---



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                   |                        

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

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         |  
|                                                                                  |  |               |   |   |            |   |   | Obligation to |   |   |             |   |   | Contributed |   |   | Comprehensive |  
|                                                                                  |  | Shares        |   |   | Amount     |   |   | Issue Shares  |   |   | Deficit     |   |   | Surplus     |   |   | Income        |  
|                                                                                  |  |               |   |   |            |   |   |               |   |   |             |   |   |             |   |   |               |  
|                                                                                  |  |               |   |   |            |   |   |               |   |   |             |   |   |             |   |   |               |  
|Balance, October 31, 2008 (carried
      forward)                                 |  | 57,782,847    |   | $ | 68,824,822 |   | $ | 795,000       |   | $ | (51,015,714 | ) | $ | 11,912,309  |   | $ | 2,617,740     |  
|                                                                                  |  |               |   |   |            |   |   |               |   |   |             |   |   |             |   |   |               |  
|Net loss for the year                                                             |  | -             |   |   | -          |   |   | -             |   |   | (254,628    | ) |   | -           |   |   | -             |  
|Other comprehensive income                                                        |  |               |   |   |            |   |   |               |   |   |             |   |   |             |   |   |               |  
|Unrealized gain on
      available-for-sale investments                           |  | -             |   |   | -          |   |   | -             |   |   | -           |   |   | -           |   |   | 12,043,882    |  
|Transfer to income of realized gain on sale of
      resource related investments |  | -             |   |   | -          |   |   | -             |   |   | -           |   |   | -           |   |   | (1,658,126    | )
|Comprehensive income for the year                                                 |  |               |   |   |            |   |   |               |   |   |             |   |   |             |   |   |               |  
|Shares issued for cash                                                            |  |               |   |   |            |   |   |               |   |   |             |   |   |             |   |   |               |  
|Exercise of options                                                               |  | 25,000        |   |   | 36,750     |   |   | -             |   |   | -           |   |   | -           |   |   | -             |  
|Exercise warrants                                                                 |  | 92,500        |   |   | 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       |   |   | -           |   |   | -           |   |   | -             |  
|Debt settlement                                                                   |  | 143,130       |   |   | 204,676    |   |   | -             |   |   | -           |   |   | -           |   |   | -             |  
|Stock-based compensation                                                          |  | -             |   |   | -          |   |   | -             |   |   | -           |   |   | 1,192,109   |   |   | -             |  
|                                                                                  |  |               |   |   |            |   |   |               |   |   |             |   |   |             |   |   |               |  
|Balance, October 31, 2009                                                         |  | 58,543,477    |   |   | 70,034,895 |   |   | 111,500       |   |   | (51,270,342 | ) |   | 13,058,271  |   |   | 13,003,496    |  
|                                                                                  |  |               |   |   |            |   |   |               |   |   |             |   |   |             |   |   |               |  
|Net income for the year                                                           |  | -             |   |   | -          |   |   | -             |   |   | 44,950,970  |   |   | -           |   |   | -             |  
|Other comprehensive income                                                        |  |               |   |   |            |   |   |               |   |   |             |   |   |             |   |   |               |  
|Unrealized gain on
      available-for-sale investments                           |  | -             |   |   | -          |   |   | -             |   |   | -           |   |   | -           |   |   | 17,686,472    |  
|Transfer to income of realized gain on sale of
      resource related investments |  | -             |   |   | -          |   |   | -             |   |   | -           |   |   | -           |   |   | (462,375      | )
|Comprehensive income for the year                                                 |  |               |   |   |            |   |   |               |   |   |             |   |   |             |   |   |               |  
|Shares issued for cash                                                            |  |               |   |   |            |   |   |               |   |   |             |   |   |             |   |   |               |  
|Exercise warrants                                                                 |  | 67,125        |   |   | 90,619     |   |   | -             |   |   | -           |   |   | -           |   |   | -             |  
|Shares purchased pending return to treasury                                       |  | (312,300      | ) |   | (374,760   | ) |   | -             |   |   | -           |   |   | 1,066       |   |   | -             |  
|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   |   |   | -             |  
|                                                                                  |  |               |   |   |            |   |   |               |   |   |             |   |   |             |   |   |               |  
|Balance,
      October 31, 2010                                                   |  | 58,373,302    |   | $ | 69,890,947 |   | $ | -             |   | $ | (6,319,372  | ) | $ | 14,726,585  |   | $ | 30,227,593    |  

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)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
|   | (b)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     

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)                                          
|   |                                              
|   |                                              
|   |                                              
|   | (d)                                          
|   |                                              
|   |                                              

| | 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)                                          
|   |                                              
|   |                                              
|   |                                              
|   | (g)                                          
|   |                                              
|   |                                              
|   |                                              
|   |                                              
|   |                                              
|   |                                              
|   |                                              
|   |                                              
|   |                                              
|   |                                              
|   |                                              
|   | (h)                                          
|   |                                              
|   |                                              
|   |                                              
|   | (i)                                          
|   |                                              
|   |                                              
|   |                                              
|   | (j)                                          
|   |                                              
|   |                                              

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)                                          
|   |                                              
|   |                                              
|   |                                              
|   | (l)                                          
|   |                                              
|   |                                              
|   |                                              
|   | (m)                                          
|   |                                              
|   |                                              
|   |                                              
|   |                                              
|   |                                              
|   | (n)                                          
|   |                                              
|   |                                              
|   |                                              
|   |                                              

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)                                          
|   |                                              
|   |                                              
|   |                                              
|   |                                              
|   |                                              
|   |                                              
|   |                                              
|   |                                              
|   |                                              
|   |                                              
|   |                                              
|   |                                              
|   |                                              
|   |                                              
|   |                                              
|   |                                              
|   |                                              
|3. | FIXED ASSETS                                 

| |                        |   | 2010    |  |   | 2009         | 
| | ---------------------- | - | ------- |  | - | ------------ | 
| |                        |   |         |  |   | Accumulated  | 
| |                        |   | Cost    |  |   | Amortization | 
| | Computer equipment     | $ | 171,624 |  | $ | 122,128      | 
| | Office equipment       |   | 99,853  |  |   | 48,402       | 
| | Leasehold improvements |   | 210,530 |  |   | 113,740      | 
| |                        | $ | 482,007 |  | $ | 284,270      | 

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     | 
| | International Tower Hill Mines Ltd.           |  | 4,591,223  |  | $ | 34,847,383 |  |  | -          | 
| | Trevali Resources Corp. (notes 13(f) and (g)) |  | 7,032,432  |  |   | 9,986,053  |  |  | 2,855,866  | 
| | Wealth Minerals Ltd.                          |  | 5,022,806  |  |   | 3,164,368  |  |  | -          | 
| | Dorato Resources Inc.                         |  | 2,416,000  |  |   | 3,020,000  |  |  | -          | 
| | Indico Resources Ltd.                         |  | 50,000     |  |   | 31,000     |  |  | -          | 
| | Kria Resources Ltd. (notes 13(e) and (g))     |  | 15,000,000 |  |   | 3,150,000  |  |  | 15,000,000 | 
| | Corvus Gold Inc.                              |  | 880,711    |  |   | 871,904    |  |  | -          | 
| | Totem Minerals Inc. (note 13(a))              |  | 3,782,000  |  |   | 1,891,000  |  |  | -          | 
| | Ethos Capital Corp.                           |  | 100,000    |  |   | 80,000     |  |  | -          | 
| |                                               |  |            |  | $ | 57,041,708 |  |  |            | 

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

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)                                     
|   |                                         
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|   |                                         
|   |                                         
|   |                                         
|   |                                         
|   |                                         
|   |                                         
|   |                                         
|   |                                         

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)                                     
|   |                                         
|   |                                         
|   |                                         
|   |                                         
|   |                                         
|   |                                         
|   |                                         
|   |                                         
|   |                                         
|   |                                         
|   |                                         
|   | (d)                                     
|   |                                         
|   |                                         
|   |                                         
|   |                                         
|   |                                         
|   |                                         
|   |                                         
|   | (e)                                     
|   |                                         
|   |                                         
|   |                                         
|   |                                         
|   |                                         
|   |                                         

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)                                     
|   |                                         
|   |                                         
|   |                                         
|   |                                         
|   |                                         
|   |                                         
|   |                                         
|   | (g)                                     
|   |                                         
|   |                                         
|   |                                         
|   |                                         
|   |                                         
|   |                                         
|   |                                         
|   | (h)                                     
|   |                                         
|   |                                         
|   |                                         
|   | (i)                                     
|   |                                         
|   |                                         

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)                           
|   |                               
|   |                               

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   |  
|                                      |   | Baja       |   |   | Other     |   |   | Total      |   |   |            |   |   | Pongo      |  
|Balance, October 31, 2008             | $ | 7,064,909  |   | $ | 370,115   |   | $ | 7,435,024  |   | $ | 3,315,933  |   | $ | 3,692,705  |  
|                                      |   |            |   |   |           |   |   |            |   |   |            |   |   |            |  
|Acquisition costs                     |   | 102,417    |   |   | 108,871   |   |   | 211,288    |   |   | 7,744      |   |   | 301,254    |  
|                                      |   |            |   |   |           |   |   |            |   |   |            |   |   |            |  
|Deferred exploration costs:           |   |            |   |   |           |   |   |            |   |   |            |   |   |            |  
|Camp                                  |   | 48,644     |   |   | 7,931     |   |   | 56,575     |   |   | 79,194     |   |   | 229,958    |  
|Drilling and analysis                 |   | 23,560     |   |   | -         |   |   | 23,560     |   |   | 22,807     |   |   | -          |  
|Personnel
      and geology           |   | 96,997     |   |   | 204       |   |   | 97,201     |   |   | 64,928     |   |   | 665,741    |  
|Total exploration costs               |   | 169,201    |   |   | 8,135     |   |   | 177,336    |   |   | 166,929    |   |   | 895,699    |  
|Total expenditures
      for the year |   | 271,618    |   |   | 117,006   |   |   | 388,624    |   |   | 174,673    |   |   | 1,196,953  |  
|Costs recovered  Acquisition         |   | -          |   |   | (192,627  | ) |   | (192,627   | ) |   | -          |   |   | (1,552,292 | )
|Costs recovered 
      Exploration   |   | -          |   |   | (62,516   | ) |   | (62,516    | ) |   | -          |   |   | (3,337,366 | )
|Total before write-offs               |   | 7,336,527  |   |   | 231,978   |   |   | 7,568,505  |   |   | 3,490,606  |   |   | -          |  
|Write-offs  Acquisition costs        |   | -          |   |   | -         |   |   | -          |   |   | (1,162,834 | ) |   | -          |  
|Write-offs  Exploration costs        |   | -          |   |   | -         |   |   | -          |   |   | (1,433,658 | ) |   | -          |  
|Total write-offs                      |   | -          |   |   | -         |   |   | -          |   |   | (2,596,492 | ) |   | -          |  
|Balance, October 31, 2009             |   | 7,336,527  |   |   | 231,978   |   |   | 7,568,505  |   |   | 894,114    |   |   | -          |  
|                                      |   |            |   |   |           |   |   |            |   |   |            |   |   |            |  
|Acquisition costs                     |   | 302,911    |   |   | 10,966    |   |   | 313,877    |   |   | 4,887      |   |   | -          |  
|Deferred exploration costs:           |   |            |   |   |           |   |   |            |   |   |            |   |   |            |  
|Camp                                  |   | 111,473    |   |   | 12,075    |   |   | 123,548    |   |   | 298,536    |   |   | -          |  
|Drilling and analysis                 |   | 654,228    |   |   | -         |   |   | 654,228    |   |   | 784,761    |   |   | -          |  
|Personnel and geology                 |   | 92,944     |   |   | 6,108     |   |   | 99,052     |   |   | 489,337    |   |   | -          |  
|Total exploration
      costs         |   | 858,645    |   |   | 18,183    |   |   | 876,828    |   |   | 1,572,634  |   |   | -          |  
|Total expenditures for the year       |   | 1,161,556  |   |   | 29,149    |   |   | 1,190,705  |   |   | 1,577,521  |   |   | -          |  
|Total before
      write-offs         |   | 8,498,083  |   |   | 261,127   |   |   | 8,759,210  |   |   | 2,471,635  |   |   | -          |  
|Write-offs  Acquisition costs        |   | (3,567,578 | ) |   | -         |   |   | (3,567,578 | ) |   | -          |   |   | -          |  
|Write-offs 
      Exploration costs  |   | (4,930,505 | ) |   | -         |   |   | (4,930,505 | ) |   | -          |   |   | -          |  
|Total write-offs                      |   | (8,498,083 | ) |   | -         |   |   | (8,498,083 | ) |   | -          |   |   | -          |  
|Balance,
      October 31, 2010       | $ | -          |   | $ | 261,127   |   | $ | 261,127    |   | $ | 2,471,635  |   | $ | -          |  
|Represented by:                       |   |            |   |   |           |   |   |            |   |   |            |   |   |            |  
|Acquisition costs                     | $ | -          |   | $ | 63,459    |   | $ | 63,459     |   | $ | 188,412    |   | $ | -          |  
|Exploration costs                     |   | -          |   |   | 197,668   |   |   | 197,668    |   |   | 2,285,223  |   |   | -          |  
|Balance,
      October 31, 2010       | $ | -          |   | $ | 261,127   |   | $ | 261,127    |   | $ | 2,471,635  |   | $ | -          |  

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)                            
|   |                                
|   |                                
|   |                                
|   |                                
|   |                                
|   |                                
|   |                                
|   |                                
|   |                                
|   |                                
|   |                                
|   |                                
|   |                                
|   |                                
|   |                                

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)                            
|   |                                
|   |                                
|   |                                
|   |                                
|   |                                
|   |                                
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|   |                                
|   |                                
|   |                                
|   |                                
|   |                                
|   |                                
|   |                                
|   |                                
|   |                                

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)                            
|   |                                
|   |                                
|   |                                
|   |                                
|   |                                
|   |                                
|   |                                
|   |                                
|   |                                
|   |                                
|   |                                
|   |                                
|   |                                
|   |                                
|   |                                
|   |                                
|   |                                
|   |                                
|   |                                
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|   |                                
|   |                                
|   |                                
|   |                                
|   |                                
|   |                                
|   |                                
|   |                                
|   |                                
|   |                                
|   |                                

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)                            
|   |                                
|   |                                
|   |                                
|   |                                
|   |                                
|   |                                
|   |                                
|   |                                
|   |                                
|   |                                
|   |                                
|   |                                
|   |                                
|   |                                
|   |                                
|   |                                
|   |                                
|   |                                
|   |                                
|   |                                
|   |                                
|   |                                
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|   |                                
|   |                                
|   |                                
|   |                                
|   |                                
|   |                                
|   |                                
|   |                                

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)**                        

| |      | -          
      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:                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
| |     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
| |     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
| |     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
| |     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
| |     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
| |     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
| |     | 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)                            
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|   | (c)                            
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|   |                                
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|   |                                
|   |                                
|   |                                
|   |                                
|   |                                

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)                            
|   |                                
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|   |                                
|   |                                

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)                            
|   |                                
|   |                                
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|   |                                
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|   |                                
|   |                                

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)                            
|   |                                
|   |                                
|   |                                
|   |                                
|   |                                
|   |                                
|   |                                
|   |                                
|   |                                
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|   |                                

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)                            
|   |                                
|   |                                
|   |                                
|   |                                
|   |                                
|   |                                
|   |                                
|   |                                
|   |                                
|   | (d)                            
|   |                                
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|   |                                
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|   |                                
|   |                                
|   |                                
|   |                                
|   |                                
|   |                                
|   |                                
|   |                                

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, MinnesotaPursuant 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)          
|   |              
|   |              
|   |              
|   |              
|   |              
|   | (b)          
|   |              
|   |              

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

Details of warrants outstanding are as
follows:

| |                                   |  | 2010      |  |   | 2009     | 
| | --------------------------------- |  | --------- |  | - | -------- | 
| |                                   |  | Number of |  |   | Exercise | 
| | Expiry date                       |  | Warrants  |  |   | Price    | 
| | March 1, 2010                     |  | -         |  | $ | -        | 
| | March 1, 2010                     |  | -         |  | $ | -        | 
| | Warrants outstanding, end of year |  | -         |  |   |          | 

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)          
|   |              
|   |              
|   |              
|   |              

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)          

| |                                        |  | 2010       |   |   | 2009     |  
| | -------------------------------------- |  | ---------- | - | - | -------- | -
| |                                        |  |            |   |   | Weighted |  
| |                                        |  |            |   |   | Average  |  
| |                                        |  | Number of  |   |   | Exercise |  
| |                                        |  | Options    |   |   | Price    |  
| | Options outstanding, beginning of year |  | 5,500,000  |   | $ | 1.77     |  
| | Expired and cancelled                  |  | (3,700,000 | ) | $ | (2.01    | )
| | Exercised                              |  | -          |   | $ | -        |  
| | Granted                                |  | 3,510,000  |   | $ | 1.21     |  
| | Options outstanding, end of year       |  | 5,310,000  |   | $ | 1.23     |  

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

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  | 
| | Resource properties | $ | 2,869,893  | 
| | Cash                |   | 6,192,603  | 
| | Investments         |   | 65,922,190 | 
| | Other               |   | 1,027,574  | 
| |                     | $ | 76,012,260 | 

| |                     |   | 2009       | 
| | ------------------- | - | ---------- | 
| |                     |   | Canada/US  | 
| | Resource properties | $ | 309,347    | 
| | Cash                |   | 5,672,162  | 
| | Investments         |   | 23,406,055 | 
| | Other               |   | 973,482    | 
| |                     | $ | 30,361,046 | 

|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)                                                                 
|    |                                                                     
|    |                                                                     
|    |                                                                     
|    |                                                                     

| |                        |   | 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.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
| |     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
| |     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   

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)                                                                 
|    |                                                                     
|    |                                                                     
|    |                                                                     
|    |                                                                     
|    |                                                                     
|    |                                                                     
|    |                                                                     
|    |                                                                     
|    |                                                                     
|13. | SUBSEQUENT EVENTS                                                   
|    |                                                                     
|    | Subsequent to October 31, 2010, the Company:                        
|    |                                                                     
|    | (a)                                                                 
|    |                                                                     
|    | (b)                                                                 
|    |                                                                     
|    | (c)                                                                 
|    |                                                                     
|    | (d)                                                                 
|    |                                                                     
|    | (e)                                                                 
|    |                                                                     
|    | (f)                                                                 

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)                                                                                                                                     
|    |                                                                                                                                         
|    | (h)                                                                                                                                     
|    |                                                                                                                                         
|    | (i)                                                                                                                                     
|    |                                                                                                                                         
|    | (j)                                                                                                                                     
|    |                                                                                                                                         
|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)                                                                                                                                     
|    |                                                                                                                                         
|    |                                                                                                                                         
|    |                                                                                                                                         
|    |                                                                                                                                         
|    |                                                                                                                                         
|    |                                                                                                                                         

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)                                                       
|    |                                                           
|    |                                                           
|    |                                                           
|    |                                                           
|    |                                                           
|    |                                                           

| |                                                                              |   | 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)                                                       
|    |                                                           
|    |                                                           
|    |                                                           
|    |                                                           

| |                                                                          |   | 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)                                                       
|    |                                                           
|    |                                                           
|    |                                                           
|    |                                                           
|    |                                                           
|    |                                                           
|    |                                                           
|    |                                                           
|    |                                                           
|    |                                                           
|    |                                                           
|    |                                                           
|    |                                                           
|    |                                                           
|    |                                                           
|    |                                                           
|    |                                                           
|    | **(b)**                                                   
|    |                                                           
|    |                                                           

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)                                                       
|    |                                                           
|    |                                                           
|    |                                                           
|    |                                                           
|    |                                                           
|    |                                                           
|    |                                                           
|    |                                                           
|    |                                                           
|    |                                                           
|    |                                                           
|    |                                                           

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)                                                       
|    |                                                           
|    |                                                           
|    |                                                           
|    |                                                           
|    |                                                           
|    |                                                           

42

---