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TECHNICAL REPORTLONGNOSE AND TITAC IRON-TITANIUMEXPLORATION PROJECT, MINNESOTA,
      **USA**EXPLORATION RESULTS 2010Effective DateJanuary 27, 2011Prepared for:Cardero Resource CorporationSuite 1920  1188 West Georgia
      StreetVancouver, BC, V6E 4A2Tel: +1 604 408 7488Fax: +1 604 4087499www.cardero.comAuthors:EurGeol Keith Henderson PGeoStephen (Jayson) Ripke QP, MMSA


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Table Contents

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

ii

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

iii

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List of Tables

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

iv

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List of Figures

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

v

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1 Summary

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

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

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

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

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

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

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

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

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

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

1



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

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

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

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

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

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

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

2



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

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

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

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

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

3



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

Both properties are at an advanced exploration stage.

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

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

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

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

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

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

4



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

A budget is presented to complete the recommended work program:

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


5



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2 Introduction

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

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

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

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

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

6



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3 Reliance On Other Experts

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

7



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4 Property Description and Location

Introduction

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



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

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

Land Description and Cardero Holdings

8



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

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

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

Longnose Interest

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

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

9



---

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

TiTac Interest

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

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

Property Boundaries

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

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



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

11

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Licenses, Permits and
Registrations

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

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

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

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

Known Mineralized Zones

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

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

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5 Accessibility, Climate, Local
  Resources, Infrastructure & Physiography

Accessibility and
Physiography

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

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

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

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

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

Climate

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

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

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


Local Resources and
Infrastructure

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

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

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

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

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

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

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

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

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6 History

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

Titaniferous Iron Oxide Mineralization
in the Duluth Complex

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

Longnose Property

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

Two bulk samples for metallurgical testing and TiO2recovery have been collected from theLongnose property. The test pit
locations are displayed in figure 6-1 (Patelke and Severson, 2001). The first
bulk sample measured 32+ tons of material and was collected in 1984 by the
American Shield Corp/Nicor joint venture. The second bulk sample measured 60
tons and was collected in 1999 by American Shield Corp. The University of
Minnesota, Natural Resources Research Institute, Coleraine Minerals Research
Laboratory houses what remains of both bulk samples.

BHP Minerals International Inc. (BHP) held the Longnose
property for sometime in the 1990s. Most of the work completed by BHP centered
on metallurgy, and TiO2recovery. Their firstinvestigation involved a
smelting and sulfation-leaching process developed by the US Bureau of Mines
(Ulland, 2000). Their second investigation involved an oxidation-reduction roast
followed by chemical leaching, using a process called Murso (Ulland, 2000).
BHP apparently

17



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

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

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

Titac Property

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

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



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

20

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7 Geologic Setting

**Regional Geology**

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

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



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

21

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



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

22

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Local Geology

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

Geology of the Longnose
Property

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

23



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

24

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

Geology of the Titac Property

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

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

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

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

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

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

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

27



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

28

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

29

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8 Deposit Types

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

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

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

| | 1) | Severson (1988, 1991, & 1994), and Severson and Hauck
      (1990) suggest that a spatial/empirical relationship between the Duluth
      Complex OUIs and the Biwabik Iron- Formation exists, and that
      incorporation of the Biwabik Iron-Formation by the Duluth Complex at the
      basal contact may have inspired the genesis of the Duluth Complex OUIs.
      This does not directly explain the high titanium content of the Duluth
      Complex OUIs however; Muhich (1993) finds that the Biwabik Iron-Formation
      is locally enriched in titanium proximal to the Duluth Complex basal
      contact. Muhichs (1993) observations suggest that the Duluth Complex OUIs
      may be genetically related to the Biwabik Iron- Formation, and may be
      assimilated inclusions of Biwabik Iron-Formation that have been enriched
      in titanium and iron from Duluth Complex magmas and fluids.
| | -- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | 2) | Severson (1988, 1994) and Severson and Hauck (1990) also
      suggested, as did Ross (1985) that Duluth Complex OUIs formed by
      infiltration metasomatism. Infiltration metasomatism calls on the upward
      streaming of intercumulus fluids that are derived from within a
      crystallizing cumulus pile, or more simply put, the magma itself. This
      genesis                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           

30



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| |    | mechanism has been suggested for the formation of similar
      ultramafic plugs in the Bushveld Complex (Schiffries, 1982; Viljoen and
      Scoon, 1985).                                                                                                                                                                                                                                                                                                                                                               
| | -- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | 3) | Bonnichsen (1972) and Mainwaring and Naldrett (1977)
      suggested a magmatic origin for the Duluth Complex OUIs. In this empirical
      magmatic genesis model, the Duluth Complex OUIs would form from
      ferrogabbroic magmas, containing an abundance of suspended plagioclase
      crystals which separate from the magma and rise to the top of the magma
      chamber due to density contrasts, subsequently leaving the much more dense
      iron-rich titaniferous ultramafic magma toward the
  bottom.

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

31



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9 Mineralization

Mineralization at
Longnose

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

Mineralization at Titac

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

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

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

32



---

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

33



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10 Exploration

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

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

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

34



---



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

35



---

11 Drilling

Introduction

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

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

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

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

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

36



---

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

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

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


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

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


37

---

TTC-012-2010
      567786.7
      5227652.2
      1276
      130
      -60
      388.9TTC-013-2010
      567967.1
      5227493.0
      830
      125
      -45
      253.0TTC-014-2010
      567933.4
      5227620.0
      1986
      162
      -60
      605.3TTC-015-2010
      567970.0
      5227486.2
      855
      165
      -45
      260.6TTC-016-2010N
      567968.9
      5227488.1
      895
      187
      -45
      272.8TTC-017-2010
      567928.4
      5227630.4
      1047
      332
      -85
      319.1TTC-018-2010
      567961.5
      5227486.0
      865
      219
      -45
      263.7TTC-019-2010
      567976.6
      5227494.0
      1607
      Vertical
      -90
      489.8TTC-020-2010
      567968.2
      5227482.8
      1015
      6
      -45
      309.4TTC-021-2010
      567873.0
      5227482.3
      1227
      82
      -75
      374.0TTC-022-2010
      567964.5
      5227489.5
      1148
      15
      -65
      349.9TTC-023-2010
      567849.0
      5227555.2
      1157
      128
      -75
      352.7TTC-024-2010
      567970.0
      5227486.7
      1258
      72
      -65
      383.4TTC-025-2010
      568083.8
      5227592.6
      1258
      220
      -75
      383.4TTC-026-2010
      567965.4
      5227482.8
      1258
      112
      -65
      383.4TTC-027-2010
      568081.9
      5227423.5
      1258
      308
      -75
      383.4TTC-028-2010
      567966.3
      5227483.9
      1207
      201
      -65
      367.9TTC-029-2010
      567964.1
      5227486.6
      1097
      249
      -65
      334.4TTC-030-2010
      567964.2
      5227489.7
      1057
      308
      -50
      322.2TITAC PROPERTY HISTORIC (drilled by United
        States Steel Corporation)DDH#
      mE
      mN
      Total Depth (ft)
      **Azimuth**
      **Dip**
      **Total Depth (m)**26000
      568539
      5228590
      730
      250
      -46
      222.526001
      567927
      5227501
      552
      Vertical
      -90
      168.226002
      568100
      5228342
      901
      Vertical
      90
      274.626003
      567837
      5227580
      466
      Vertical
      90
      142.026007
      568250
      5228343
      587
      Vertical
      90
      178.926008
      568158
      5228219
      607
      Vertical
      90
      185.0


Longnose Drilling Results

The OUI at Longnose is very well defined by drilling with
between 75 and 125 metres between pertinent drill holes. Most drill holes on the
property have intersected thick intervals of titanium-iron oxide mineralization,
and the intrusive stratigraphy of the OUI can be fairly well correlated. The
drilling completed by American Shield Corp. and Nicor follows a grid pattern in
which section lines have a 315 degree bearing, and most of these holes were
drilled with an azimuth of 315 degrees and a dip of -45 degrees, except several
holes that were drilled vertically (See Table 10-1). The drilling completed by
CIOUS does not follow this grid, but instead fills in local gaps, and explores
the outer limits of the defined Longnose intrusion. The intrusive stratigraphy
of the Longnose OUI seems to dip to the southeast at 30-45 degrees; therefore
drill holes with a -45 degree dip should give a reasonably accurate indication
of the true thickness of mineralization. Table 11-2 documents relevant
intersections of mineralization with weighted averages for TiO2and
Fe2O3, from the perspective of TiO2, displayed in
percent.

Cardero also re-assayed historic core from the Longnose
property. The relevant results of this sampling and re-assay program are
displayed in Table 11-3 with weighted averages for TiO2and
Fe2O3, from the perspective of TiO2, displayed
in percent.

38



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Table 11-2: Drill core assay results for Longnose (Intervals and
thicknesses are to the nearest tenth of a metre; weighted average of TiO2and Fe2O3are to the nearest tenth of a
percent).

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


Table 11-3: Re-assays of historic Longnose drill core (Intervals
and thicknesses are to the nearest tenth of a metre; weighted average of
TiO2and Fe2O3are to the nearest tenth of a
percent).

LONGNOSE (Historic) Re-Assays
      From(m)
      To(m)
      Thickness(m)
      Weighted Average(%)Drillhole
      
      TiO2 %
      Fe2O3 %LN-1
      
      33.5
      91.4
      57.9
      17.8
      36.1LN-2
      
      13.4
      172.2
      158.8
      20.3
      40.1*incl.*
      36.6
      121.9
      85.3
      25.7
      45.9LN-3
      
      11.9
      149.4
      137.5
      19.9
      34.2*incl.*
      54.9
      132.2
      77.3
      22.5
      34.3*incl.*
      97.5
      118.9
      21.4
      26.1
      32.5LN-4
      
      15.5
      186.5
      171.0
      20.8
      39.3*incl.*
      15.5
      149.4
      133.9
      24.1
      42.2*incl.*
      15.5
      67.1
      51.6
      28.6
      38.0LN-5
      
      70.1
      79.2
      9.1
      14.6
      32.885.3
      94.5
      9.2
      15.4
      32.8120.7
      183.5
      62.8
      17.1
      36.5LN-6
      
      110.0
      181.4
      71.4
      20.3
      40.7LN-8
      
      8.2
      122.5
      114.3
      18.5
      31.2*incl.*
      39.6
      122.5
      82.9
      21.6
      35.9LN-9
      
      50.0
      112.8
      62.8
      15.0
      30.1LN-10
      
      11.9
      100.6
      88.7
      22.6
      42.7


Titac Drilling Results

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

39



---

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

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

Two holes were drilled at Titac South by USSC in the late
1960s, both holes are vertical, and both holes intercepted thick intervals of
strong titanium-iron oxide mineralization. Twenty-two holes were drilled at
Titac South by CIOUS in 2010. Every hole at Titac South intercepted thick
intervals of strong titanium-iron oxide mineralization. Given the sub-vertical
orientation, and sheet-like or ring-like stratigraphy of the intrusion, the
drill plan at Titac South featured a central fan- or (inverted) funnel-like
pattern of inside-out drill holes with various azimuths and dips
(TTC-009,-011,-013,-015,-016,-018,-020,-022,-024,-026,-028,-029,-030-2010; Table
11-1). Numerous holes were also drilled outside-in toward the center of the
intrusion (TTC-010,-012,-014,-017,-021,-023,-025,-027-2010; Table 11-1). Drill
hole density is good at Titac South, with a first round of holes drilled with a
dip of -45 degrees from the fan-site, and a second round of holes drilled with a
dip of -65 degrees from the fan-site. Holes drilled from the outside-in
feature a similar pattern of dips. A vertical hole (TTC-019-2010) was also
drilled at the fan-site to a depth of 490 metres. Because of the sub-vertical
orientation, and complex igneous stratigraphy at both Titac North and Titac
South, the true thickness of specific mineralization intervals is not known,
though the size and grade of both intrusions can be determined by
three-dimensional modeling. Table 11-4 documents relevant intersections of
mineralization at Titac North, and Table 11-5 documents relevant intersections
of mineralization at Titac South, both from the perspective of TiO2with weighted averages for TiO2, Fe2O3,
and copper; though these intersections do not portray true thickness in a planar
manner, they are useful when considered in three-dimensions and give a sense of
the expected grades for the intrusions.

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

Table 11-4: Drill core assay results for Titac North (Intervals
and thicknesses are to the nearest tenth of a metre; weighted average of
TiO2and Fe2O3are to the nearest tenth of a
percent; weighted averages for copper are to the nearest hundredth of a
percent).

40

---

**TITAC NORTH**
      **From**
      **To**
      **Thickness**
      **Weighted Average (%)**Drillhole
      
      (m)
      (m)
      (m)
      TiO2 %
      Fe2O3 %
      Cu %TTC-003-2010
      
      29.0
      62.8
      33.8
      17.1
      46.7
      0.0894.2
      103.9
      9.7
      18.8
      30.9
      0.24142.0
      148.1
      6.1
      17.3
      34.9
      0.21160.0
      167.0
      7.0
      19.6
      33.9
      0.24270.1
      278.1
      8.0
      17.6
      36.8
      0.37TTC-004-2010
      
      79.9
      96.6
      16.7
      16.6
      30.7
      0.25207.9
      225.9
      18.0
      19.2
      45.7
      0.20236.8
      253.6
      16.8
      15.2
      34.0
      0.24260.0
      287.1
      27.1
      17.4
      34.1
      0.23TTC-005-2010
      
      74.4
      83.1
      8.7
      16.3
      24.3
      0.36129.8
      140.5
      10.7
      17.0
      29.1
      0.30210.8
      219.8
      9.0
      20.8
      48.1
      0.23230.4
      244.8
      14.4
      17.5
      36.5
      0.25264.0
      278.1
      14.1
      18.0
      32.8
      0.27306.6
      350.8
      44.2
      18.2
      50.7
      0.08TTC-006-2010
      
      23.2
      53.2
      30.0
      15.1
      32.8
      0.26*incl.*
      40.5
      53.2
      12.7
      16.3
      33.9
      0.24TTC-007-2010
      
      142.0
      147.5
      5.5
      15.0
      35.8
      0.26153.0
      158.2
      5.2
      16.5
      32.7
      0.26292.5
      360.9
      68.4
      15.3
      36.5
      0.28


Table 11-5: Drill core assay results for Titac South (Intervals
and thicknesses are to the nearest tenth of a metre; weighted average of
TiO2and Fe2O3are to the nearest tenth of a
percent; weighted averages for copper are to the nearest hundredth of a
percent).

ITAC SOUTH
      From(m)
      To(m)
      Thickness(m)
      Weighted Average (%)Drillhole
      
      TiO2 %
      Fe2O3 %
      Cu %TTC-009-2010
      
      153.2
      235.0
      81.8
      17.7
      34.7
      0.22TTC-010-2010
      
      335.6
      392.0
      56.4
      15.3
      31.5
      0.22*incl.*
      366.0
      392.0
      25.9
      19.8
      30.1
      0.32TTC-011-2010
      
      61.6
      68.3
      6.7
      19.4
      33.3
      0.4083.2
      96.3
      13.1
      18.3
      33.2
      0.28104.9
      132.3
      27.4
      18.6
      34.4
      0.35143.0
      161.2
      18.2
      16.8
      46.7
      0.13TTC-012-2010
      
      89.5
      94.8
      5.3
      16.3
      28.2
      0.25100.9
      115.7
      14.8
      13.5
      28.3
      0.16198.6
      199.3
      0.7
      21.2
      29.9
      0.22239.6
      245.4
      5.8
      15.6
      23.7
      0.29258.5
      350.8
      92.3
      15.0
      25.0
      0.20*incl.*
      296.0
      326.1
      30.1
      17.2
      26.8
      0.23*incl.*
      340.2
      349.3
      9.1
      19.9
      31.4
      0.24TTC-013-2010
      
      94.5
      103.6
      9.1
      20.7
      32.9
      0.25106.7
      144.8
      38.1
      15.6
      28.5
      0.25*incl.*
      106.7
      120.4
      13.7
      18.3
      31.3
      0.28




41

---

TITAC SOUTH
      From (m)
      To (m)
      Thickness (m)
      Weighted Average (%)Drillhole
      
      TiO2 %
      Fe2O3 %
      Cu %TTC-014-2010
      
      71.9
      97.8
      25.9
      16.1
      31.1
      0.17123.7
      131.4
      7.7
      15.5
      30.1
      0.17155.4
      168.2
      12.8
      22.5
      46.1
      0.17178.2
      183.2
      5.0
      18.1
      31.3
      0.16191.4
      209.1
      17.7
      16.2
      27.9
      0.24228.6
      432.2
      203.6
      18.8
      29.3
      0.33*incl.*
      256.6
      370.6
      114.0
      21.0
      30.9
      0.43TTC-015-2010
      
      39.9
      109.4
      69.5
      16.4
      30.8
      0.35*incl.*
      39.9
      56.4
      16.5
      25.6
      41.2
      0.48*incl.*
      76.4
      97.5
      21.1
      19.6
      35.2
      0.46TTC-016-2010N
      
      40.5
      101.5
      61.0
      18.4
      36.9
      0.27*incl.*
      40.5
      69.2
      28.7
      22.6
      40.7
      0.36TTC-017-2010
      
      48.2
      63.1
      14.9
      17.5
      26.8
      0.28147.2
      152.1
      4.9
      17.7
      27.5
      0.23214.3
      229.5
      15.2
      17.2
      25.4
      0.20TTC-018-2010
      
      38.4
      84.7
      46.3
      18.1
      34.1
      0.30TTC-019-2010
      
      27.9
      490.0
      462.1
      20.6
      33.2
      0.37*incl.*
      38.7
      49.4
      10.7
      22.0
      39.3
      0.29*incl.*
      95.1
      159.1
      64.0
      23.3
      33.3
      0.57*incl.*
      178.9
      279.5
      100.6
      24.7
      32.0
      0.48*incl.*
      310.0
      337.4
      27.4
      21.6
      32.4
      0.38*incl.*
      340.5
      363.3
      22.8
      21.7
      31.1
      0.25*incl.*
      456.3
      477.6
      21.3
      23.7
      38.0
      0.19TTC-020-1020
      
      38.9
      185.0
      146.1
      17.2
      33.6
      0.29*incl.*
      38.9
      52.7
      13.8
      23.2
      39.0
      0.44*incl.*
      38.9
      81.1
      42.2
      20.3
      37.0
      0.38*incl.*
      121.6
      185.0
      63.4
      18.1
      33.5
      0.28*incl.*
      128.3
      139.8
      11.5
      23.2
      35.5
      0.29TTC-021-2010
      
      30.8
      374.0
      343.2
      17.6
      30.6
      0.21*incl.*
      94.8
      374.0
      279.2
      19.5
      33.0
      0.24*incl.*
      168.6
      230.7
      62.1
      24.0
      39.7
      0.19*incl.*
      187.8
      217.8
      30.0
      28.7
      45.5
      0.20*incl.*
      206.3
      217.8
      11.5
      32.3
      40.2
      0.30*incl.*
      305.6
      322.3
      16.7
      24.5
      33.3
      0.40*incl.*
      335.9
      364.8
      28.9
      27.7
      34.2
      0.32TTC-022-2010
      
      29.9
      92.4
      62.5
      16.6
      33.1
      0.25*incl.*
      58.8
      84.1
      25.3
      18.0
      32.8
      0.29125.2
      145.7
      20.5
      16.6
      30.8
      0.22165.5
      182.9
      17.4
      17.2
      30.7
      0.21196.3
      224.9
      28.6
      16.7
      34.3
      0.17276.0
      281.6
      5.6
      16.7
      29.1
      0.26TTC-023-2010
      
      29.6
      36.3
      6.7
      15.8
      25.5
      0.24




42

---

TITAC SOUTH
      From (m)
      To (m)
      Thickness (m)
      Weighted Average (%)Drillhole
      
      TiO2 %
      Fe2O3 %
      Cu %55.2
      66.8
      11.6
      17.1
      28.7
      0.1488.1
      107.1
      19.0
      15.1
      26.9
      0.12124.4
      134.4
      10.0
      16.0
      34.0
      0.08142.3
      148.4
      6.1
      16.2
      29.0
      0.14156.2
      193.2
      37.0
      15.8
      30.1
      0.16213.7
      239.9
      26.2
      18.6
      27.5
      0.32266.1
      281.3
      15.2
      17.1
      27.1
      0.20TTC-024-2010
      
      42.5
      49.7
      7.2
      15.8
      28.0
      0.24129.5
      352.0
      222.5
      14.9
      32.9
      0.18*incl.*
      129.5
      133.5
      4.0
      18.2
      37.5
      0.33*incl.*
      146.0
      213.8
      67.8
      16.4
      32.6
      0.18*incl.*
      256.6
      291.8
      35.2
      20.1
      35.2
      0.24*incl.*
      264.0
      278.6
      14.6
      23.4
      36.2
      0.28*incl.*
      299.1
      306.2
      7.1
      16.5
      37.8
      0.17*incl.*
      346.6
      352.0
      5.4
      16.2
      32.5
      0.18TTC-025-2010
      
      29.3
      383.4
      354.1
      16.4
      34.6
      0.20*incl.*
      29.3
      120.7
      91.4
      19.3
      46.6
      0.21*incl.*
      29.3
      42.1
      12.8
      29.1
      50.5
      0.19*incl.*
      82.3
      100.6
      18.3
      21.7
      42.2
      0.23*incl.*
      138.1
      282.9
      144.8
      17.9
      30.5
      0.21*incl.*
      195.4
      213.7
      18.3
      22.4
      32.3
      0.28*incl.*
      349.9
      369.4
      19.5
      22.2
      38.5
      0.25TTC-026-2010
      
      30.5
      383.4
      352.9
      14.8
      29.4
      0.27*incl.*
      30.5
      42.5
      12.0
      18.5
      35.6
      0.39*incl.*
      51.2
      56.7
      5.5
      17.5
      32.8
      0.58*incl.*
      62.2
      71.3
      9.1
      17.5
      31.4
      0.52*incl.*
      74.9
      79.9
      5.0
      18.0
      33.2
      0.63*incl.*
      168.2
      328.6
      160.4
      19.3
      33.6
      0.27*incl.*
      228.0
      328.6
      100.6
      20.6
      35.8
      0.28*incl.*
      345.0
      360.3
      15.3
      18.5
      28.8
      0.18TTC-027-2010
      
      27.4
      383.4
      356.0
      14.1
      28.7
      0.25*incl.*
      105.8
      383.4
      277.6
      16.6
      31.3
      0.28*incl.*
      152.7
      383.4
      230.7
      17.5
      31.7
      0.28*incl.*
      182.3
      221.9
      39.6
      20.4
      33.4
      0.30*incl.*
      236.8
      246.3
      9.5
      24.3
      36.5
      0.31*incl.*
      293.2
      323.1
      29.9
      20.7
      35.1
      0.33*incl.*
      365.8
      374.3
      8.5
      19.4
      37.3
      0.37TTC-028-2010
      
      29.4
      134.7
      105.3
      20.2
      34.9
      0.28*incl.*
      29.4
      77.7
      48.3
      24.2
      39.5
      0.37157.6
      170.7
      13.1
      16.2
      24.8
      0.31190.2
      196.0
      5.8
      17.6
      25.5
      0.33210.0
      217.3
      7.3
      15.0
      24.5
      0.22




43

---

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


44



---

12 Sampling Method and Approach

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

Drill Core and Sample Interval Preparation

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

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

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

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

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

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

Sample intervals:All sample intervals are
determined by visual inspection of drill core, generally based on a visual
estimation of oxide and sulfide mineralization. Attempts are made to not cross
lithologic boundaries within sample intervals; however given the intrusive,
locally lithologically heterogeneous nature of drill core this is not always
possible. Drill core is pieced together and a line is drawn parallel to the long
axis of all drill core to be sampled. Sample intervals range in length from 0.2
metres to roughly 2.5 metres, with most sample intervals from 1.5 -2.0 metres in
length. Sample tags are stapled into boxes, and sample identification numbers
are written on core for future reference. Sample intervals are recorded, noting
the type of sample (i.e. core, 1⁄4 core original, 1⁄4 core duplicate, prep
duplicate, standard, or blank), and the general lithology of the sample.

45



---

Sample Collection and Preparation

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

46



---

13 Sample Preparation, Analyses
  and Security

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

Sample Analysis

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

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

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

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

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


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

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




47

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

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


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

Sample Security

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

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

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

48



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14 Data Verification

Quality Control Procedures

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



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

Field duplicates (FDUP) in this case refer to 1⁄4 core duplicates
of the same sampling interval. A preparation duplicate (CDUP) consists of a poly
bag containing only a sample tag with instructions for laboratory personnel to
prepare the sample from the preceding standard drill core analysis by taking a
split after the coarse crushing stage. Four different reference materials are
used in the sampling program. TTC-1 and LNC-1, which are in-house reference
materials created by Cardero; and, DH6701 and SX67-05 are certified
reference materials

49



---

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

A total of 316 reference materials and 138 Pokegama quartzite
blank samples were submitted blindly to the laboratory during the core sampling
campaign. A total of 310 1⁄4 core duplicate pairs and 299 preparation duplicate
pairs were collected and submitted to the laboratory. Only the 1⁄4 core duplicates
were blind to the laboratory. All analytical data including quality control
samples were checked and verified by Carderos senior geochemist, Tansy
OConnor-Parsons.

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



Figure 14-2. Scatterplot graphs of TiO2(left) and
Fe2O3(right) data for 1⁄4 core duplicate (FDUP; top) and
preparation duplicate (CDUP; bottom) data.

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

50



---

samples from a subset of routine samples of varying
concentrations be submitted to a second laboratory in order to confirm the
accuracy of the TiO2analyses.



Figure 14-3. TiO2data presented for certified
reference materials DH6701 (top left) and SX6705 (top right); and CDU internal
reference materials LNC-1 (bottom left) and TTC-1 (bottom right).

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



51

---

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

52



---

15 Adjacent Properties

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

53



---

16 Mineral Processing and Metallurgical
  Testing

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

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

54



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17 Mineral Resource and Reserve
  Estimates

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

55



---

18 Other Relevant Data and Information

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

56



---

19 Interpretation and Conclusions

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

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

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

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

57



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20 Recommendations

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

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

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

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

58



---

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

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


59



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21 References

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

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

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

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

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

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

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

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

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

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

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

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

60



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

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

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

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

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

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

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

61



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22 Date and Signature Page

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

Dated: January 27, 2011

Signed:

(signed) Keith J.
Henderson

EurGeol Keith J. Henderson, P.Geo



(signed) Stephen J.
Ripke

Stephen (Jayson) Ripke, QP, MMSA

62



---

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

Not applicable.

63



---

24 Certificates of Authors

CERTIFICATE OF KEITH J. HENDERSON

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

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

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

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

64

---

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

Dated this 27th day of January, 2011

|(signed) Keith
      J. Henderson       | 
|--------------------------------------- | 
|                                        | 
|Signature of Qualified Person           | 
|                                        | 
|EurGeol Keith J.
      Henderson, P.Geo | 
|                                        | 
|Print name of Qualified Person          | 

65



---

CERTIFICATE OF STEPHEN (JAYSON) RIPKE

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

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

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

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

66

---

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

Dated this 27th day of January, 2011

|(signed)
      Stephen J. Ripke       | 
|------------------------------------- | 
|                                      | 
|Signature of Qualified Person         | 
|                                      | 
|Stephen (Jayson)
      Ripke, QP MMSA | 
|                                      | 
|Print name of Qualified Person        | 

67



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