanium-iron oxide mineralization; however, diamond drill hole TTC-005-2010 was an inclined hole that reached a depth of roughly 450 metres. Titac South is roughly 320 metres long, by 290 metres wide, and is at least 490 metres thick (the deepest vertical hole at Titac South measure 488 metres in length, and ends in titanium-iron oxide mineralization). None of the remaining intrusions at Titac have been drilled.

Lithologically, the Titac property is similar to the Longnose property. The Titac intrusion or intrusions dominantly consist of coarse-grained to pegmatitic pyroxenite and peridotite (Fig. 7-5), with lesser amounts of medium- to coarse-grained dunite, and numerous zones of massive and semi-massive oxide (45-100% titanium-iron oxide mineralization). Pyroxenite, peridotite, and dunite typically contain 15-35% titanium-iron oxide mineralization. Pyroxenite at the Titac intrusion typically contains more oxide mineralization than pyroxenite at the Longnose intrusion. Locally, contacts between the Titac OUI intrusions and the hosting country rock are marked by fine- to medium-grained melatroctolite, which features sub-vertical serpentine veining. Contacts between lithologies within the OUI, or OUIs can be sharp or gradational, however they are usually sharp (cm to m).

In terms of mineralized intrusions geometry, Titac is different to the Longnose intrusion. Both Titac North and Titac South appear to be vertical pipe-like intrusions, with complex sub-vertical sheet-like, and/or zoned stratigraphies/lithological variations (Figs. 7-7 & 7-8). Both Titac North and Titac South are open at depth.

27

Figure 7-7: Schematic cross-section through the Titac Oxide-bearing Ultramafic Intrusion (Titac South).

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Figure 7-8: Schematic cross-section through the Titac Oxide-bearing Ultramafic Intrusion (Titac North).

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8 Deposit Types

Titaniferous iron oxide intrusions within the Duluth Complex were first discovered in 1867, roughly coincident with the discovery of the Mesabi Range iron ores (Winchell, 1897). Broderick (1917) was the first to classify the intrusions while working in the northern part of the Duluth Complex, subdividing them into 4 groups: A) inclusions of Gunflint Iron-Formation, B) gabbroic banded segregations, C) irregular late intrusions of titaniferous magnetite, and D) dike-like intrusions of titaniferous magnetite. Severson (1988), and Severson and Hauck (1990) recognized types 3 and 4 while working in the western and southern portions of the Duluth Complex and reclassified them together as OUIs, based on their ultramafic composition, high oxide content, and cross-cutting relationships to the layered series troctolitic intrusions that host them. Hauck et al. (1997) reclassified Broderick’s (1917) subdivisions into three general types: Type 1, banded or layered, oxide-rich metasedimentary inclusions in mafic and ultramafic rocks; Type 2, banded or layered oxide segregations (cumulates) in mafic rocks; and Type 3, discordant OUIs with semi-massive to massive oxide zones. Both the Titac and Longnose intrusions are classified as Type 3 titaniferous iron oxide intrusions (Hauck et al. 1997) as described below.

Type 3 titaniferous iron oxide intrusions in the Duluth Complex are somewhat similar to the ultramafic intrusions of the Bushveld Complex, the Stillwater Complex, and the Rio Jacare Intrusion of Brazil (Hauck et al. 1997). They are typically composed of coarse-grained to pegmatitic, oxide-bearing (>5% to 30% oxide minerals) pyroxenite, peridotite, and dunite, which contain lenses of semi-massive (>30% to 90% oxide minerals) and massive oxide (>90% oxide minerals). OUIs in the Duluth Complex vary in size and shape, but generally seem to occur as sheet-like intrusions (sills), funnel-like intrusions, dike-like intrusions, or pipe-like intrusions. They can be zoned with numerous apophyses around a centralized ultramafic core. When they are zoned, they tend to feature pegmatitic pyroxenite generally surrounding a core of coarse-grained to pegmatitic peridotite and dunite. They appear to be deep-seated and several Duluth Complex OUIs seem to be root-less.

Genesis of the Duluth Complex OUIs is speculative and several theories have been proposed as described below:

1)

Severson (1988, 1991, & 1994), and Severson and Hauck (1990) suggest that a spatial/empirical relationship between the Duluth Complex OUIs and the Biwabik Iron- Formation exists, and that incorporation of the Biwabik Iron-Formation by the Duluth Complex at the basal contact may have inspired the genesis of the Duluth Complex OUIs. This does not directly explain the high titanium content of the Duluth Complex OUIs however; Muhich (1993) finds that the Biwabik Iron-Formation is locally enriched in titanium proximal to the Duluth Complex basal contact. Muhich’s (1993) observations suggest that the Duluth Complex OUIs may be genetically related to the Biwabik Iron- Formation, and may be assimilated inclusions of Biwabik Iron-Formation that have been enriched in titanium and iron from Duluth Complex magmas and fluids.

2)

Severson (1988, 1994) and Severson and Hauck (1990) also suggested, as did Ross (1985) that Duluth Complex OUIs formed by infiltration metasomatism. Infiltration metasomatism calls on the upward streaming of intercumulus fluids that are derived from within a crystallizing cumulus pile, or more simply put, the magma itself. This genesis

30

mechanism has been suggested for the formation of similar ultramafic plugs in the Bushveld Complex (Schiffries, 1982; Viljoen and Scoon, 1985).

3)

Bonnichsen (1972) and Mainwaring and Naldrett (1977) suggested a magmatic origin for the Duluth Complex OUIs. In this empirical magmatic genesis model, the Duluth Complex OUIs would form from ferrogabbroic magmas, containing an abundance of suspended plagioclase crystals which separate from the magma and rise to the top of the magma chamber due to density contrasts, subsequently leaving the much more dense iron-rich titaniferous ultramafic magma toward the bottom.

Evidence for all three genesis models exists, thus all three models, or a combination of the three may be accurate in specific instances. Mineralization at both properties appears to be largely intrusive in nature, but also exhibits textures near contacts with country rock that could be metasomatic in nature. It also seems apparent that in some instances Biwabik Iron formation could have influenced mineralization, based on the proximity of some OUIs to Biwabik Iron-Formation country rock. However, not all OUIs in the Duluth Complex show obvious proximity to occurrences of Biwabik Iron-Formation.

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9 Mineralization

Mineralization at Longnose

Mineralization at Longnose dominantly consists of disseminated to net-textured, medium- to coarse-grained, magnetite and ilmenite with some fraction of titaniferous magnetite. It is quite difficult to tell the difference between titanium-rich mineralization and iron-rich mineralization in hand sample, however the general statement could be made that drill core exhibiting a dark-silvery color is ilmenite-rich, drill core exhibiting a dull-black color is rich in titaniferous magnetite, and drill core exhibiting a shiny-black color is magnetite-rich. Olivine-rich ultramafic rocks (peridotite, feldspathic peridotite, & dunite) host the majority of the titanium-iron oxide mineralization found in the Longnose OUI, and will often be net-textured with oxide minerals interstitial to silicates. Visual modal mineral calculations generally estimate that titanium-iron oxide minerals compose 15-35% of the peridotitic and dunitic rocks at Longnose. Numerous massive and semi-massive titanium-iron oxide horizons or zones (45-100% titanium-iron oxide) have been intersected in drill core. These massive and semi-massive oxides seem to be dominantly hosted by peridotite and dunite, though they have been intersected within zones of pyroxenite as well. It is somewhat unclear if the massive and semi-massive zones are continuous throughout the intrusion, or if they exist as discrete “pockets”. It is clear though, that the main mineralized intrusion at Longnose is a thick, laterally and vertically continuous intrusion dominantly composed of a mixture of oxide-bearing peridotite, oxide-bearing dunite, massive oxide, and semi-massive oxide with between 15% and 100% titanium-iron oxide mineralization.

Mineralization at Titac

Titaniferous-iron oxide mineralization at the Titac property shares many similar characteristics of mineralization at the Longnose property. When mineralization is hosted by olivine-rich ultramafic rocks it is typically medium- to coarse-grained, disseminated to net-textured, and interstitial to silicate minerals. The largest difference occurs with mineralization hosted by pyroxenite, in which the oxide mineralization typically occurs as medium- to coarse-grained clumps or clots up to roughly 5 cm in size (typically 2-4 cm) at Titac.

The Titac intrusion also contains abundant copper-sulfide mineralization. Up to five modal percent (typically 1-2%) copper-sulfide mineralization has been observed, dominantly consisting of chalcopyrite and bornite. Two distinct types of chalcopyrite seem to be present including a bright, golden, metallic colored chalcopyrite and a second duller, brownish-bronze colored chalcopyrite. Bornite exhibits a deep blue-purple metallic color. Copper sulfides typically occur as medium- to coarse-grained disseminations interstitial to silicates and oxides, but also occur as pegmatitic clots up to roughly 5 cm in size (typically 2-3 cm). Very fine-grained disseminations of pyrrhotite can occur near the contacts of the OUI and the country rock (in both OUI rocks and country rocks), and rarely fine-grained pyrite will fill micro-fractures (<1 to 2 mm thick) within the OUI.

Mineralization at Titac North appears to be vertically continuous, as historic diamond drill hole 26002 was drilled vertically near the center of Titac North (Fig. 7-8), and encountered strongly mineralized pyroxenite, and massive and semi-massive oxide throughout its length (~275 metres). Mineralization at Titac South also appears to be vertically continuous as Cardero diamond drill hole TTC-019-2010 was drilled vertically near the center of the Titac South (Fig. 7-

32

7) magnetic anomaly, and intersected strongly mineralized pyroxenite, peridotite, and numerous zones of massive and semi-massive oxide throughout its length (approximately490 metres). Titac North and Titac South appear to be somewhat laterally continuous as well, though there does seem to be anorthositic, locally basaltic, rarely sedimentary, and possibly troctolitic inclusions within both intrusions, and the lateral stratigraphy of both intrusions seems to be quite heterogeneous.

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10 Exploration

Exploration of the Longnose and Titac properties by CIOUS began in the summer of 2010 with field searches for historic drill collars. Benchmark Engineering (Mountain Iron, Minnesota) was contracted to conduct the search with key Cardero personnel on hand to oversee the work. At that time re-assaying of historic drill core from the Longnose property, which is stored at the University of Minnesota, Natural Resources Research Institute, Coleraine Minerals Research Laboratory, Coleraine, Minnesota, was also conducted.

Very little bedrock is exposed at the Longnose property, and no bedrock is exposed at the Titac property. Because of this, no bedrock mapping has been completed by Cardero to date (January 2011), although at least one bedrock map of the Longnose property has been published (Linscheid, 1991), and bedrock outcrops from Linscheid (1991) were evaluated and included in the Bedrock Geological Map of Allen Quadrangle (Severson and Miller, 1999; pers. com., Severson, July 2010).

Airborne geophysical surveys have been conducted at both properties by the Minnesota Geological Survey; these surveys provided the initial template for early exploration projects on both properties. Ground magnetic surveys were also conducted on both properties. The ground magnetic survey conducted at the Longnose property by American Shield Corp. has not been obtained by Cardero; however, the original grid for the survey is still largely visible in the field. The ground magnetic survey conducted by USSC in 1967 on the Titac property has been obtained by Cardero. A map of this survey, including the original grid, reading stations, readings, and the collar location for the first drill hole drilled on the property (DDH 26000) was obtained from the archives at the Minnesota Department of Natural Resources office in Hibbing, Minnesota in 2010. This map has been georeferenced based on the drill collar and road locations. The grid and station locations were then converted to metres in the Universal Trans Mercator projection, using the North American 1983 datum. The station locations and magnetic readings were then entered into a spreadsheet, and the data was re-interpreted by Quantec Geoscience. The results of this re-interpretation confirmed the presence of multiple titaniferous-iron oxide-bearing intrusions at the Titac property (Fig. 10-1) including two large intrusions here referred to as Titac North and Titac South, as well as numerous smaller intrusions to the west and northwest.

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Figure 10-1: Re-interpretation of 1967 ground magnetic data, confirms the presence of multiple titaniferous-iron oxide-bearing intrusions at Titac, including the two main intrusions (Titac North & Titac South).

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11 Drilling

Introduction

CIOUS completed drilling of 36 NQ2 diamond drill holes totaling 11,471.6 metres (37,636.5 feet) on the Titac and Longnose properties between February 2010 and June 2010. Drilling depths were recorded in feet, as is the standard in the US. Drilling was completed by licensed drilling contractor Idea International Drilling Ltd. (Idea). Idea conducted drilling operations using four different drill rigs (Atlas Copco CS1000, Atlas Copco Diamec U6, Atlas Copco CT14, and a Sandvik DE130) with two rigs operating at any given point in time. Drill rigs were skid-mounted (with the exception of the Atlas Copco CT14), and maneuvered in the field using Caterpillar D5M and D7G tractors. Licensed contractor Warren Johnson Excavating was contracted to install all drill trails, drill pads, and entrance/exit points. Trails, pads, and entrance/exit points were installed using a combination of Caterpillar tractors, Caterpillar excavators, and various logging skidders.

All drill holes were permanently abandoned per Minnesota Department of Health standards, by setting a plug at least 300 feet below the surface of bedrock and filling the portion of the boring above the plug with neat cement. One drill hole (LNG-002-2010) was temporarily abandoned per Minnesota Department of Health standards by installing a five foot casing extension on the drill collar and screwing a cap onto the casing extension. This hole was temporarily abandoned due to unseasonably warm temperatures causing swamp-ground to become unworkable and forcing drilling operations in the swamp to cease and heavy equipment in the immediate area to be evacuated.

Down-hole surveys have been completed on all contemporary drill holes. The Idea survey crew conducted down-hole surveys of each respective drill hole following completion of each hole. Down-hole surveys were completed using a Gyro-based tool, with survey readings collected every 20 feet. Data consists of a dip reading in degrees, and easting and northing readings in feet relative to the starting position of the survey.

Drill hole locations were recorded at the time of drilling using a hand held Garmin GPS unit with accuracy to +/- 6 metres. Because casing was pulled upon completion of each drill hole, a steel fence post was used to mark the location of each hole. A location survey was completed by the Idea survey crew upon completion of drilling operations. Licensed surveyors Northern Lights Surveying and Mapping Inc. (Virginia, Minnesota) were contracted by Idea to place 4-5 location pins on site at each respective property. Upon installation of these pins Idea surveyed drill hole locations with accuracy to 2/10ths of a foot, recording the easting, northing, and elevation of each drill hole.

There are also a number of historic drill holes that have been drilled on both the Titac and Longnose properties. Only the drill holes completed prior to approximately 1970 have drill collars that still exist on site. These drill collars have been located and surveyed with a differential GPS. Since approximately 1970, drill casings have been mandated to be removed upon remediation of the drill site, so these drill collars do not exist. Evidence, such as drill pad clearings in the forest, has been found to support the location of many of these historic holes and their drill collar locations are believed to be within 10 metre accuracy.

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Table 11-1 documents the technical specifications of all contemporary and historic drilling at both the Titac and Longnose properties.

Table 11-1: Technical specifications of all diamond drill holes on the Longnose Property.

LONGNOSE PROPERTY CONTEMPORARY (drilled by Cardero Iron Ore Company Ltd.)
DDH#	(Survey) mE	(Survey) mN	Total Depth (ft)	Azimuth	Dip	Total Depth (m)
LNG-001-2010	572158.1	5268405.0	794	315	-45	242.0
LNG-002-2010	572232.4	5268492.7	329.5	315	-45	100.4
LNG-003-2010	571921.7	5268537.5	306	315	-45	93.3
LNG-004-2010	571996.9	5268694.2	516	315	-45	157.3
LNG-005-2010	572130.6	5268853.9	597	Vertical	-90	182.0
LNG-006-2010	572083.0	5268744.5	568	Vertical	-90	173.1
LONGNOSE PROPERTY HISTORIC (drilled by American Shield Corp., Bear Creek Mining, and Nicor)
DDH#	mE	mN	Total Depth (ft)	Azimuth	Dip	Total Depth (m)
LN-1	572034	5268381	634	315	-45	193.2
LN-2	572094	5268489	570	315	-45	173.7
LN-3	572127	5268624	502	315	-45	153.0
LN-4	572072	5268421	612	315	-45	186.5
LN-5	572462	5268305	602	315	-45	183.5
LN-6	572232	5268360	595	315	-45	181.4
LN-7	572552	5268394	602	315	-45	183.5
LN-8	572234	5268689	402	315	-45	122.5
LN-9	572118	5268550	400	315	-45	121.9
LN-10	572010	5268483	330	315	-45	100.6
A1-1	571995	5268584	416	Vertical	-90	126.8
BA-6	571869	5268614	3085	Vertical	-90	940.3

Table 11-1: Technical specifications of all diamond drill holes on the Titac property.

TITAC PROPERTY CONTEMPORARY (drilled by Cardero Iron Ore Company Ltd.)
DDH#	(Survey) mE	(Survey) mN	Total Depth (ft)	Azimuth	Dip	Total Depth (m)
TTC-001-2010	568033.6	5228365.0	756	Vertical	-90	230.4
TTC-002-2010	568005.9	5228444.5	685	Vertical	-90	208.8
TTC-003-2010	567915.6	5228321.0	1196	130	-60	364.5
TTC-004-2010	567992.4	5228225.1	1137	73	-60	346.6
TTC-005-2010	568089.8	5228109.2	1707	0	-60	520.3
TTC-006-2010	568020.5	5228360.1	867	25	-75	264.3
TTC-007-2010	568317.8	5228222.7	1256	305	-60	382.8
TTC-008-2010	568320.2	5228220.8	1206	355	-60	367.6
TTC-009-2010	567966.7	5227486.0	1235	55	-45	376.4
TTC-010-2010	567743.4	5227519.3	1286	90	-60	392.0
TTC-011-2010	567965.7	5227490.9	894	115	-45	272.5

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TTC-012-2010	567786.7	5227652.2	1276	130	-60	388.9
TTC-013-2010	567967.1	5227493.0	830	125	-45	253.0
TTC-014-2010	567933.4	5227620.0	1986	162	-60	605.3
TTC-015-2010	567970.0	5227486.2	855	165	-45	260.6
TTC-016-2010N	567968.9	5227488.1	895	187	-45	272.8
TTC-017-2010	567928.4	5227630.4	1047	332	-85	319.1
TTC-018-2010	567961.5	5227486.0	865	219	-45	263.7
TTC-019-2010	567976.6	5227494.0	1607	Vertical	-90	489.8
TTC-020-2010	567968.2	5227482.8	1015	6	-45	309.4
TTC-021-2010	567873.0	5227482.3	1227	82	-75	374.0
TTC-022-2010	567964.5	5227489.5	1148	15	-65	349.9
TTC-023-2010	567849.0	5227555.2	1157	128	-75	352.7
TTC-024-2010	567970.0	5227486.7	1258	72	-65	383.4
TTC-025-2010	568083.8	5227592.6	1258	220	-75	383.4
TTC-026-2010	567965.4	5227482.8	1258	112	-65	383.4
TTC-027-2010	568081.9	5227423.5	1258	308	-75	383.4
TTC-028-2010	567966.3	5227483.9	1207	201	-65	367.9
TTC-029-2010	567964.1	5227486.6	1097	249	-65	334.4
TTC-030-2010	567964.2	5227489.7	1057	308	-50	322.2
TITAC PROPERTY HISTORIC (drilled by United States Steel Corporation)
DDH#	mE	mN	Total Depth (ft)	Azimuth	Dip	Total Depth (m)
26000	568539	5228590	730	250	-46	222.5
26001	567927	5227501	552	Vertical	-90	168.2
26002	568100	5228342	901	Vertical	90	274.6
26003	567837	5227580	466	Vertical	90	142.0
26007	568250	5228343	587	Vertical	90	178.9
26008	568158	5228219	607	Vertical	90	185.0

Longnose Drilling Results

The OUI at Longnose is very well defined by drilling with between 75 and 125 metres between pertinent drill holes. Most drill holes on the property have intersected thick intervals of titanium-iron oxide mineralization, and the intrusive stratigraphy of the OUI can be fairly well correlated. The drilling completed by American Shield Corp. and Nicor follows a grid pattern in which section lines have a 315 degree bearing, and most of these holes were drilled with an azimuth of 315 degrees and a dip of -45 degrees, except several holes that were drilled vertically (See Table 10-1). The drilling completed by CIOUS does not follow this grid, but instead fills in local gaps, and explores the outer limits of the defined Longnose intrusion. The intrusive stratigraphy of the Longnose OUI seems to dip to the southeast at 30-45 degrees; therefore drill holes with a -45 degree dip should give a reasonably accurate indication of the true thickness of mineralization. Table 11-2 documents relevant intersections of mineralization with weighted averages for TiO₂ and Fe₂O₃, from the perspective of TiO2, displayed in percent.

Cardero also re-assayed historic core from the Longnose property. The relevant results of this sampling and re-assay program are displayed in Table 11-3 with weighted averages for TiO₂ and Fe₂O₃, from the perspective of TiO₂, displayed in percent.

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Table 11-2: Drill core assay results for Longnose (Intervals and thicknesses are to the nearest tenth of a metre; weighted average of TiO₂ and Fe₂O₃ are to the nearest tenth of a percent).

LONGNOSE		From (m)	To (m)	Thickness (m)	Weighted Average (%)
Drillhole					TiO2 %	Fe2O3 %
LNG-001-2010		19.5	224.3	204.8	15.3	33.9
	incl.	49.1	88.1	39.0	20.6	35.8
	incl.	103.6	210.6	107.0	18.9	43.0
	incl.	123.4	139.0	15.6	23.0	41.2
	incl.	143.4	178.6	35.2	24.2	50.4
LNG-003-2010		5.2	93.3	88.1	14.5	33.0
	incl.	5.2	41.5	36.3	21.4	38.9
	incl.	5.2	29.3	24.1	23.1	39.2
LNG-004-2010		1.2	39.9	38.7	17.9	27.1
	incl.	1.2	20.1	18.9	19.2	26.7
LNG-006-2010		9.4	21.6	12.2	14.5	24.3

Table 11-3: Re-assays of historic Longnose drill core (Intervals and thicknesses are to the nearest tenth of a metre; weighted average of TiO₂ and Fe₂O₃ are to the nearest tenth of a percent).

LONGNOSE (Historic) Re-Assays		From (m)	To (m)	Thickness (m)	Weighted Average (%)
Drillhole					TiO2 %	Fe2O3 %
LN-1		33.5	91.4	57.9	17.8	36.1
LN-2		13.4	172.2	158.8	20.3	40.1
	incl.	36.6	121.9	85.3	25.7	45.9
LN-3		11.9	149.4	137.5	19.9	34.2
	incl.	54.9	132.2	77.3	22.5	34.3
	incl.	97.5	118.9	21.4	26.1	32.5
LN-4		15.5	186.5	171.0	20.8	39.3
	incl.	15.5	149.4	133.9	24.1	42.2
	incl.	15.5	67.1	51.6	28.6	38.0
LN-5		70.1	79.2	9.1	14.6	32.8
		85.3	94.5	9.2	15.4	32.8
		120.7	183.5	62.8	17.1	36.5
LN-6		110.0	181.4	71.4	20.3	40.7
LN-8		8.2	122.5	114.3	18.5	31.2
	incl.	39.6	122.5	82.9	21.6	35.9
LN-9		50.0	112.8	62.8	15.0	30.1
LN-10		11.9	100.6	88.7	22.6	42.7

Titac Drilling Results

There are several OUIs at the Titac property of varying sizes. Only the two main intrusions (Titac North & Titac South) have been drilled, and only Titac South has been extensively drilled

39

(refer to figure 7-7). The Titac North and Titac South OUIs both appear to be oriented subvertically, and appear to have complex igneous stratigraphies. The orientation and complexity of these intrusions have posed specific difficulties with regards for drill planning.

Drilling at Titac North in the late 1960’s by USSC consists of three vertical holes drilled into the main intrusive intrusion, and a fourth angled hole drilled to the northeast of the main intrusion (Table 11-1). Strong titanium-iron oxide mineralization was intercepted in all three vertical holes drilled by USSC, while the fourth angled hole largely missed mineralization. CIOUS drilled a total of eight holes at Titac North in 2010. The first two holes (TTC-001-2010 & TTC-002-2010; Table 11-1) were vertical and largely missed mineralization, while the remaining six holes (TTC-003-2010 through TTC-008-2010; Table 11-1) were angled and all intercepted strong titanium-iron oxide mineralization to varying degrees of success. Ground cover at Titac North is largely swamp land, and an early spring break-up in 2010 hampered drilling efforts by CIOUS, and forced drilling efforts to Titac South.

Two holes were drilled at Titac South by USSC in the late 1960’s, both holes are vertical, and both holes intercepted thick intervals of strong titanium-iron oxide mineralization. Twenty-two holes were drilled at Titac South by CIOUS in 2010. Every hole at Titac South intercepted thick intervals of strong titanium-iron oxide mineralization. Given the sub-vertical orientation, and sheet-like or ring-like stratigraphy of the intrusion, the drill plan at Titac South featured a central fan- or (inverted) funnel-like pattern of “inside-out” drill holes with various azimuths and dips (TTC-009,-011,-013,-015,-016,-018,-020,-022,-024,-026,-028,-029,-030-2010; Table 11-1). Numerous holes were also drilled “outside-in” toward the center of the intrusion (TTC-010,-012,-014,-017,-021,-023,-025,-027-2010; Table 11-1). Drill hole density is good at Titac South, with a first round of holes drilled with a dip of -45 degrees from the fan-site, and a second round of holes drilled with a dip of -65 degrees from the fan-site. Holes drilled from the “outside-in” feature a similar pattern of dips. A vertical hole (TTC-019-2010) was also drilled at the fan-site to a depth of 490 metres. Because of the sub-vertical orientation, and complex igneous stratigraphy at both Titac North and Titac South, the true thickness of specific mineralization intervals is not known, though the size and grade of both intrusions can be determined by three-dimensional modeling. Table 11-4 documents relevant intersections of mineralization at Titac North, and Table 11-5 documents relevant intersections of mineralization at Titac South, both from the perspective of TiO₂ with weighted averages for TiO₂, Fe₂O₃, and copper; though these intersections do not portray true thickness in a planar manner, they are useful when considered in three-dimensions and give a sense of the expected grades for the intrusions.

Re-assaying of historic core from the Titac property has not been conducted. However, several points are worth noting: 1) Historical assays from the six holes drilled by USSC were favorable enough to lead Cardero to acquisition of the Titac property, and 2) Titac South has been extensively drilled by CIOUS to the point that re-assaying of the six historical drill cores will not affect the results of this program.

Table 11-4: Drill core assay results for Titac North (Intervals and thicknesses are to the nearest tenth of a metre; weighted average of TiO₂ and Fe₂O₃ are to the nearest tenth of a percent; weighted averages for copper are to the nearest hundredth of a percent).

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TITAC NORTH		From	To	Thickness	Weighted Average (%)
Drillhole		(m)	(m)	(m)	TiO2 %	Fe2O3 %	Cu %
TTC-003-2010		29.0	62.8	33.8	17.1	46.7	0.08
		94.2	103.9	9.7	18.8	30.9	0.24
		142.0	148.1	6.1	17.3	34.9	0.21
		160.0	167.0	7.0	19.6	33.9	0.24
		270.1	278.1	8.0	17.6	36.8	0.37
TTC-004-2010		79.9	96.6	16.7	16.6	30.7	0.25
		207.9	225.9	18.0	19.2	45.7	0.20
		236.8	253.6	16.8	15.2	34.0	0.24
		260.0	287.1	27.1	17.4	34.1	0.23
TTC-005-2010		74.4	83.1	8.7	16.3	24.3	0.36
		129.8	140.5	10.7	17.0	29.1	0.30
		210.8	219.8	9.0	20.8	48.1	0.23
		230.4	244.8	14.4	17.5	36.5	0.25
		264.0	278.1	14.1	18.0	32.8	0.27
		306.6	350.8	44.2	18.2	50.7	0.08
TTC-006-2010		23.2	53.2	30.0	15.1	32.8	0.26
	incl.	40.5	53.2	12.7	16.3	33.9	0.24
TTC-007-2010		142.0	147.5	5.5	15.0	35.8	0.26
		153.0	158.2	5.2	16.5	32.7	0.26
		292.5	360.9	68.4	15.3	36.5	0.28

Table 11-5: Drill core assay results for Titac South (Intervals and thicknesses are to the nearest tenth of a metre; weighted average of TiO₂ and Fe₂O₃ are to the nearest tenth of a percent; weighted averages for copper are to the nearest hundredth of a percent).

ITAC SOUTH		From (m)	To (m)	Thickness (m)	Weighted Average (%)
Drillhole					TiO2 %	Fe2O3 %	Cu %
TTC-009-2010		153.2	235.0	81.8	17.7	34.7	0.22
TTC-010-2010		335.6	392.0	56.4	15.3	31.5	0.22
	incl.	366.0	392.0	25.9	19.8	30.1	0.32
TTC-011-2010		61.6	68.3	6.7	19.4	33.3	0.40
		83.2	96.3	13.1	18.3	33.2	0.28
		104.9	132.3	27.4	18.6	34.4	0.35
		143.0	161.2	18.2	16.8	46.7	0.13
TTC-012-2010		89.5	94.8	5.3	16.3	28.2	0.25
		100.9	115.7	14.8	13.5	28.3	0.16
		198.6	199.3	0.7	21.2	29.9	0.22
		239.6	245.4	5.8	15.6	23.7	0.29
		258.5	350.8	92.3	15.0	25.0	0.20
	incl.	296.0	326.1	30.1	17.2	26.8	0.23
	incl.	340.2	349.3	9.1	19.9	31.4	0.24
TTC-013-2010		94.5	103.6	9.1	20.7	32.9	0.25
		106.7	144.8	38.1	15.6	28.5	0.25
	incl.	106.7	120.4	13.7	18.3	31.3	0.28

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TITAC SOUTH		From (m)	To (m)	Thickness (m)	Weighted Average (%)
Drillhole					TiO2 %	Fe2O3 %	Cu %
TTC-014-2010		71.9	97.8	25.9	16.1	31.1	0.17
		123.7	131.4	7.7	15.5	30.1	0.17
		155.4	168.2	12.8	22.5	46.1	0.17
		178.2	183.2	5.0	18.1	31.3	0.16
		191.4	209.1	17.7	16.2	27.9	0.24
		228.6	432.2	203.6	18.8	29.3	0.33
	incl.	256.6	370.6	114.0	21.0	30.9	0.43
TTC-015-2010		39.9	109.4	69.5	16.4	30.8	0.35
	incl.	39.9	56.4	16.5	25.6	41.2	0.48
	incl.	76.4	97.5	21.1	19.6	35.2	0.46
TTC-016-2010N		40.5	101.5	61.0	18.4	36.9	0.27
	incl.	40.5	69.2	28.7	22.6	40.7	0.36
TTC-017-2010		48.2	63.1	14.9	17.5	26.8	0.28
		147.2	152.1	4.9	17.7	27.5	0.23
		214.3	229.5	15.2	17.2	25.4	0.20
TTC-018-2010		38.4	84.7	46.3	18.1	34.1	0.30
TTC-019-2010		27.9	490.0	462.1	20.6	33.2	0.37
	incl.	38.7	49.4	10.7	22.0	39.3	0.29
	incl.	95.1	159.1	64.0	23.3	33.3	0.57
	incl.	178.9	279.5	100.6	24.7	32.0	0.48
	incl.	310.0	337.4	27.4	21.6	32.4	0.38
	incl.	340.5	363.3	22.8	21.7	31.1	0.25
	incl.	456.3	477.6	21.3	23.7	38.0	0.19
TTC-020-1020		38.9	185.0	146.1	17.2	33.6	0.29
	incl.	38.9	52.7	13.8	23.2	39.0	0.44
	incl.	38.9	81.1	42.2	20.3	37.0	0.38
	incl.	121.6	185.0	63.4	18.1	33.5	0.28
	incl.	128.3	139.8	11.5	23.2	35.5	0.29
TTC-021-2010		30.8	374.0	343.2	17.6	30.6	0.21
	incl.	94.8	374.0	279.2	19.5	33.0	0.24
	incl.	168.6	230.7	62.1	24.0	39.7	0.19
	incl.	187.8	217.8	30.0	28.7	45.5	0.20
	incl.	206.3	217.8	11.5	32.3	40.2	0.30
	incl.	305.6	322.3	16.7	24.5	33.3	0.40
	incl.	335.9	364.8	28.9	27.7	34.2	0.32
TTC-022-2010		29.9	92.4	62.5	16.6	33.1	0.25
	incl.	58.8	84.1	25.3	18.0	32.8	0.29
		125.2	145.7	20.5	16.6	30.8	0.22
		165.5	182.9	17.4	17.2	30.7	0.21
		196.3	224.9	28.6	16.7	34.3	0.17
		276.0	281.6	5.6	16.7	29.1	0.26
TTC-023-2010		29.6	36.3	6.7	15.8	25.5	0.24

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TITAC SOUTH		From (m)	To (m)	Thickness (m)	Weighted Average (%)
Drillhole					TiO2 %	Fe2O3 %	Cu %
		55.2	66.8	11.6	17.1	28.7	0.14
		88.1	107.1	19.0	15.1	26.9	0.12
		124.4	134.4	10.0	16.0	34.0	0.08
		142.3	148.4	6.1	16.2	29.0	0.14
		156.2	193.2	37.0	15.8	30.1	0.16
		213.7	239.9	26.2	18.6	27.5	0.32
		266.1	281.3	15.2	17.1	27.1	0.20
TTC-024-2010		42.5	49.7	7.2	15.8	28.0	0.24
		129.5	352.0	222.5	14.9	32.9	0.18
	incl.	129.5	133.5	4.0	18.2	37.5	0.33
	incl.	146.0	213.8	67.8	16.4	32.6	0.18
	incl.	256.6	291.8	35.2	20.1	35.2	0.24
	incl.	264.0	278.6	14.6	23.4	36.2	0.28
	incl.	299.1	306.2	7.1	16.5	37.8	0.17
	incl.	346.6	352.0	5.4	16.2	32.5	0.18
TTC-025-2010		29.3	383.4	354.1	16.4	34.6	0.20
	incl.	29.3	120.7	91.4	19.3	46.6	0.21
	incl.	29.3	42.1	12.8	29.1	50.5	0.19
	incl.	82.3	100.6	18.3	21.7	42.2	0.23
	incl.	138.1	282.9	144.8	17.9	30.5	0.21
	incl.	195.4	213.7	18.3	22.4	32.3	0.28
	incl.	349.9	369.4	19.5	22.2	38.5	0.25
TTC-026-2010		30.5	383.4	352.9	14.8	29.4	0.27
	incl.	30.5	42.5	12.0	18.5	35.6	0.39
	incl.	51.2	56.7	5.5	17.5	32.8	0.58
	incl.	62.2	71.3	9.1	17.5	31.4	0.52
	incl.	74.9	79.9	5.0	18.0	33.2	0.63
	incl.	168.2	328.6	160.4	19.3	33.6	0.27
	incl.	228.0	328.6	100.6	20.6	35.8	0.28
	incl.	345.0	360.3	15.3	18.5	28.8	0.18
TTC-027-2010		27.4	383.4	356.0	14.1	28.7	0.25
	incl.	105.8	383.4	277.6	16.6	31.3	0.28
	incl.	152.7	383.4	230.7	17.5	31.7	0.28
	incl.	182.3	221.9	39.6	20.4	33.4	0.30
	incl.	236.8	246.3	9.5	24.3	36.5	0.31
	incl.	293.2	323.1	29.9	20.7	35.1	0.33
	incl.	365.8	374.3	8.5	19.4	37.3	0.37
TTC-028-2010		29.4	134.7	105.3	20.2	34.9	0.28
	incl.	29.4	77.7	48.3	24.2	39.5	0.37
		157.6	170.7	13.1	16.2	24.8	0.31
		190.2	196.0	5.8	17.6	25.5	0.33
		210.0	217.3	7.3	15.0	24.5	0.22

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TITAC SOUTH		From (m)	To (m)	Thickness (m)	Weighted Average (%)
Drillhole					TiO2 %	Fe2O3 %	Cu %
TTC-029-2010		29.3	276.5	247.2	17.5	33.6	0.15
	incl.	29.3	162.5	133.2	20.7	38.6	0.17
	incl.	29.3	88.4	59.1	24.2	44.4	0.13
TTC-030-2010		36.0	203.0	167.0	16.0	31.6	0.17
	incl.	43.0	83.2	40.2	20.4	39.0	0.18
	incl.	100.3	105.8	5.5	16.4	34.3	0.14
	incl.	113.4	133.8	20.4	16.4	29.7	0.19
	incl.	145.4	177.1	31.7	17.8	29.2	0.22
	incl.	192.0	203.0	11.0	16.7	29.2	0.25

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12 Sampling Method and Approach

All samples collected by CIOUS for analysis are from drill core. Drill core sampling is typically continuous through the length of each drill hole, except where drill core is obviously not mineralized. There are no sample biases, and samples are representative of the mineralization found. The rocks are intrusive and competent, typically with limited, localized fracturing. Drill core recovery averages 92.3% and rock quality is typically good.

Drill Core and Sample Interval Preparation

Drill core is logged lithologically as it is drilled, and then stored in original cardboard boxes (10 feet per box) on pallets until additional analysis of core can be performed. As time permits, data is collected on core regarding rock quality, core recovery, magnetic susceptibility, and specific gravity. Sample intervals are then set-up, and all drill core is photographed. Currently, all drill core from the 2010 drilling program has been logged and sampled, and all sample results from the 2010 drill core sampling campaign are complete. Lithologic logging and collection of other data from drill core is done per standard industry practices as follows:

Lithologic log: lithologic intervals are recorded in feet based on run blocks inserted at the time of drilling. Specific data is collected on rock type, texture, grain-size, lithologic contacts, modal mineralogy, structures, oxide mineralization, sulfide mineralization, and alteration.

Rock quality/Core recovery: intervals are recorded in feet based on run blocks inserted at the time of drilling. Actual lengths of intervals are measured and recorded in inches. The sum of all pieces of core greater than 10 inches is recorded, and total fractures per interval are recorded. RQD for each interval is determined by dividing the sum greater than 10 inches by the actual total inches of core recorded, and multiplying 100.

Magnetic Susceptibility: Magnetic susceptibility data is collected on all drill core using a SAIC Exploranium KT-9 magnetic susceptibility meter. Five readings are collected for each core interval so that a reading is collected at least every 2 feet.

Specific Gravity: Specific gravity measurements are collected roughly every 20 feet. Core pieces measuring roughly 4-5 inches are weighed first in air (grams), and then in water (grams), using a manual balance and custom built work station.

Core photography: All drill core is photographed using a Sony Cyber-shot digital camera, typically with two core boxes per photo. All pictures are labeled as follows: “DDH Box # (#’-#’).”

Sample intervals: All sample intervals are determined by visual inspection of drill core, generally based on a visual estimation of oxide and sulfide mineralization. Attempts are made to not cross lithologic boundaries within sample intervals; however given the intrusive, locally lithologically heterogeneous nature of drill core this is not always possible. Drill core is pieced together and a line is drawn parallel to the long axis of all drill core to be sampled. Sample intervals range in length from 0.2 metres to roughly 2.5 metres, with most sample intervals from 1.5 -2.0 metres in length. Sample tags are stapled into boxes, and sample identification numbers are written on core for future reference. Sample intervals are recorded, noting the type of sample (i.e. core, ¼ core original, ¼ core duplicate, prep duplicate, standard, or blank), and the general lithology of the sample.

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Sample Collection and Preparation

Samples are collected by sawing core in half along the line drawn parallel to the long axis of core with a diamond tipped blade. The core cutting saw is cleaned at the end of each day, or after 400 feet of core has been cut (whichever is earlier), and the saw is filled with clean water at the time of cleaning. The left half of drill core is kept and remains in the original cardboard boxes, which are securely stored at CIOUS’s field office in Aurora, Minnesota. The right half of core is collected and packaged in clear poly bags, along with a sample tag designating the sample identification number. Bags are labeled in black permanent marker with the corresponding sample identification number and a zip tie is used to close each poly bag. The weight of each sample is then recorded (in grams). Poly bags are packaged in white sand bags (typically five samples per sand bag). Each sand bag is labeled with the sample identification numbers that it contains, and the batch number that the samples belong to. Sand bags are first secured with a standard zip tie, and then a second individually numbered zip tie is placed over the standard zip tie for security. The security number is recorded along with the sample numbers that it represents. The sand bags are then transferred to a standard shipping pallet (generally 10-15 sand bags per pallet). The pallets are shrink wrapped, and labeled with the sample batch numbers. Generally, each drill hole is given a unique sample batch number.

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13 Sample Preparation, Analyses and Security

Sample preparation of drill core is conducted at the CIOUS facility in Aurora, Minnesota by persons under contract with CIOUS to carry out the exploration, drilling, and sampling programs. Sample preparation of historic core from the Longnose property was carried out by Cardero personnel prior to the involvement of contractors hired to carry out the exploration, drilling, and sampling programs.

Sample Analysis

Samples are prepared for assay analysis by ALS Laboratory Group (ALS) at their Thunder Bay, Ontario facility. The laboratory prepares samples for assay using code prep-31, in which samples are crushed, and 250 grams of material from each sample is split off and pulverized so that better than 85% pass through 75 micron mesh. Samples are dried if necessary using code DRY-21. The sample pulp is then shipped to the ALS facility in Vancouver, British Columbia, Canada for assay, while the coarse sample is put in temporary storage at ALS in Thunder Bay (and eventually shipped back to CIOUS’s field office in Aurora, Minnesota).

ALS Laboratory Group laboratories are ISO 17025 certified. The ALS laboratory used for sample preparation is located at 1160 Commerce Street, Thunder Bay, Ontario, Canada P7E 6EP. The ALS laboratory used for sample analysis is located at 2103 Dollarton Hwy, North Vancouver, British Columbia, Canada V7H 0A7.

A whole rock analysis (code: ME-ICP06) is conducted on samples, and base metals are analyzed using code ME-4ACD81. Sample analysis method ME-ICP06 returns results for all major oxides from 0.01 -100% as displayed in table 13-1, and sample analysis method ME-4ACD81 returns results for base metals as listed in table 13-2. Numerous samples have also been analyzed for rare earth and trace elements by ALS using sample method ME-MS81. The elements and respective ranges for sample method MA-MS81 are displayed in table 13-3.

Table 13-1: Analytes and Ranges of ALS Laboratory Group sample analysis method ME-ICP06.

Analyte	Range (%)	Analyte	Range (%)	Analyte	Range (%)
SiO2	0.01-100	Na2O	0.01-100	P2O5	0.01-100
Al2O3	0.01-100	K2O	0.01-100	SrO	0.01-100
Fe2O3	0.01-100	Cr2O3	0.01-100	BaO	0.01-100
CaO	0.01-100	TiO2	0.01-100	LOI	0.01-100
MgO	0.01-100	MnO	0.01-100

Table 13-2: Analytes and Ranges of ALS Laboratory Group sample analysis method ME-4ACD81.

Analyte	Range (ppm)	Analyte	Range (ppm)	Analyte	Range (ppm)
Ag	0.5-100	Cu	1-10,000	Ni	1-10,000
As	5-10,000	Hg	1-10,000	Pb	2-10,000
Cd	0.5-1,000	Mo	1-10,000	Zn	2-10,000
Co	1-10,000

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Table 13-3: Analytes and Ranges of ALS Laboratory Group sample analysis method ME-MS81.

Analyte	Range (ppm)	Analyte	Range (ppm)	Analyte	Range (ppm)
Ag	1-1,000	Ho	0.01-1,000	Ta	0.1-10,000
Ba	0.5-10,000	La	0.5-10,000	Tb	0.01-1,000
Ce	0.5-10,000	Lu	0.01-1,000	Th	0.05-1,000
Co	0.5-10,000	Mo	2-10,000	Tl	0.5-1,000
Cr	10-10,000	Nb	0.2-10,000	Tm	0.01-1,000
Cs	0.01-10,000	Nd	0.1-10,000	U	0.05-1,000
Cu	5-10,000	Ni	5-10,000	V	5-10,000
Dy	0.05-1,000	Pb	5-10,000	W	1-10,000
Er	0.03-1,000	Pr	0.03-1,000	Y	0.5-10,000
Eu	0.03-1,000	Rb	0.2-10,000	Yb	0.03-1,000
Ga	0.1-1,000	Sm	0.03-1,000	Zn	5-10,000
Gd	0.05-1,000	Sn	1-10,000	Zr	2-10,000
Hf	0.2-10,000	Sr	0.1-10,000

Copper analyses that return values greater than the detection limits (>10,000 ppm) of sample method ME-4ACD81 are re-analyzed by ALS using sample method Cu-OG62, which has detection limits of 0.01 -40%.

Sample Security

Drill core is retrieved from drill sites on a daily basis by Cardero staff, and delivered directly to the CIOUS field office in Aurora, Minnesota. Drill core is stored on-site at the field office until sampling can be conducted by Cardero personnel. The CIOUS field office is locked at night and when personnel are not present at the facility and the local Aurora police force regularly patrol the area. There are no issues regarding drill core security.

Upon collection of samples they are packaged as described above and shipped via chartered and bonded independent carrier Valley Carthage Transport and Manitoulin Transport for customs brokerage to ALS Laboratory Group Laboratories in Thunder Bay, Ontario, Canada. There have been no reported incidents regarding the individually numbered security zip ties placed on each sand bag, and thus there are no issues regarding the security of sample shipment.

The authors conclude that the above procedures for sample analysis, preparation and security either meet or exceed industry best practice.

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14 Data Verification

Quality Control Procedures

CIOUS has instituted extensive quality assurance/quality control (QA/QC) procedures to ensure the integrity of sample analyses. The QA/QC procedures followed for all drill core sampling conducted by CIOUS at the Longnose and Titac properties are outlined in figure 14-1.

Figure 14-1: Quality Control/Quality Assurance procedures instituted by Cardero for all drill core sampled from the Longnose and Titac properties.

Field duplicates (FDUP) in this case refer to ¼ core duplicates of the same sampling interval. A preparation duplicate (CDUP) consists of a poly bag containing only a sample tag with instructions for laboratory personnel to prepare the sample from the preceding standard drill core analysis by taking a split after the coarse crushing stage. Four different reference materials are used in the sampling program. “TTC-1” and “LNC-1”, which are in-house reference materials created by Cardero; and, “DH6701” and “SX67-05” are certified reference materials

49

manufactured for Brammer Standard Company, Inc. (14603 Benfer Road, Houston, Texas 77069, United States of America) by accredited laboratory Dillinger Hutte Laboratory (GAZ; Association for the Accreditation and Certification GmbH, Attestation no. 91021). Blank material is collected locally in Minnesota from bedrock outcroppings of the Pokegama quartzite near Virginia, Minnesota. Pokegama quartzite is a suitable blank reference because it is dominantly composed of SiO₂.

A total of 316 reference materials and 138 Pokegama quartzite blank samples were submitted blindly to the laboratory during the core sampling campaign. A total of 310 ¼ core duplicate pairs and 299 preparation duplicate pairs were collected and submitted to the laboratory. Only the ¼ core duplicates were blind to the laboratory. All analytical data including quality control samples were checked and verified by Cardero’s senior geochemist, Tansy O’Connor-Parsons.

Quarter-core and preparation duplicate data are presented in Figure 14-2. These data exhibit good to excellent correlation for the elements of interest.

Figure 14-2. Scatterplot graphs of TiO₂(left) and Fe₂O₃(right) data for ¼ core duplicate (FDUP; top) and preparation duplicate (CDUP; bottom) data.

Reference material results are plotted against their known concentration with tolerance levels within 10% (Figure 14-3). Performance of the certified reference materials was satisfactory for DH6701, although a slight negative bias can be concluded. A similar negative bias for some SX6705 samples were noted at first, however re-analysis of the reference material and surrounding samples resulted in comparable results. It is recommended that analytical check

50

samples from a subset of routine samples of varying concentrations be submitted to a second laboratory in order to confirm the accuracy of the TiO₂ analyses.

Figure 14-3. TiO₂ data presented for certified reference materials DH6701 (top left) and SX6705 (top right); and CDU internal reference materials LNC-1 (bottom left) and TTC-1 (bottom right).

Coarse blank samples (Figure 14-4) indicate predominantly only low-level carryover contamination of titanium and iron during the preparation through to analytical stage.

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Figure 14-4. TiO₂ (left) and Fe₂O₃ (right) data presented for the Pokegama Quartzite Blank samples.

52

15 Adjacent Properties

There is no relevant information with respect to any properties adjacent to either the Longnose or the Titac properties.

53

16 Mineral Processing and Metallurgical Testing

No detailed beneficiation work has been completed by Cardero. Future work is planned to select representative samples from the drill core and/or assay rejects from the drilling program to conduct metallurgical beneficiation studies following NI 43-101 protocol.

Significant amounts of historical beneficiation work has been conducted by the Coleraine Minerals Research Lab (CMRL) which is part of the University of Minnesota Duluth’s (UMD’s) Natural Resources Research Institute (NRRI), located in Coleraine, Minnesota, USA. The work pre-dates the NI 43-101 standards and therefore is not compliant. However, the work was completed to high standards and will be useful in designing the future beneficiation work.

54

17 Mineral Resource and Reserve Estimates

No Mineral resource calculation has been completed. However, SRK Consulting, Vancouver, Canada, have been retained to complete independent resource estimation later in 2011, when all exploration drilling has been completed.

55

18 Other Relevant Data and Information

There is no additional data or information not contained in this report which is relevant.

56

19 Interpretation and Conclusions

Both the Longnose and Titac OUIs are geologically interpreted to be late-stage, intrusive intrusions that cut early Duluth Complex intrusives, and are associated with magmatism generated by the 1.1 billion year old Midcontinent Rift system.

The drilling program conducted in 2010 by CIOUS confirmed strong titanium-iron-oxide mineralization at both the Longnose and Titac properties, and determined that the Titac property contains at least two intrusions with large zones of titanium-iron-oxide mineralization (Titac North and Titac South). Re-interpretation of a 1967 ground magnetic survey also shows that the Titac intrusion may be a cluster of OUIs. The Longnose OUI is hosted by troctolitic rocks of the Partridge River intrusion), and the Titac OUI or OUI’s are hosted by a combination of troctolitic rocks of the Western Margin intrusion and anorthositic rocks of the Anorthositic series (Titac).

The Longnose intrusion is stratigraphically simple, consisting of a core of olivine-rich dunitic and peridotitic rocks containing disseminated titanium-iron oxide mineralization with horizons of massive and semi-massive oxide throughout, that is enveloped by pyroxenitic rocks, which contain much less mineralization. Disseminated titanium-iron oxide mineralization is continuous, and the horizons of massive and semi-massive oxide may link up to form layers that dip moderately coincident with dip of the overall intrusion.

The Titac intrusions are stratigraphically complex with funnel- or pipe-like geometries, and seemingly interlayered peridotite, pyroxenite, massive oxide, and semi-massive oxide. Peridotitic and pyroxenitic rocks at Titac contain disseminated titanium-iron oxide mineralization and copper sulfide mineralization. Zones of melatroctolite, that feature very-fine grained pyrrhotite mineralization and sub-vertical serpentine-veining, locally buffer the contact between the OUI and hosting rocks. Disseminated titanium-iron oxide mineralization is fairly continuous with localized unmineralized zones that maybe inclusions of country rock. Zones of massive oxide and semi-massive oxide seem to be sub-vertically continuous.

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20 Recommendations

The drilling program conducted in 2010 by CIOUS confirmed strong titanium-iron-oxide mineralization at both the Longnose and Titac properties, and determined that the Titac property contains at least two OUIs with large zones of titanium-iron-oxide mineralization (Titac North and Titac South).

Both the Longnose and Titac properties are at an advanced exploration stage and both properties merit additional work. The Longnose intrusion is fairly well defined by historic drilling, and has been further defined by the drilling conducted by CIOUS in 2010. Better definition is needed in select areas of the Longnose intrusion to confirm grade continuity, and drilling in the southern, southeastern, and eastern areas of the intrusion could help to expand the known mineralization of the intrusion. A drilling program is recommended consisting of at least four drills to help confirm grade continuity, and to check the southern, southeastern, and eastern boundaries of the intrusion. The Titac South intrusion was extensively drilled by CIOUS in 2010. Limited drilling is recommended at Titac South to investigate a possible near-surface, high-grade zone of mineralization in the northeastern area of the intrusion. Exploration of the Titac North intrusion has thus far been unable to adequately define the intrusion, and an extensive drilling campaign is recommended. None of the outlying intrusions on the northeastern area of the property have been drilled. Exploration drilling of these intrusions is also recommended.

Detailed recommendations regarding drilling programs and other aspects of both properties are as follows:

• Drilling by CIOUS in 2010 at the Titac South intrusion has defined a large zone of titanium-iron mineralization, and identified an area to the northeast of the intrusion that merits additional drilling. A drilling program consisting of two drill holes is recommended to better define this northeastern area.
• A drilling program consisting of four drill holes at the Longnose property in order to both confirm historical drilling results, and to test continuity of mineralization within the intrusion.
• Upon completion of drilling these six holes, and obtaining assay data for these six holes, it is recommended that a resource calculation should be completed for Longnose and TiTac South. SRK Consulting has been retained to complete this work as independent consultants. Drilling by CIOUS in 2010 at the Titac North intrusion helped to confirm the presence of strong titanium-iron oxide mineralization, however definition drilling is not planned for the 2011 drill program. A future drill program consisting of approximately 50 drill holes will be sufficient to delineate additional resources at TiTac North.
• A re-interpretation of a historical (1967) ground magnetic data by Quantec Geoscience identified numerous outlying intrusions at Titac. An introductory exploration drilling program consisting of four drill holes is recommended to explore these areas.
• A petrographic study of the oxide and sulfide mineralization found at both properties should be conducted to identify the specific oxide and sulfide minerals present at both properties.

58

• Initial metallurgical and recovery testing should be conducted. Initial bulk samples should consist of 100 kilogram composites, collected from drill core sample coarse rejects, and represent average mineralization grades.
• Selective sample pulps should be assayed for platinum group elements contents.

A 2011 budget is presented to complete the recommended work program:

Recommended Item	US$
Longnose in-fill and step-out drilling (4 holes/1100 m @ $163/m*)	$180,000
Titac South in-fill drilling (2 holes/500 m @ $163/m*)	$82,000
Resource calculation & 43-101 Reporting	$60,000
Titac outlying intrusions exploration drilling (4 holes/1200 m @ $163/m*)	$200,000
Acquisition of additional mineral leases/property boundary survey	$40,000
Mineralization study	$15,000
Metallurgical testing	$100,000
Platinum group element assays	$12,000
TOTAL	$689,000
*Drilling cost per meter includes: Site and Trail preparation, drilling, sampling, facility/vehicle lease, and staffing

59

21 References

Bonnichsen, B., 1972, Southern part of the Duluth Complex in Sims, P.K., and Morey, G.B., eds., Geology of Minnesota: A centennial volume, St. Paul, Minnesota Geological Survey, p. 361-387.

Broderick, T.M., 1917, The relation of the titaniferous magnetites of northeastern Minnesota to the Duluth Gabbro, Economic Geology, v. 12, p. 663-696.

Hauck, S.A., Severson, M.J., Zanko, L., Barnes, S.J., Morton, P., Alminas, H., Foord, E.E., and Dahlberg, E.H., 1997, An overview of the geology and oxide, sulfide, and platinum-group element mineralization along the western and northern contacts of the Duluth Complex, in Ojakangas, R.W., Dickas, A.B., and Green, J.C., eds., Middle Proterozoic to Cambrian Rifting, Central North America: Boulder, Colorado, Geological Society of America Special Paper 312.

Linscheid, E.K., 1991, The petrography of the Longnose peridotite and its relationship to the Duluth Complex, Duluth, University of Minnesota, Master’s thesis, 121 p.

Mainwaring, P.R., and Naldrett, A.J., 1977, Country rock assimilation and genesis of Cu-Ni sulfides in the Water Hen Intrusion, Duluth Complex, Minnesota, Economic Geology, v. 72, 1269-1284.

Muhich, T.G., 1993, Movement of titanium across the Duluth Complex-Biwabik Iron Formation contact at Dunka Pit, Mesabi Iron Range, northeastern Minnesota [M.S. thesis], Duluth, University of Minnesota, 154 p.

Patelke, R.L., and Severson, M.J., 2005, A history of Copper-Nickel and Titanium Oxide test pits, bulk samples, and related metallurgical testing in the the Keweenawan Duluth Complex, northeastern Minnesota, Duluth, University of Minnesota, Natural Resources Research Institute, Technical Report NRRI/TR-2005/01, 121 p.

Plainsdaily.com, January 5, 2011 Ross, B.A., 1985, A petrologic study of the Bardon Peak peridotite, Duluth Complex [M.S. thesis], Duluth, University of Minnesota, 140 p.

Schiffries, C.M, 1982, The petrogenesis of a platiniferous dunite pipe in the Bushveld Complex: Infiltration metasomatism by a chloride solution, Economic Geology, v. 77, p. 1439-1453.

Severson, M.J., 1988, Geology and structure of a portion of the Partridge River Intrusion: A progress report, Duluth, University of Minnesota, Natural Resources Research Institute, Technical Report, NRRI/GMIN-TR-88-08, 78 p.

Severson, M.J., 1991, Geology, mineralization, and geostatistics of the Minnamax/Babbitt Cu-Ni deposit (Local Boy area), Minnesota, Part I: Geology, Duluth, University of Minnesota, Natural Resources Research Institute, Technical Report, NRRI/TR-91/13a, 96 p.

Severson, M.J., 1994, Igneous stratigraphy of the South Kawishiwi Intrusion, Duluth Complex, northeastern Minnesota, Duluth, University of Minnesota, Natural Resources Research Institute, Technical Report, NRRI/TR-93/34, 210 p.

60

Severson, M.J., 1995, Geology of the southern portion of the Duluth Complex, Duluth, University of Minnesota, Natural Resources Research Institute, Technical Report, NRRI/TR-95/26, 185 p.

Severson, M.J., and Hauck, S.A., 2008, Finish logging of Duluth Complex drill core (And a Reinterpretation of the Geology at the Mesaba (Babbitt) deposit), Duluth, University of Minnesota, Natural Resources Research Institute, Technical Report, NRRI/TR-2008/17, 62 p.

Severson, M.J., and Miller, J.D., 1999, Bedrock Geological Map of Allen Quadrangle, Minnesota Geological Survey, Miscellaneous Map Series, Map M-91.

Severson, M.J., and Hauck, S.A., 1990, Geology, geochemistry, and stratigraphy of a portion of the Partridge River Intrusion, Duluth, University of Minnesota, Natural Resources Research Institute, Technical Report, NRRI/GMIN-TR-89-11, 230 p.

Ulland, W., 2000, The Longnose and associated titanium deposits of Minnesota: a compilation of reports (June 19, 2000): On file at the MDNR, Lands and Minerals Division, Hibbing, Minnesota, 76 p.

Viljoen, M.J., and Scoon, R.N., 1985, Distribution and main geologic features of discordant intrusions of iron-rich ultramafic pegmatite in the Bushveld Complex, Economic Geology, v. 80, p. 1109-1128.

Weather.com, December 20, 2010, http://www.weather.com/outlook/health/fitness/wxclimatology/monthly/USMN0370 Winchell, H.V., 1897, Reputed nickel mines in Minnesota, Engineering Mining Journal, v. 64, p. 578.

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22 Date and Signature Page

The effective date of this technical report, entitled “Longnose and Titac Iron Titanium Exploration Project, Minnesota, USA – Exploration Results 2010” is January 27, 2011.

Dated: January 27, 2011

Signed:

(signed) Keith J. Henderson                                                  

EurGeol Keith J. Henderson, P.Geo

(signed) Stephen J. Ripke                                                       

Stephen (Jayson) Ripke, QP, MMSA

62

23 Additional Requirements for Technical reports on Development Properties and Production properties

Not applicable.

63

24 Certificates of Authors

CERTIFICATE OF KEITH J. HENDERSON

I, EurGeol Keith J. Henderson, P.Geo, do hereby certify that:

1. I am the Vice-President, Exploration of:

Cardero Resource Corp.
Suite 1920 – 1188 West Georgia Street
Vancouver, British Columbia
CANADA V6E 4A2

2.	I have graduated from the following Universities with degrees as follows:
	a.	Queens University Belfast, B.Sc. (Hons) Geology
	b.	University College Dublin, M.Sc. Petroleum Geology
3.	I am a member in good standing of the European Federation of Geologists and the Institute of Geologists of Ireland.
4.	I have worked in mineral exploration and mining geology for over 18 years since my graduation from the University of Belfast.
5.	I have read the definition of “Qualified Person” set out in National Instrument 43-101 (“NI 43-101”) and certify that by reason of my education, affiliation with professional associations and past relevant work experience, including but not limited to previous experience in the Duluth Complex (Nickel, PGE exploration); regional exploration in the mid-continental rift including southern Ontario, Minnesota and Michigan (data compilation and targeting); and exploration and mapping in northern Quebec (magmatic sulphides in ultramafic intrusions), I fulfill the requirements to be a “Qualified Person” for the purposes of NI 43-101.
6.	I am jointly responsible for the preparation of all sections of the technical report titled “Longnose and Titac Iron Titanium Exploration Project, Minnesota, USA – Exploration Results 2010” and dated January 27, 2011 (the “Technical Report”) relating to the Titac and Longnose properties in Minnesota. I have not visited either the Longnose or the Titac properties.
7.	I have had extensive involvement with the property that is the subject of the Technical Report, having been involved in the review of historical data and initial assessment of the property, and having directed the formulation and implementation of the work programs by the issuer on the property.
8.	I am not aware of any material fact or material change with respect to the subject matter of the sections of the Technical Report for which I am responsible that is not reflected in the Technical Report, the omission to disclose which makes the Technical Report misleading.
9.	I am not independent of the issuer, applying all of the tests in section 1.4 of NI 43-101, as I am an employee and senior officer of the issuer and hold incentive stock options.

64

10. I have read NI 43-101 and Form 43-101F1, and the Technical Report has been prepared in compliance with that instrument and form.

Dated this 27^th day of January, 2011

(signed) Keith J. Henderson

Signature of Qualified Person

EurGeol Keith J. Henderson, P.Geo

Print name of Qualified Person

65

CERTIFICATE OF STEPHEN (JAYSON) RIPKE

I, Stephen (Jayson) Ripke, QP MMSA, do hereby certify that:

1. I am the Vice-President, Technical of:

Cardero Iron Ore Management (USA) Inc.
3559 Flat Creek Road
Lancaster, South Carolina
USA 29720

2.	I have graduated from the following Universities with degrees as follows:
	a.	Michigan Technological University (MTU); B.S. in Metallurgical & Materials Engineering (1997)
	b.	MTU; M.S. in Metallurgical & Materials Engineering (2000)
	c.	MTU; Ph.D. in Chemical Engineering (2002)
3.	I am a member in good standing of the Mining and Metallurgical Society of America an am recognized as a Qualified Professional Member with special expertise in Metallurgy/Processing.
4.	I have worked in mining geology and metallurgy for over 8 years since my graduation from Michigan Technological University.
5.	I have read the definition of “Qualified Person” set out in National Instrument 43-101 (“NI 43-101”) and certify that by reason of my education, affiliation with professional associations and past relevant work experience, including being Process Control Engineer at Cliffs Natural Resources’ (CNR, formerly Cleveland Cliff’s Inc.) Northshore Mine, Chief Metallurgist at CNR’s Wabush Mines, and New Technology Manager and Plant Sales Manager for Midrex Technologies, Inc., I fulfill the requirements to be a “Qualified Person” for the purposes of NI 43-101.
6.	I am jointly responsible for the preparation of all sections of the technical report titled “Longnose and Titac Iron Titanium Exploration Project, Minnesota, USA – Exploration Results 2010” and dated January 27, 2011 (the “Technical Report”), relating to the Titac and Longnose properties in Minnesota. I have visited the Longnose and Titac properties 7 times for a total of 15 days, the most recent visit being for a period of 3 days between December 7 and 10, 2010.
7.	I have had extensive involvement with the property that is the subject of the Technical Report, having been involved in the review of historical data and initial assessment of the property, and have been involved with the formulation and implementation of the work programs by the issuer on the property.
8.	I am not aware of any material fact or material change with respect to the subject matter of the sections of the Technical Report for which I am responsible that is not reflected in the Technical Report, the omission to disclose which makes the Technical Report misleading.
9.	I am not independent of the issuer, applying all of the tests in section 1.4 of NI 43-101, as I am an employee and senior officer of a subsidiary of the issuer and hold incentive stock options.

66

10. I have read NI 43-101 and Form 43-101F1, and the Technical Report has been prepared in compliance with that instrument and form.

Dated this 27^th day of January, 2011

(signed) Stephen J. Ripke

Signature of Qualified Person

Stephen (Jayson) Ripke, QP MMSA

Print name of Qualified Person

67

EX-10

Exhibit 10

CERTIFICATION

I, Hendrik Van Alphen, certify that:

1. I have reviewed this annual report on Form 40-F of Cardero Resource Corp.;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the issuer as of, and for, the periods presented in this report;

4. The issuer's other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the issuer and have:

(a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the issuer, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

(b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

(c) Evaluated the effectiveness of the issuer's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

(d) Disclosed in this report any change in the issuer's internal control over financial reporting that occurred during the period covered by the annual report that has materially affected, or is reasonably likely to materially affect, the issuer's internal control over financial reporting; and

5. The issuer's other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the issuer's auditors and the audit committee of the issuer's board of directors (or persons performing the equivalent functions):

(a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the issuer's ability to record, process, summarize and report financial information; and

(b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the issuer's internal control over financial reporting.

Date: January 28, 2011

(signed) Hendrik Van Alphen                
President and Chief Executive Officer

EX-11

Exhibit 11

CERTIFICATION

I, Michael W. Kinley, certify that:

1. I have reviewed this annual report on Form 40-F of Cardero Resource Corp.;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the issuer as of, and for, the periods presented in this report;

4. The issuer's other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the issuer and have:

(a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the issuer, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

(b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

(c) Evaluated the effectiveness of the issuer's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

(d) Disclosed in this report any change in the issuer's internal control over financial reporting that occurred during the period covered by the annual report that has materially affected, or is reasonably likely to materially affect, the issuer's internal control over financial reporting; and

5. The issuer's other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the issuer's auditors and the audit committee of the issuer's board of directors (or persons performing the equivalent functions):

(a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the issuer's ability to record, process, summarize and report financial information; and

(b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the issuer's internal control over financial reporting.

Date: January 28, 2011

(signed) Michael Kinley             
Chief Financial Officer

EX-12

Exhibit 12

CERTIFICATION PURSUANT TO
18 U.S.C. §1350,
AS ADOPTED PURSUANT TO
SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the Annual Report of Cardero Resource Corp. (the “Company”) on Form 40-F for the fiscal year ended October 31, 2010 as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, Hendrik Van Alphen, the President and Chief Executive Officer of the Company, certify, pursuant to 18 U.S.C. §1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that:

1.	The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and
2.	The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

Date: January 28, 2011

(signed) Hendrik Van Alphen             
Hendrik Van Alphen,
President and Chief Executive Officer

EX-13

Exhibit 13

CERTIFICATION PURSUANT TO
18 U.S.C. §1350,
AS ADOPTED PURSUANT TO
SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the Annual Report of Cardero Resource Corp. (the “Company”) on Form 40-F for the fiscal year ended October 31, 2010 as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, Michael W. Kinley, the Chief Financial Officer of the Company, certify, pursuant to 18 U.S.C. §1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that:

1.	The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and
2.	The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

Date: January 28, 2011

(signed) Michael Kinley              
Michael W. Kinley,
Chief Financial Officer

EX-14

Exhibit 14

CONSENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the Board of Directors of Cardero Resource Corp.

We consent to the inclusion in this annual report on Form 40-F and the incorporation by reference in the registration statement on Form S-8 (No. 333-151385) of Cardero Resource Corp. (the “Company”) of:

• our Report of Independent Registered Public Accounting Firm dated January 26, 2011, on the consolidated balance sheets of the Company as at October 31, 2010 and 2009 and the consolidated statements of operations, shareholders’ equity and cash flows for each of the years ended October 31, 2010, 2009 and 2008;

• our Comments by Auditors for US Readers on Canada-US reporting differences, dated January 26, 2011; and

• our Report of Independent Registered Public Accounting Firm dated January 26, 2011, on the Company’s internal control over financial reporting as of October 31, 2010;

each of which is contained in this annual report on Form 40-F of the Company for the fiscal year ended October 31, 2010.

(signed) Smythe Ratcliffe LLP          
Smythe Ratcliffe LLP
Chartered Accountants

Vancouver, British Columbia, Canada
January 28, 2011

EX-15

Exhibit 15

CONSENT

Each of the undersigned hereby consents to the use of its name and references to, and the use of information derived from, the technical report dated September 10, 2009 entitled “Pampa El Toro Mineral Resource Technical Report” in the following documents, which are being filed as exhibits to and incorporated by reference into the annual report on Form 40-F of Cardero Resource Corp. (the “Company”) being filed with the United States Securities and Exchange Commission and which is being incorporated by reference into the registration statement on Form S-8 (No. 333-151385) of the Company:

1.	The Company’s annual information form for the fiscal year ended October 31, 2010; and
2.	The Company’s management’s discussion and analysis for the fiscal year ended October 31, 2010.

DATED January 28, 2011
SRK Consulting (South Africa) (Pty) Ltd.	(signed) Mark D. Wanless
	Mark D. Wanless
Per: (signed) Mark D. Wanless
Name: Mark D. Wanless
Title: Associate Partner & Principal Geologist

EX-16

Exhibit 16

CONSENT

Each of the undersigned hereby consents to the use of its name and references to, and the use of information derived from, the technical report dated September 10, 2009 entitled “Pampa El Toro Mineral Resource Technical Report” in the following documents, which are being filed as exhibits to and incorporated by reference into the annual report on Form 40-F of Cardero Resource Corp. (the “Company”) being filed with the United States Securities and Exchange Commission and which is being incorporated by reference into the registration statement on Form S-8 (No. 333-151385) of the Company:

1.	The Company’s annual information form for the fiscal year ended October 31, 2010; and
2.	The Company’s management’s discussion and analysis for the fiscal year ended October 31, 2010.

DATED January 28, 2011
Holland and Holland Consultants (UK)	(signed) Leonard Holland
	Leonard Holland
Per: (signed) Leonard Holland
Name: Leonard Holland
Title: President

EX-17

Exhibit 17

CONSENT

The undersigned hereby consents to the use of his name and references to, and the use of information derived from, the technical report dated January 27, 2011 entitled “Longnose and Titac Iron Titanium Exploration Project, Minnesota, USA – Exploration Results 2010” in the following documents, which are being filed as exhibits to and incorporated by reference into the annual report on Form 40-F of Cardero Resource Corp. (the “Company”) being filed with the United States Securities and Exchange Commission and which is being incorporated by reference into the registration statement on Form S-8 (No. 333-151385) of the Company:

1.	The Company’s annual information form for the fiscal year ended October 31, 2010; and
2.	The Company’s management’s discussion and analysis for the fiscal year ended October 31, 2010.

DATED January 28, 2011

(signed) Keith J. Henderson          
EurGeol Keith J Henderson, P.Geo

EX-18

Exhibit 18

CONSENT

The undersigned hereby consents to the use of his name and references to, and the use of information derived from, the technical report dated January 27, 2011 entitled “Longnose and Titac Iron Titanium Exploration Project, Minnesota, USA – Exploration Results 2010” in the following documents, which are being filed as exhibits to and incorporated by reference into the annual report on Form 40-F of Cardero Resource Corp. (the “Company”) being filed with the United States Securities and Exchange Commission and which is being incorporated by reference into the registration statement on Form S-8 (No. 333-151385) of the Company:

1.	The Company’s annual information form for the fiscal year ended October 31, 2010; and
2.	The Company’s management’s discussion and analysis for the fiscal year ended October 31, 2010.

DATED January 28, 2011

(signed) Stephen (Jayson) Ripke
Stephen (Jayson) Ripke, QP, MMSA