---



CARDERO RESOURCE CORP.(An Exploration Stage Company)

Audited Consolidated Financial
Statements

October 31, 2011 and 2010

---

MANAGEMENTS RESPONSIBILITY FORFINANCIAL
STATEMENTS

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

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

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

MANAGEMENTS REPORT ON INTERNAL CONTROL OVER FINANCIAL
REPORTING

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

The Company acquired 100% ownership in Cardero Coal Ltd.
(formerly Coalhunter Mining Corporation) on June 1, 2011. Management excluded
from its assessment of the effectiveness of Cardero Resource Corp.s internal
control over financial reporting as of October 31, 2011. Cardero Coal Ltd.s
internal control over financial reporting is associated with total assets of
$66.4 million included in the consolidated financial statements of Cardero
Resource Corp. and subsidiaries as of and for the year ended October 31, 2011.
Management did not assess the effectiveness of internal control over financial
reporting at Cardero Coal Ltd. due to the complexity associated with assessing
internal controls during integration efforts.

Management conducted an evaluation of the effectiveness of the
Companys internal control over financial reporting based on the framework and
criteria established in Internal ControlIntegrated
Framework, issued by the Committee of Sponsoring Organizations of the
Treadway Commission. This evaluation included review of the documentation of
controls, evaluation of the design effectiveness of controls, testing of the
operating effectiveness of controls and a conclusion on this evaluation. Based
on this evaluation, management concluded that the Companys internal control
over financial reporting was effective as of October 31, 2011. The effectiveness
of the Companys internal control over financial reporting as of October 31,
2011 has been audited by Smythe Ratcliffe LLP, an independent registered public
accounting firm, as stated in their report.

|Michael Hunter                    | Blaine Bailey        
|----------------------------------- | -----------------------
|Michael Hunter,                     | Blaine Bailey,         
|President & Chief Executive Officer | Chief Financial Officer
|                                    |                        
|January 26, 2012                    |                        
|Vancouver, Canada                   |                        

---

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING
FIRM

TO THE SHAREHOLDERS OF CARDERO RESOURCE CORP.(An Exploration Stage Company)

We have audited the accompanying consolidated balance sheets of
Cardero Resource Corp. as of October 31, 2011 and 2010 and the consolidated
statements of operations, shareholders equity and cash flows for the years
ended October 31, 2011, 2010 and 2009, and a summary of significant accounting
policies and other explanatory information.

Managements Responsibility for the Consolidated Financial
StatementsManagement is responsible for the preparation and fair
presentation of these consolidated financial statements in accordance with
Canadian generally accepted accounting principles, and for such internal control
as management determines is necessary to enable the preparation of consolidated
financial statements that are free from material misstatement, whether due to
fraud or error.

Auditors ResponsibilityOur responsibility
is to express an opinion on these consolidated financial statements based on our
audits. We conducted our audits in accordance with Canadian generally accepted
auditing standards and the standards of the Public Company Accounting Oversight
Board (United States). Those standards require that we comply with ethical
requirements and plan and perform the audit to obtain reasonable assurance about
whether the consolidated financial statements are free from material
misstatement.

An audit involves performing procedures to obtain audit
evidence about the amounts and disclosures in the consolidated financial
statements. The procedures selected depend on the auditors judgment, including
the assessment of the risks of material misstatement of the consolidated
financial statements, whether due to fraud or error. In making those risk
assessments, the auditor considers internal control relevant to the entitys
preparation and fair presentation of the consolidated financial statements in
order to design audit procedures that are appropriate in the circumstances. An
audit also includes evaluating the appropriateness of accounting policies used
and the reasonableness of accounting estimates made by management, as well as
evaluating the overall presentation of the consolidated financial statements.

We believe that the audit evidence we have obtained in our
audits is sufficient and appropriate to provide a basis for our audit opinion.

OpinionIn our opinion, these consolidated financial
statements present fairly, in all material respects, the financial position of
Cardero Resource Corp. as at October 31, 2011 and 2010, and the results of its
operations and its cash flows for the years ended October 31, 2011, 2010 and
2009 in accordance with Canadian generally accepted accounting principles.

Other MatterWe have also audited, in accordance
with the standards of the Public Company Accounting Oversight Board (United
States), the Companys internal control over financial reporting as of October
31, 2011 based on criteria established in Internal Control  Integrated
Framework issued by the Committee of Sponsoring Organizations of the Treadway
Commission and our report dated January 26, 2012 expressed an unqualified
opinion thereon.

Vancouver, CanadaJanuary 26, 2012



---

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING
FIRM

TO THE SHAREHOLDERS OF CARDERO RESOURCE CORP.(An Exploration Stage Company)

We have audited Cardero Resource Corp.s (the Company)
internal control over financial reporting as of October 31, 2011 based on the
criteria established in Internal Control  Integrated Framework issued by the
Committee of Sponsoring Organizations of the Treadway Commission (COSO). The
Companys management is responsible for maintaining effective internal control
over financial reporting and for its assessment of the effectiveness of internal
control over financial reporting included in the accompanying Management Report
on Internal Control Over Financial Reporting. Our responsibility is to express
an opinion on the Companys internal control over financial reporting based on
our audit.

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

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

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

As indicated in the accompanying Cardero Resource Corp.s
Managements Report on Internal Control Over Financial Reporting, managements
assessment of and conclusion on the effectiveness of internal control over
financial reporting did not include the internal controls of Cardero Coal Ltd.
(formerly Coalhunter Mining Corporation), which is included in the October 31,
2011 consolidated financial statements of Cardero Resource Corp. and constituted
$66.4 million of total assets as of October 31, 2011. Our audit of internal
control over financial reporting of Cardero Resource Corp. also did not include
an evaluation of the internal control over financial reporting of Cardero Coal
Ltd.

In our opinion, the Company maintained, in all material
respects, effective internal control over financial reporting as of October 31,
2011, based on the criteria established in Internal Control  Integrated
Framework issued by the COSO.

We have also audited, in accordance with the standards of the
Public Company Accounting Oversight Board (United States), the consolidated
balance sheets of the Company as of October 31, 2011 and 2010, and the related
consolidated statements of operations, shareholders equity and cash flows for
the years ended October 31, 2011, 2010 and 2009, and our report dated January
26, 2012 expressed an unqualified opinion thereon.

Vancouver, Canada
  January 26, 2012



---

|CARDERO RESOURCE CORP.           
|---------------------------------
|(AN EXPLORATION STAGE COMPANY)   
|Consolidated Financial Statements
|October 31, 2011, 2010 and 2009  
|                                 





|INDEX                                                                  | Page
|---------------------------------------------------------------------- | ----
|                                                                       |     
|Managements
      Responsibility for Financial Statements             |     
|                                                                       |     
|Managements
      Report on Internal Control over Financial Reporting |     
|                                                                       |     
|Reports
      of Independent Registered Public Accounting Firm         |     
|                                                                       |     
|Consolidated
      Financial Statements                                | 1-5 
|                                                                       |     
|Consolidated
      Balance Sheets                                      | 1   
|                                                                       |     
|Consolidated
      Statements of Operations                            | 2   
|                                                                       |     
|Consolidated
      Statements of Shareholders Equity                  | 3-4 
|                                                                       |     
|Consolidated
      Statements of Cash Flows                            | 5   
|                                                                       |     
|Notes
      to Consolidated Financial Statements                       | 6-45

---

CARDERO RESOURCE CORP.(AN EXPLORATION STAGE
COMPANY)Consolidated Balance SheetsOctober 31

|                                                        |   | 2011        |   |   | 2010        |  
|------------------------------------------------------- | - | ----------- | - | - | ----------- | -
|                                                        |   |             |   |   |             |  
|ASSETS                                                  |   |             |   |   |             |  
|Current                                                 |   |             |   |   |             |  
|Cash and cash equivalents                               | $ | 5,985,634   |   | $ | 52,264,003  |  
|Accounts receivable                                     |   | 1,434,077   |   |   | 267,431     |  
|Due from related parties (note
      9)                 |   | 1,239,043   |   |   | 1,361,550   |  
|Loan receivable (note 9)                                |   | 8,580,096   |   |   | -           |  
|Prepaid expenses                                        |   | 356,191     |   |   | 335,493     |  
|Total Current Assets                                    |   | 17,595,041  |   |   | 54,228,477  |  
|                                                        |   |             |   |   |             |  
|Fixed Assets(note 4)                                    |   | 910,996     |   |   | 197,737     |  
|Resource Related Investments(note
      5)              |   | 32,551,104  |   |   | 60,685,650  |  
|Equity Investments(note 6)                              |   | -           |   |   | 5,236,540   |  
|Resource Property Advances                              |   | 810,100     |   |   | -           |  
|Resource Properties(notes 3 and 7)                      |   | 69,347,042  |   |   | 15,856,750  |  
|Reclamation Deposit                                     |   | 115,000     |   |   | -           |  
|                                                        |   |             |   |   |             |  
|Total Assets                                            | $ | 121,329,283 |   | $ | 136,205,154 |  
|                                                        |   |             |   |   |             |  
|LIABILITIES                                             |   |             |   |   |             |  
|Current                                                 |   |             |   |   |             |  
|Accounts payable and accrued
      liabilities (note 9) | $ | 4,038,261   |   | $ | 832,087     |  
|Income taxes payable                                    |   | -           |   |   | 26,847,314  |  
|Total Current Liabilities                               |   | 4,038,261   |   |   | 27,679,401  |  
|                                                        |   |             |   |   |             |  
|Future Income Tax Liability(note 3)                     |   | 11,713,033  |   |   | -           |  
|Total Liabilities                                       |   | 15,751,294  |   |   | 27,679,401  |  
|                                                        |   |             |   |   |             |  
|SHAREHOLDERS EQUITY                                    |   |             |   |   |             |  
|Capital Stock(notes 3 and 8)                            |   | 107,237,122 |   |   | 69,890,947  |  
|Contributed Surplus                                     |   | 20,318,203  |   |   | 14,726,585  |  
|Accumulated Other Comprehensive
      Income            |   | 9,075,564   |   |   | 30,227,593  |  
|Deficit                                                 |   | (31,052,900 | ) |   | (6,319,372  | )
|Total Shareholders Equity                              |   | 105,577,989 |   |   | 108,525,753 |  
|                                                        |   |             |   |   |             |  
|Total Liabilities and Shareholders Equity              | $ | 121,329,283 |   | $ | 136,205,154 |  

Nature of operations (note 1)Commitments (note
12)Subsequent events (note 17)

Approved on behalf of the Board:

|Hendrik Van
      Alphen   |  | Lawrence W. Talbot        
|---------------------------- |  | ----------------------------
|Hendrik Van Alphen, Director |  | Lawrence W. Talbot, Director

| | See Notes to Consolidated
      Financial Statements | 1
| | ---------------------------------------------------- | -

---

CARDERO RESOURCE CORP.(AN EXPLORATION STAGE
COMPANY)Consolidated Statements of OperationsYears Ended October 31

|                                                                      |   | 2011        |   |   | 2010        |   |   | 2009       |  
|--------------------------------------------------------------------- | - | ----------- | - | - | ----------- | - | - | ---------- | -
|                                                                      |   |             |   |   |             |   |   |            |  
|Administrative Expenses                                               |   |             |   |   |             |   |   |            |  
|Amortization                                                          | $ | 244,935     |   | $ | 69,463      |   | $ | 52,418     |  
|Bad debts                                                             |   | -           |   |   | 104,835     |   |   | 468,099    |  
|Consulting fees (notes 8 and 9)                                       |   | 1,324,798   |   |   | 1,828,250   |   |   | 1,276,789  |  
|Corporate development                                                 |   | 606,239     |   |   | 301,906     |   |   | 91,058     |  
|Insurance                                                             |   | 108,928     |   |   | 162,115     |   |   | 173,179    |  
|Investor relations (note 8)                                           |   | 650,779     |   |   | 553,873     |   |   | 254,789    |  
|Office costs                                                          |   | 736,844     |   |   | 1,005,473   |   |   | 726,334    |  
|Professional fees (note 9)                                            |   | 977,197     |   |   | 995,418     |   |   | 820,382    |  
|Property evaluations (note 7(e))                                      |   | 3,610,508   |   |   | 226,202     |   |   | 453,525    |  
|Regulatory and transfer agent
      fees                              |   | 221,064     |   |   | 104,686     |   |   | 134,609    |  
|Salaries and benefits (note 8)                                        |   | 3,840,081   |   |   | 3,238,965   |   |   | 2,215,861  |  
|Travel                                                                |   | 225,639     |   |   | 328,387     |   |   | 255,344    |  
|                                                                      |   |             |   |   |             |   |   |            |  
|Loss Before Other Items and Income Taxes                              |   | (12,547,012 | ) |   | (8,919,573  | ) |   | (6,922,387 | )
|                                                                      |   |             |   |   |             |   |   |            |  
|Other Items                                                           |   |             |   |   |             |   |   |            |  
|Foreign exchange gain (loss)                                          |   | 984,660     |   |   | (3,832,001  | ) |   | (418,566   | )
|Interest income, net of bank
      charges (note 9(c))                |   | 1,420,650   |   |   | 36          |   |   | 24,575     |  
|Realized gain on sale of available-for-sale
      investment (note 5) |   | 8,833,404   |   |   | 939,651     |   |   | 2,718,254  |  
|Unrealized gain (loss) on
      derivative investments (note 5)       |   | (2,936,073  | ) |   | 1,346,746   |   |   | 349,424    |  
|Unrealized gain (loss) on held-for-trading
      investment (note 5)  |   | (59,500     | ) |   | 52,000      |   |   | 11,000     |  
|Gain on sale of resource
      property (note 7(c)(ii))               |   | -           |   |   | 87,727,157  |   |   | 8,597,655  |  
|Write-off of resource properties (note 7)                             |   | (12,206,614 | ) |   | (8,498,083  | ) |   | (3,070,287 | )
|Impairment losses on
      available-for-sale investments (note 5)    |   | (2,837,978  | ) |   | -           |   |   | -          |  
|Loss on equity investments (note 6)                                   |   | (793,194    | ) |   | (483,461    | ) |   | (795,000   | )
|Loss on debt settlement                                               |   | -           |   |   | -           |   |   | (17,176    | )
|                                                                      |   |             |   |   |             |   |   |            |  
|                                                                      |   | (7,594,645  | ) |   | 77,252,045  |   |   | 7,399,879  |  
|                                                                      |   |             |   |   |             |   |   |            |  
|Income (Loss) Before Income Taxes                                     |   | (20,141,657 | ) |   | 68,332,472  |   |   | 477,492    |  
|                                                                      |   |             |   |   |             |   |   |            |  
|Income Taxes                                                          |   |             |   |   |             |   |   |            |  
|Current expense                                                       |   | (859,159    | ) |   | (26,421,049 | ) |   | (2,564,900 | )
|Future recovery (expense) (note 11)                                   |   | (3,732,712  | ) |   | 3,039,547   |   |   | 1,832,780  |  
|                                                                      |   |             |   |   |             |   |   |            |  
|                                                                      |   | (4,591,871  | ) |   | (23,381,502 | ) |   | (732,120   | )
|                                                                      |   |             |   |   |             |   |   |            |  
|Net Income (Loss) for the Year                                        | $ | (24,733,528 | ) | $ | 44,950,970  |   | $ | (254,628   | )
|                                                                      |   |             |   |   |             |   |   |            |  
|Basic and Diluted Income (Loss) Per Share                             | $ | (0.36       | ) | $ | 0.77        |   | $ | (0.01      | )
|                                                                      |   |             |   |   |             |   |   |            |  
|Weighted Average Number of Common Shares
      Outstanding            |   | 68,988,456  |   |   | 58,571,515  |   |   | 58,421,309 |  

---

CARDERO RESOURCE CORP.(AN EXPLORATION STAGE
COMPANY)Consolidated Statements of Shareholders Equity

Capital Stock
      
      
      
      
      
      
      
      
      
      
      
      
      
      AccumulatedOther
      
      
      
      TotalObligation to
      
      
      
      
      
      
      Contributed
      
      
      Comprehensive
      
      
      
      ShareholdersShares
      
      
      Amount
      
      
      
      Issue Shares
      
      
      
      Deficit
      
      
      Surplus
      
      
      Income
      
      
      
      EquityBalance, October 31, 2008
      
      57,782,847
      
      $
      68,824,822
      
      
      $
      795,000
      
      
      $
      (51,015,714
      )
      $
      11,912,309
      
      $
      2,617,740
      
      
      $
      33,134,157Net loss for the year
      
      -
      
      
      -
      
      
      
      -
      
      
      
      (254,628
      )
      
      -
      
      
      -
      
      
      
      (254,628
      )Other comprehensive incomeUnrealized gain on available-for-sale investments
      
      -
      
      
      -
      
      
      
      -
      
      
      
      -
      
      
      -
      
      
      12,043,882
      
      
      
      12,043,882Transfer to income of realized gain on sale of resource related
        
            investments
      
      -
      
      
      -
      
      
      
      -
      
      
      
      -
      
      
      -
      
      
      (1,658,126
      )
      
      
      (1,658,126
      )Comprehensive income for the year
      
      
      
      
      
      
      
      
      
      
      
      
      
      
      
      
      
      
      
      
      
      
      10,131,128Shares issued for cashExercise of options
      
      25,000
      
      
      36,750
      
      
      
      -
      
      
      
      -
      
      
      -
      
      
      -
      
      
      
      36,750Exercise of warrants
      
      92,500
      
      
      127,500
      
      
      
      -
      
      
      
      -
      
      
      -
      
      
      -
      
      
      
      127,500Shares issued for non-cashReclassification of contributed surplus on exercise of options
      
      -
      
      
      14,088
      
      
      
      -
      
      
      
      -
      
      
      (14,088
      )
      
      -
      
      
      
      -Reclassification of contributed surplus on exercise of warrants
      
      -
      
      
      32,059
      
      
      
      -
      
      
      
      -
      
      
      (32,059
      )
      
      -
      
      
      
      -Investment acquisition
      
      500,000
      
      
      795,000
      
      
      
      (795,000
      )
      
      
      -
      
      
      -
      
      
      -
      
      
      
      -Obligation to issue shares
      
      -
      
      
      -
      
      
      
      111,500
      
      
      
      -
      
      
      -
      
      
      -
      
      
      
      111,500Debt settlement
      
      143,130
      
      
      204,676
      
      
      
      -
      
      
      
      -
      
      
      -
      
      
      -
      
      
      
      204,676Stock-based compensation
      
      -
      
      
      -
      
      
      
      -
      
      
      
      -
      
      
      1,192,109
      
      
      -
      
      
      
      1,192,109Balance, October 31, 2009
      
      58,543,477
      
      
      70,034,895
      
      
      
      111,500
      
      
      
      (51,270,342
      )
      
      13,058,271
      
      
      13,003,496
      
      
      
      44,937,820


---

CARDERO RESOURCE CORP.(AN EXPLORATION STAGE
COMPANY)Consolidated Statements ofShareholders Equity (Continued)

Capital Stock
      
      
      
      
      
      
      
      
      
      
      
      
      
      AccumulatedOther
      
      
      
      TotalObligation to
      
      
      
      
      
      
      Contributed
      
      
      Comprehensive
      
      
      
      ShareholdersShares
      
      
      Amount
      
      
      
      Issue Shares
      
      
      
      Deficit
      
      
      Surplus
      
      
      Income
      
      
      
      EquityBalance, October 31, 2009 (carried forward)
      
      58,543,477
      
      $
      70,034,895
      
      
      $
      111,500
      
      
      $
      (51,270,342
      )
      $
      13,058,271
      
      $
      13,003,496
      
      
      $
      44,937,820Net income for the year
      
      -
      
      
      -
      
      
      
      -
      
      
      
      44,950,970
      
      
      -
      
      
      -
      
      
      
      44,950,970Other
        comprehensive incomeUnrealized gain on available-for-sale investments
      
      -
      
      
      -
      
      
      
      -
      
      
      
      -
      
      
      -
      
      
      17,686,472
      
      
      
      17,686,472Transfer
        to income of realized gain on sale of 
                    
        resource related investments
      
      -
      
      
      -
      
      
      
      -
      
      
      
      -
      
      
      -
      
      
      (462,375
      )
      
      
      (462,375
      )Comprehensive income for the year
      
      
      
      
      
      
      
      
      
      
      
      
      
      
      
      
      
      
      
      
      
      
      62,175,067Shares issued for cashExercise warrants
      
      67,125
      
      
      90,619
      
      
      
      -
      
      
      
      -
      
      
      -
      
      
      -
      
      
      
      90,619Shares purchased pending return to treasury
      
      (312,300
      )
      
      (374,760
      )
      
      
      -
      
      
      
      -
      
      
      1,066
      
      
      -
      
      
      
      (373,694
      )Shares issued for non-cashReclassification
        of contributed surplus on exercise of warrants
      
      -
      
      
      28,693
      
      
      
      -
      
      
      
      -
      
      
      (28,693
      )
      
      -
      
      
      
      -Property acquisition
      
      75,000
      
      
      111,500
      
      
      
      (111,500
      )
      
      
      -
      
      
      -
      
      
      -
      
      
      
      -Stock-based compensation
      
      -
      
      
      -
      
      
      
      -
      
      
      
      -
      
      
      1,695,941
      
      
      -
      
      
      
      1,695,941Balance, October 31, 2010
      
      58,373,302
      
      
      69,890,947
      
      
      
      -
      
      
      
      (6,319,372
      )
      
      14,726,585
      
      
      30,227,593
      
      
      
      108,525,753Net
        loss for the year
      
      -
      
      
      -
      
      
      
      -
      
      
      
      (24,733,528
      )
      
      -
      
      
      -
      
      
      
      (24,733,528
      )Other comprehensive incomeUnrealized loss on available-for-sale investments
      
      -
      
      
      -
      
      
      
      -
      
      
      
      -
      
      
      -
      
      
      (13,039,757
      )
      
      
      (13,039,757
      )Transfer to income of realized gain on sale of
        resource        related investments
      
      -
      
      
      -
      
      
      
      -
      
      
      
      -
      
      
      -
      
      
      (8,112,272
      )
      
      
      (8,112,272
      )Comprehensive loss for the year
      
      
      
      
      
      
      
      
      
      
      
      
      
      
      
      
      
      
      
      
      
      
      (45,885,557
      )Shares issued for cashExercise options
      
      840,000
      
      
      1,026,150
      
      
      
      -
      
      
      
      -
      
      
      -
      
      
      -
      
      
      
      1,026,150Exercise warrants
      
      443,800
      
      
      171,718
      
      
      
      -
      
      
      
      -
      
      
      -
      
      
      -
      
      
      
      171,718Shares issued for non-cashReclassification of contributed surplus on exercise
        of options
      
      -
      
      
      556,406
      
      
      
      -
      
      
      
      -
      
      
      (556,406
      )
      
      -
      
      
      
      -Reclassification of contributed surplus on exercise
        of warrants
      
      -
      
      
      496,398
      
      
      
      -
      
      
      
      -
      
      
      (496,398
      )
      
      -
      
      
      
      -Acquisition of Cardero Coal (note 3)
      
      23,397,002
      
      
      35,095,503
      
      
      
      -
      
      
      
      -
      
      
      5,342,487
      
      
      -
      
      
      
      40,437,990Stock-based compensation
      
      -
      
      
      -
      
      
      
      -
      
      
      
      -
      
      
      1,301,935
      
      
      -
      
      
      
      1,301,935Balance, October 31, 2011
      
      83,054,104
      
      $
      107,237,122
      
      
      $
      -
      
      
      $
      (31,052,900
      )
      $
      20,318,203
      
      $
      9,075,564
      
      
      $
      105,577,989


---

CARDERO RESOURCE CORP.(AN EXPLORATION STAGE
COMPANY)Consolidated Statements of Cash FlowsYears Ended October 31

|                                                                 |   | 2011        |   |   | 2010        |   |   | 2009       |  
|---------------------------------------------------------------- | - | ----------- | - | - | ----------- | - | - | ---------- | -
|                                                                 |   |             |   |   |             |   |   |            |  
|Operating Activities                                             |   |             |   |   |             |   |   |            |  
|Net income (loss) for
      the year                             | $ | (24,733,528 | ) | $ | 44,950,970  |   | $ | (254,628   | )
|Items not involving cash                                         |   |             |   |   |             |   |   |            |  
|Amortization                                                     |   | 244,935     |   |   | 69,463      |   |   | 52,418     |  
|Bad debts                                                        |   | -           |   |   | 104,835     |   |   | 468,099    |  
|Stock-based compensation (note 8)                                |   | 1,301,935   |   |   | 1,695,941   |   |   | 1,192,109  |  
|Write-off of resource
      properties (note 7)                  |   | 12,206,614  |   |   | 8,498,083   |   |   | 3,070,287  |  
|Realized
      gain on sale of available-for-sale investments    |   | (8,833,403  | ) |   | (939,651    | ) |   | (2,718,254 | )
|Unrealized loss (gain) on held-for-trading investment (note 5)   |   | 59,500      |   |   | (52,000     | ) |   | (11,000    | )
|Loss on
      equity investment                                  |   | 793,194     |   |   | 483,461     |   |   | 795,000    |  
|Unrealized loss (gain) on
      derivative investments (note 5)  |   | 2,936,073   |   |   | (1,346,746  | ) |   | (349,424   | )
|Impairment losses on available-for-sale investments (note 5)     |   | 2,837,978   |   |   | -           |   |   | -          |  
|Amortization of fair
      value of warrants to interest income  |   | (892,513    | ) |   | -           |   |   | -          |  
|Gain on
      sale of resource property                          |   | -           |   |   | (87,727,157 | ) |   | (8,597,655 | )
|Loss on debt settlement                                          |   | -           |   |   | -           |   |   | 17,176     |  
|Future
      income taxes (recovery) expense                     |   | 3,732,712   |   |   | (3,039,547  | ) |   | (1,832,780 | )
|Realized foreign exchange
      gain on income tax payable       |   | (1,245,680  | ) |   | -           |   |   | -          |  
|Unrealized foreign exchange loss                                 |   | 1,369,755   |   |   | 2,877,426   |   |   | 32,360     |  
|Changes in non-cash working capital
      items                  |   |             |   |   |             |   |   |            |  
|Accounts
      receivable                                        |   | (308,776    | ) |   | (85,975     | ) |   | 300,662    |  
|Due from related parties                                         |   | 122,507     |   |   | (773,594    | ) |   | 150,916    |  
|Loan
      receivable                                            |   | (8,580,096  | ) |   | -           |   |   | -          |  
|Prepaid expenses                                                 |   | (15,532     | ) |   | (95,465     | ) |   | (16,254    | )
|Accounts
      payable and accrued liabilities                   |   | (163,112    | ) |   | 173,710     |   |   | 78,765     |  
|Income taxes payable                                             |   | (25,601,634 | ) |   | 24,282,414  |   |   | 2,564,900  |  
|                                                                 |   |             |   |   |             |   |   |            |  
|Cash Used
      in Operating Activities                          |   | (44,769,071 | ) |   | (10,923,832 | ) |   | (5,057,303 | )
|                                                                 |   |             |   |   |             |   |   |            |  
|Investing Activities                                             |   |             |   |   |             |   |   |            |  
|Acquisition of Cardero
      Coal Ltd. (note 3)                  |   | 2,348,873   |   |   | -           |   |   | -          |  
|Investment in and expenditures on
      resource properties      |   | (7,332,461  | ) |   | (7,411,092  | ) |   | (3,778,314 | )
|Increase in reclamation
      deposit                            |   | (110,000    | ) |   | -           |   |   | -          |  
|Proceeds from resource property
      transactions, net of costs |   | -           |   |   | 88,372,433  |   |   | 13,587,313 |  
|Proceeds from sale of
      resource related investments         |   | 12,250,273  |   |   | 2,416,776   |   |   | 4,607,154  |  
|Purchase of resource related
      investments                   |   | (3,840,625  | ) |   | (17,094,329 | ) |   | (4,874,325 | )
|Purchase of equity
      investments                             |   | (3,882,443  | ) |   | (5,720,000  | ) |   | -          |  
|Purchase of fixed assets                                         |   | (771,028    | ) |   | (38,648     | ) |   | (82,059    | )
|                                                                 |   |             |   |   |             |   |   |            |  
|Cash
      Provided by (Used in) Investing Activities            |   | (1,337,411  | ) |   | 60,525,140  |   |   | 9,459,769  |  
|                                                                 |   |             |   |   |             |   |   |            |  
|Financing Activities                                             |   |             |   |   |             |   |   |            |  
|Proceeds from shares
      issued                                |   | 1,197,868   |   |   | 90,619      |   |   | 164,250    |  
|Shares purchased pending return to treasury                      |   | -           |   |   | (373,694    | ) |   | -          |  
|                                                                 |   |             |   |   |             |   |   |            |  
|Cash
      Provided by (Used in) Financing Activities            |   | 1,197,868   |   |   | (283,075    | ) |   | 164,250    |  
|                                                                 |   |             |   |   |             |   |   |            |  
|Effect of
      Foreign Exchange on Cash                         |   | (1,369,755  | ) |   | (2,877,426  | ) |   | (32,360    | )
|                                                                 |   |             |   |   |             |   |   |            |  
|Increase (Decrease) in Cash and Cash
      Equivalents           |   | (46,278,369 | ) |   | 46,440,807  |   |   | 4,534,356  |  
|Cash and Cash Equivalents, Beginning of the
      Year           |   | 52,264,003  |   |   | 5,823,196   |   |   | 1,288,840  |  
|                                                                 |   |             |   |   |             |   |   |            |  
|Cash and Cash Equivalents, End of the Year                       | $ | 5,985,634   |   | $ | 52,264,003  |   | $ | 5,823,196  |  
|Supplemental cash flow information(note 16)                      |   |             |   |   |             |   |   |            |  

---

|CARDERO RESOURCE CORP.                     
|-------------------------------------------
|(AN EXPLORATION STAGE COMPANY)             
|Notes to Consolidated Financial Statements 
|Years ended October 31, 2011, 2010 and 2009
|                                           

|1. | NATURE OF OPERATIONS                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
|-- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
|   | Cardero Resource Corp. and its subsidiaries are engaged
      in the exploration of mineral properties, primarily in Mexico, Peru,
      Argentina, Ghana, the United States and Canada. The Company considers
      itself to be an exploration stage company.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
|   | These consolidated financial statements have been
      prepared on the basis of accounting principles applicable to a going
      concern, which assume that the Company will be able to continue in
      operation for the foreseeable future.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
|   | The Company incurred a loss of $24,733,528 for the year
      ended October 31, 2011 (2010  $44,950,970 net income; 2009  $254,628 net
      loss). The Company has working capital as at October 31, 2011 of
      $13,556,780 (2010 - $26,549,076), and a deficit of $31,052,900 (2010 -
      $6,319,372).                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
|   | As the equity market improves, with the fair value of the
      Companys investments, management believes it has sufficient funding for
      operations in the near future, which results in the going concern
      assumption being an appropriate underlying concept for the preparation of
      these consolidated financial statements.                                                                                                                                                                                                                                                                                                                                                                                                                                                     
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
|   | The business of mining and exploration involves a high
      degree of risk and there can be no assurance that current exploration
      programs will result in profitable mining operations. The Company has no
      source of revenue, and has significant cash requirements to meet its
      administrative overhead and maintain its mineral interests. The
      recoverability of amounts shown for resource properties is dependent on
      several factors. These include the discovery of economically recoverable
      reserves, the ability of the Company to obtain the necessary financing to
      complete the development of these properties, and future profitable
      production or proceeds from disposition of mineral properties or resource
      related investments.
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
|2. | SIGNIFICANT ACCOUNTING POLICIES                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
|   | (a)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
|   | (b)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     

6

---

|CARDERO RESOURCE CORP.                     
|-------------------------------------------
|(AN EXPLORATION STAGE COMPANY)             
|Notes to Consolidated Financial Statements 
|Years ended October 31, 2011, 2010 and 2009
|                                           

|2. | SIGNIFICANT ACCOUNTING POLICIES
  (Continued)
|-- | ---------------------------------------------
|   |                                              
|   | (c)                                          
|   |                                              
|   |                                              
|   |                                              
|   | (d)                                          
|   |                                              
|   |                                              

Computer equipment
    -
    30% declining
      balance basisComputer software
    -
    100% declining balanceOffice equipment
    -
    20% to 30%
      declining balance basisVehicle
    -
    20% declining balanceMetallurgy lab
    -
    over 5 years on a
      straight-line basisLeasehold improvements
    -
    over the term of the lease on a
      straight-line basis


| |     | Additions during the year are amortized at one-half the
      annual rates.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
| | --- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
| | (e) | Investments                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
| |     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
| |     | Investments over which the Company exercises significant
      influence are accounted for using the equity method. Resource related
      investments, not including derivatives, are principally classified as
      available-for-sale, and are carried at quoted market value, where
      applicable, or at an estimate of fair value. Resulting unrealized gains or
      losses, net of applicable income taxes, are reflected in other
      comprehensive income, while realized gains or losses are reflected in
      operations. Share purchase warrants included in investments are derivative
      financial instruments and are classified as held-for-trading and,
      accordingly, unrealized gains or losses, net of applicable income taxes,
      are included in operations.
| |     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
| |     | The investments are reviewed, on an
      investment-by-investment basis quarterly, to consider whether there are
      any conditions that may indicate that the impairments are other than
      temporary. When the impairments are other than temporary, in the Companys
      assessment, the accumulated unrealized gains or losses are reflected in
      operations rather than in other comprehensive
income.                                                                                                                                                                                                                                                                                                                                                                             

7

---

|CARDERO RESOURCE CORP.                     
|-------------------------------------------
|(AN EXPLORATION STAGE COMPANY)             
|Notes to Consolidated Financial Statements 
|Years ended October 31, 2011, 2010 and 2009
|                                           

|2. | SIGNIFICANT ACCOUNTING POLICIES
  (Continued)
|-- | ---------------------------------------------
|   |                                              
|   | (f)                                          
|   |                                              
|   |                                              
|   |                                              
|   |                                              
|   |                                              
|   |                                              
|   |                                              
|   |                                              
|   |                                              
|   |                                              
|   |                                              
|   | (g)                                          
|   |                                              
|   |                                              
|   |                                              
|   |                                              
|   |                                              
|   |                                              
|   |                                              
|   |                                              

| |     | Gains and losses arising from this translation of foreign
      currency are included in the determination of net income (loss) for the
      period.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
| | --- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
| | (h) | Stock-based compensation                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
| |     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
| |     | The Company accounts for stock-based compensation using a
      fair value based method with respect to all stock-based payments measured
      and recognized, to directors, employees and non -employees. For directors
      and employees, the fair value of the option is measured at the date of
      grant. For non-employees, the fair value of the options is measured on the
      earlier of the date at which the counterparty performance is complete or
      the date the performance commitment is reached, or the date at which the
      equity instruments are granted if they are fully vested and
      non-forfeitable. For directors, employees and non-employees, the fair
      value of the options is accrued and charged either to operations or
      mineral property interests, with the offset credit to contributed surplus,
      over the vesting period. If and when the stock options are exercised, the
      applicable amounts from contributed surplus are transferred to capital
      stock.

8

---

|CARDERO RESOURCE CORP.                     
|-------------------------------------------
|(AN EXPLORATION STAGE COMPANY)             
|Notes to Consolidated Financial Statements 
|Years ended October 31, 2011, 2010 and 2009
|                                           

|2. | SIGNIFICANT ACCOUNTING POLICIES
  (Continued)
|-- | ---------------------------------------------
|   |                                              
|   | (i)                                          
|   |                                              
|   |                                              
|   |                                              
|   | (j)                                          
|   |                                              
|   |                                              
|   |                                              
|   | (k)                                          
|   |                                              
|   |                                              
|   |                                              
|   | (l)                                          
|   |                                              
|   |                                              
|   |                                              
|   | (m)                                          
|   |                                              
|   |                                              
|   |                                              
|   |                                              

9

---

|CARDERO RESOURCE CORP.                     
|-------------------------------------------
|(AN EXPLORATION STAGE COMPANY)             
|Notes to Consolidated Financial Statements 
|Years ended October 31, 2011, 2010 and 2009
|                                           

|2. | SIGNIFICANT ACCOUNTING POLICIES
  (Continued)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
|-- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
|   | (n)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
|3. | ACQUISITION OF CARDERO COAL                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
|   | On June 1, 2011, the Company completed the acquisition of
      Cardero Coal through a Plan of Arrangement (the Acquisition) whereby one
      Cardero Coal common share was exchanged for 0.8 of a common share of the
      Company. The acquisition resulted in the Company issuing 23,397,002 common
      shares on the effective date, with a further 5,885,543 common shares
      reserved for issuance for the exercise of options held by former Cardero
      Coal optionees, the exercise of Cardero Coal warrants and pursuant to
      Cardero Coal property acquisition agreements. On completion of the
      transaction, Cardero Coal became a wholly-owned subsidiary of the Company.
      The Company accounted for the Acquisition using the asset acquisition
      method.                                        
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
|   | The fair value of the common shares of the Company issued
      in connection with the Acquisition has been determined at $1.50 per share.
      The fair values of the Companys share purchase options and warrants
      issued as replacement options and warrants granted were $2,416,470 and
      $4,354,140. The Company options vest on December 1, 2011 (25%), June 1,
      2012 (25%), and December 1, 2012 (50%). The fair values were calculated
      using the Black-Scholes pricing model. Of the aggregate fair value,
      $988,347 represents the value of the Cardero Coal options at May 31, 2011
      and was allocated to the total purchase price. The remaining $1,428,123
      will be allocated to salaries and benefits over the vesting term. The
      assumptions used in the calculation are as
follows:

| |                       | Options | Warrants
| | --------------------- | ------- | --------
| | Expected life (years) | 2.0     | 2.0     
| | Interest rate         | 1.45%   | 1.45%   
| | Volatility (average)  | 49.89%  | 52.61%  
| | Dividend yield        | 0.00%   | 0.00%   

The purchase consideration is comprised
of the following:

| | Total purchase price:                                                  |   |            | 
| | ---------------------------------------------------------------------- | - | ---------- | 
| | Initial investments in Cardero Coal to
      acquire a 45.5% interest  | $ | 7,205,311  | 
| | Issuance of 23,397,002 Cardero common shares for 54.5%
      interest  |   | 35,095,503 | 
| | Fair value of 2,029,143 Cardero options as
      replacement options   |   | 988,347    | 
| | Fair value of 3,856,400 Cardero warrants as replacement
      warrants |   | 4,354,140  | 
| | Transaction costs                                                      |   | 922,393    | 
| |                                                                        | $ | 48,565,694 | 

10

---

|CARDERO RESOURCE CORP.                     
|-------------------------------------------
|(AN EXPLORATION STAGE COMPANY)             
|Notes to Consolidated Financial Statements 
|Years ended October 31, 2011, 2010 and 2009
|                                           

|3. | ACQUISITION OF CARDERO COAL (Continued)                                                                                       
|-- | ------------------------------------------------------------------------------------------------------------------------------
|   |                                                                                                                               
|   | The fair value of the Cardero Coal assets acquired and
      liabilities assumed as at the acquisition date were as
  follows:

| | Purchase price allocation:               |   |             |  
| | ---------------------------------------- | - | ----------- | -
| | Cash                                     | $ | 2,626,895   |  
| | Accounts receivable                      |   | 87,990      |  
| | Due from Cardero                         |   | 644,370     |  
| | Prepaid expenses                         |   | 5,166       |  
| | Fixed assets                             |   | 187,166     |  
| | Resource property advances               |   | 166,788     |  
| | Reclamation deposit                      |   | 5,000       |  
| | Resource properties (note 7)             |   | 57,021,938  |  
| | Accounts payable and accrued liabilities |   | (466,586    | )
| | Future income tax
      liability        |   | (11,713,033 | )
| |                                          | $ | 48,565,694  |  

|4. | FIXED ASSETS
|-- | ------------

2011
      
      
      
      2010Accumulated
      
      
      
      
      
      
      
      
      
      AccumulatedCost
      
      
      Amortization
      
      
      Net
      
      
      
      Cost
      
      
      Amortization
      
      
      NetComputer equipment
      $
      232,518
      
      $
      145,741
      
      $
      86,777
      
      
      $
      171,624
      
      $
      122,128
      
      $
      49,496Computer software
      
      146,280
      
      
      63,738
      
      
      82,542
      
      
      
      -
      
      
      -
      
      
      -Office equipment
      
      208,937
      
      
      68,830
      
      
      140,107
      
      
      
      99,853
      
      
      48,402
      
      
      51,451Vehicle
      
      20,874
      
      
      1,740
      
      
      19,134
      
      
      
      -
      
      
      -
      
      
      -Metallurgy lab
      
      508,651
      
      
      102,359
      
      
      406,292
      
      
      
      -
      
      
      -
      
      
      -Leasehold improvements
      
      345,068
      
      
      168,924
      
      
      176,144
      
      
      
      210,530
      
      
      113,740
      
      
      96,790$
      1,462,328
      
      $
      551,332
      
      $
      910,996
      
      
      $
      482,007
      
      $
      284,270
      
      $
      197,737


|5. | RESOURCE RELATED
INVESTMENTS
|-- | ----------------------------

Shares
      
      
      Warrants2011
      
      Number
      
      
      Fair Value
      
      
      Number
      
      
      Fair Value
      
      
      
      TotalInternational Tower Hill Mines Ltd. (ITH)
      
      3,053,933
      
      $
      15,330,744
      
      
      -
      
      $
      -
      
      
      $
      15,330,744Trevali Mining Corporation
        (Trevali)
      
      11,159,432
      
      
      10,043,489
      
      
      4,533,572
      
      
      506,635
      
      
      
      10,550,124Wealth Minerals Ltd. (Wealth)
      
      5,022,806
      
      
      1,029,675
      
      
      -
      
      
      -
      
      
      
      1,029,675Dorato Resources
        Inc. (Dorato)
      
      2,536,000
      
      
      304,320
      
      
      -
      
      
      -
      
      
      
      304,320Indico Resources Ltd. (Indico)
      
      50,000
      
      
      11,000
      
      
      -
      
      
      -
      
      
      
      11,000Balmoral Resources
        Ltd. (Balmoral)
      
      240,000
      
      
      235,200
      
      
      -
      
      
      -
      
      
      
      235,200Corvus Gold Inc. (Corvus)
      
      1,655,711
      
      
      1,043,098
      
      
      -
      
      
      -
      
      
      
      1,043,098Abzu Gold Inc. (Abzu
        Gold)
      
      8,934,007
      
      
      3,841,623
      
      
      3,782,000
      
      
      37,820
      
      
      
      3,879,443Ethos Capital Corp.(Ethos)
      
      250,000
      
      
      167,500
      
      
      -
      
      
      -
      
      
      
      167,500$
      32,006,649
      
      
      
      
      $
      544,455
      
      
      $
      32,551,104


11

---

|CARDERO RESOURCE CORP.                     
|-------------------------------------------
|(AN EXPLORATION STAGE COMPANY)             
|Notes to Consolidated Financial Statements 
|Years ended October 31, 2011, 2010 and 2009
|                                           

|5. | RESOURCE RELATED INVESTMENTS
  (Continued)
|-- | ------------------------------------------

| |                                    |  | Shares     |  |   | Warrants   |  |  |            |  |  
| | ---------------------------------- |  | ---------- |  | - | ---------- |  |  | ---------- |  | -
| | 2010                               |  | Number     |  |   | Fair Value |  |  | Number     |  |  
| |                                    |  |            |  |   |            |  |  |            |  |  
| | ITH                                |  | 4,591,223  |  | $ | 34,847,383 |  |  | -          |  | $
| | Trevali                            |  | 7,032,432  |  |   | 9,986,053  |  |  | 2,855,866  |  |  
| | Wealth                             |  | 5,022,806  |  |   | 3,164,368  |  |  | -          |  |  
| | Dorato                             |  | 2,416,000  |  |   | 3,020,000  |  |  | -          |  |  
| | Indico                             |  | 50,000     |  |   | 31,000     |  |  | -          |  |  
| | Kria Resources Ltd.
      (Kria) |  | 15,000,000 |  |   | 3,150,000  |  |  | 15,000,000 |  |  
| | Corvus                             |  | 880,711    |  |   | 871,904    |  |  | -          |  |  
| | Abzu Gold                          |  | 3,782,000  |  |   | 1,891,000  |  |  | -          |  |  
| | Ethos                              |  | 100,000    |  |   | 80,000     |  |  | -          |  |  
| |                                    |  |            |  | $ | 57,041,708 |  |  |            |  | $

All the resource related companies are
considered to be related parties by virtue of having directors and/or officers
in common. All investments in shares are classified as available-for-sale under
the financial instruments classification except for the investment in Ethos,
which is classified as held-for-trading. As investments in warrants are
considered to be derivative instruments, they are by definition classified as
held-for-trading.

During the year ended October 31, 2011,
the Company acquired additional investments for a total cost of $3,840,625 (2010
- $17,094,329; 2009 - $4,874,325). The Company sold investments for gross
proceeds of $12,250,273 (2010 - $2,416,776; 2009 - $4,607,154) at a cost of
$3,416,869 (2010 - $1,477,125; 2009 - $1,888,900) for net gains on sale of
$8,833,403 (2010 - $939,651; 2009 - $2,718,254). Impairment losses on resource
related investments amounted to $2,837,978 (2010 and 2009 - $Nil).

2011
      
      
      
      2010Exercise
      
      
      Number of
      
      
      
      Exercise
      
      
      Number ofWarrants
      Expiry Date
      
      Price
      
      
      Warrants
      
      
      
      Price
      
      
      WarrantsTrevali
      May 11, 2011
      $
      1.30
      
      
      -
      
      
      $
      1.30
      
      
      625,000May 29, 2010
      $
      1.20
      
      
      -
      
      
      $
      1.20
      
      
      67,000October 9, 2011
      $
      1.00
      
      
      -
      
      
      $
      1.00
      
      
      735,294September 1, 2012
      $
      1.50
      
      
      1,428,572
      
      
      $
      1.50
      
      
      1,428,572July 29, 2012
      $
      1.00
      
      
      1,825,000
      
      
      $
      1.00
      
      
      -January 14, 2012
      $
      1.25
      
      
      1,280,000
      
      
      $
      1.25
      
      
      -4,533,572
      
      
      
      
      
      
      2,855,866Abzu Gold
      December 21, 2011 (note 17)
      $
      0.75
      
      
      3,782,000
      
      
      $
      0.75
      
      
      -Kria
      July 29, 2012
      $
      1.00
      
      
      -
      
      
      $
      1.00
      
      
      15,000,000


During the year ended October 31, 2011,
the Company recorded an unrealized loss (gain) on the fair value adjustment of
derivatives of $2,936,073 (2010  ($1,346,746); 2009  ($349,424)) and acquired
additional share purchase warrants at a value of $718,580 (2010 - $1,171,429;
2009 - $905,072)

12

---

|CARDERO RESOURCE CORP.                     
|-------------------------------------------
|(AN EXPLORATION STAGE COMPANY)             
|Notes to Consolidated Financial Statements 
|Years ended October 31, 2011, 2010 and 2009
|                                           

|6. | EQUITY INVESTMENTS
|-- | ------------------

| |                                            |   | **2011** |  |   | 2010      | 
| | ------------------------------------------ | - | -------- |  | - | --------- | 
| | Abzu Resources Ltd.                        | $ | -        |  | $ | 1,131,253 | 
| | Cardero Coal Ltd. (Ownership interest 42%) |   | -        |  |   | 4,105,287 | 
| |                                            | $ | -        |  | $ | 5,236,540 | 

| | (a) | Abzu Resources Ltd. (Abzu)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
| | --- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
| |     | During the year ended October 31, 2010, the Company
      acquired 9,000,002 shares of Abzu at a gross cost of $1,350,000. The
      Companys proportionate share of the net book value of Abzus assets at
      the acquisition date totaled $1,220,272. The difference between investment
      cost and the Companys share of net assets is attributed to resource
      properties. The Company accounted for its investment in Abzu using the
      equity method and recorded the investment at a gross cost of $1,350,000.
      For the year ended October 31, 2010, the Companys share of Abzus results of operations amounted
      to a loss of $218,748 based upon Abzus financial statements as of October
      31, 2010. As at October 31, 2010, the Company held approximately 31.36% of
    the outstanding common shares of Abzu.                                                                     
| |     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
| |     | On December 21, 2010, Totem Minerals Inc. acquired Abzu
      and changed its name to Abzu Gold Inc. (note 5). Between November 1,
      2010 and December 20, 2010, the Companys share of Abzus results of
      operations amounted to a loss of $10,775 based upon Abzus financial
      statements as of December 31, 2010.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
| |     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
| |     | Following the above acquisition, the Company held 16.32%
      of Abzu Gold and changed this investment classification to
      available-for-sale from the equity method (note 5).                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
| |     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
| | (b) | Cardero Coal                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
| |     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
| |     | During the year ended October 31, 2010, the Company
      acquired 14,200,000 shares of Cardero Coal at a gross cost of $4,370,000.
      The Companys proportionate share of the net book value of Cardero Coals
      assets (liabilities) at the acquisition dates totaled $(60,669).
      The difference between investment cost and the Companys share of net
      assets was attributed to resource properties. The Company accounted for
      its investment in Cardero Coal using the equity method and recorded the
      investment at a gross cost of $4,370,000. For the year ended October 31,
      2010, the Companys share of Cardero Coals results of operations amounted
      to a loss of $264,713 based upon Cardero Coals financial statements as of
      October 31, 2010. As at October 31, 2010, the Company held approximately
      42% of the outstanding common shares of Cardero Coal.
| |     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
| |     | On December 16, 2010, the Company participated in a
      private placement in Cardero Coal and acquired 5,600,000 special warrants
      of Cardero Coal (Special Warrants) at a cost of $2,800,000. Each
      Special Warrant was exercisable to acquire one common share of
      Cardero Coal, and would be automatically exercised upon the third business
      day after the issuance of a receipt for a prospectus of Cardero Coal
      qualifying the issuance of the common shares upon the exercise of the
      Special Warrants. If such receipt was not issued by June 27, 2011, each
      Special Warrant would thereafter be exercisable to acquire 1.1 common
      shares, and if such receipt has not been issued by September 27, 2011,
      each Special Warrant would thereafter be exercisable to acquire 1.11
      common shares.                                                              
| |     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
| |     | Pursuant to its top-up right, on December 21, 2010, the
      Company acquired by private placement an additional 3,608,143 common
      shares of Cardero Coal at a cost of $0.30 per share, for an additional
      investment of $1,082,443.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
| |     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
| |     | During the year ended October 31, 2011, the Company
      acquired the balance of Cardero Coals outstanding securities pursuant to
      a Plan of Arrangement, effective June 1, 2011 (note
3).                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             

13

---

|CARDERO RESOURCE CORP.                     
|-------------------------------------------
|(AN EXPLORATION STAGE COMPANY)             
|Notes to Consolidated Financial Statements 
|Years ended October 31, 2011, 2010 and 2009
|                                           

|6. | EQUITY INVESTMENTS (Continued)
|-- | ------------------------------
|   |                               
|   | (b)                           
|   |                               
|   |                               
|   |                               
|   | (c)                           
|   |                               
|   |                               
|   |                               
|   |                               
|   |                               
|   |                               

14

---

|CARDERO RESOURCE CORP.                     
|-------------------------------------------
|(AN EXPLORATION STAGE COMPANY)             
|Notes to Consolidated Financial Statements 
|Years ended October 31, 2011, 2010 and 2009
|                                           

|7. | RESOURCE PROPERTIES                                                                                                
|-- | -------------------------------------------------------------------------------------------------------------------
|   |                                                                                                                    
|   | The Companys capitalized acquisition and exploration
      expenditures on its resource properties are as
follows:

Mexico
      
      
      Argentina
      
      
      Peru
      
      
      U.S.A.
      
      
      Ghana
      
      
      Canada(note
        7(a))
      
      
      (note 7(b))
      
      
      **(note 7(c))**
      
      
      **(note 7(d))**
      
      
      **(note 7(e))**
      
      
      (note 7(f))Iron Sands/
      
      
      Longnose/
      
      
      Ghana SheiniBaja
      
      
      Other
      
      
      Total
      
      
      
      
      
      Marcona
      
      
      TiTac
      
      
      Iron
        Ore
      
      
      Carbon Creek
      
      
      TotalBalance, October 31, 2009
      $
      7,336,527
      
      $
      231,978
      
      $
      7,568,505
      
      $
      894,114
      
      $
      8,727,626
      
      $
      309,347
      
      $
      -
      
      $
      -
      
      $
      17,499,592Acquisition costs cash
      
      302,911
      
      
      10,966
      
      
      313,877
      
      
      4,887
      
      
      649,772
      
      
      70,714
      
      
      50,000
      
      
      -
      
      
      1,089,250Deferred exploration costs:Camp
      
      111,473
      
      
      12,075
      
      
      123,548
      
      
      298,536
      
      
      658,584
      
      
      318,650
      
      
      -
      
      
      -
      
      
      1,399,318Drilling and analysis
      
      654,228
      
      
      -
      
      
      654,228
      
      
      784,761
      
      
      27,097
      
      
      1,614,088
      
      
      -
      
      
      -
      
      
      3,080,174Personnel and geology
      
      92,944
      
      
      6,108
      
      
      99,052
      
      
      489,337
      
      
      191,016
      
      
      336,178
      
      
      170,916
      
      
      -
      
      
      1,286,499Total exploration costs
      
      858,645
      
      
      18,183
      
      
      876,828
      
      
      1,572,634
      
      
      876,697
      
      
      2,268,916
      
      
      170,916
      
      
      -
      
      
      5,765,991Total expenditures for the year
      
      1,161,556
      
      
      29,149
      
      
      1,190,705
      
      
      1,577,521
      
      
      1,526,469
      
      
      2,339,630
      
      
      220,916
      
      
      -
      
      
      6,855,241Write-offs  Acquisition costs
      
      (3,567,578
      )
      
      -
      
      
      (3,567,578
      )
      
      -
      
      
      -
      
      
      -
      
      
      -
      
      
      -
      
      
      (3,567,578
      )Write-offs  Exploration costs
      
      (4,930,505
      )
      
      -
      
      
      (4,930,505
      )
      
      -
      
      
      -
      
      
      -
      
      
      -
      
      
      -
      
      
      (4,930,505
      )Total write-offs
      
      (8,498,083
      )
      
      -
      
      
      (8,498,083
      )
      
      -
      
      
      -
      
      
      -
      
      
      -
      
      
      -
      
      
      (8,498,083
      )Balance, October 31, 2010
      
      -
      
      
      261,127
      
      
      261,127
      
      
      2,471,635
      
      
      10,254,095
      
      
      2,648,977
      
      
      220,916
      
      
      -
      
      
      15,856,750Acquisition costs:Acquisition costs  shares (note
        3)
      
      -
      
      
      -
      
      
      -
      
      
      -
      
      
      -
      
      
      -
      
      
      -
      
      
      57,021,938
      
      
      57,021,938Acquisition costs  cash
      
      -
      
      
      3,373
      
      
      3,373
      
      
      8,479
      
      
      877,561
      
      
      50,075
      
      
      -
      
      
      5,800
      
      
      945,288Total acquisition costs
      
      -
      
      
      3,373
      
      
      3,373
      
      
      8,479
      
      
      877,561
      
      
      50,075
      
      
      -
      
      
      57,027,738
      
      
      57,967,226Deferred exploration costs:Camp
      
      -
      
      
      17,504
      
      
      17,504
      
      
      65,396
      
      
      653,215
      
      
      218,206
      
      
      -
      
      
      3,155,433
      
      
      4,109,754Drilling and analysis
      
      -
      
      
      -
      
      
      -
      
      
      94,927
      
      
      114,397
      
      
      578,031
      
      
      -
      
      
      1,823,913
      
      
      2,611,268Personnel and geology
      
      -
      
      
      -
      
      
      -
      
      
      61,210
      
      
      29,700
      
      
      268,835
      
      
      -
      
      
      946,296
      
      
      1,306,041Total exploration costs
      
      -
      
      
      17,504
      
      
      17,504
      
      
      221,533
      
      
      797,312
      
      
      1,065,072
      
      
      -
      
      
      5,925,642
      
      
      8,027,063Total expenditures for the year
      
      -
      
      
      20,877
      
      
      20,877
      
      
      230,012
      
      
      1,674,873
      
      
      1,115,147
      
      
      -
      
      
      62,953,380
      
      
      65,994,289Costs recovered  Exploration
      
      -
      
      
      (222,000
      )
      
      (222,000
      )
      
      -
      
      
      -
      
      
      (75,383
      )
      
      -
      
      
      -
      
      
      (297,383
      )Write-offs  Acquisition costs
      
      -
      
      
      (6,730
      )
      
      (6,730
      )
      
      (50,000
      )
      
      (4,383,054
      )
      
      -
      
      
      (50,000
      )
      
      -
      
      
      (4,489,784
      )Write-offs  Exploration costs
      
      -
      
      
      -
      
      
      -
      
      
      -
      
      
      (7,545,914
      )
      
      -
      
      
      (170,916
      )
      
      -
      
      
      (7,716,830
      )Total write-offs
      
      -
      
      
      (6,730
      )
      
      (6,730
      )
      
      (50,000
      )
      
      (11,928,968
      )
      
      -
      
      
      (220,916
      )
      
      -
      
      
      (12,206,614
      )Balance, October 31, 2011
      $
      -
      
      $
      53,274
      
      $
      53,274
      
      $
      2,651,647
      
      $
      -
      
      $
      3,688,741
      
      $
      -
      
      $
      62,953,380
      
      $
      69,347,042Represented by:Acquisition costs
      $
      -
      
      $
      53,274
      
      $
      53,274
      
      $
      144,891
      
      $
      -
      
      $
      293,111
      
      $
      -
      
      $
      57,027,738
      
      $
      57,519,014Exploration costs
      
      -
      
      
      -
      
      
      -
      
      
      2,506,756
      
      
      -
      
      
      3,395,630
      
      
      -
      
      
      5,925,642
      
      
      11,828,028Balance, October 31, 2011
      $
      -
      
      $
      53,274
      
      $
      53,274
      
      $
      2,651,647
      
      $
      -
      
      $
      3,688,741
      
      $
      -
      
      $
      62,953,380
      
      $
      69,347,042


15

---

|CARDERO RESOURCE CORP.                     
|-------------------------------------------
|(AN EXPLORATION STAGE COMPANY)             
|Notes to Consolidated Financial Statements 
|Years ended October 31, 2011, 2010 and 2009
|                                           

|7. | RESOURCE PROPERTIES (Continued)
|-- | -------------------------------
|   |                                
|   | (a)                            
|   |                                
|   |                                

| | i. | Baja IOCG Project, Baja California State,
Mexico                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
| | -- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
| |    | Pursuant to an agreement dated December 1, 2002 (as
      amended by agreements dated November 26,                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
| |    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
| |    | 2003 and June 30, 2005) between the Company and Anglo
      (the Anglo Agreement), Anglo agreed to manage and fund exploration
      expenditures for the identification and acquisition of not less than one
      mineral concession within an area of interest measuring approximately
      50,050 square kilometres in size. Anglo could earn a 70% interest in the
      mineral concession(s) so acquired, as well as in certain previously
      acquired mineral concessions held by the Company, and a 70% interest in a
      new Mexican company to be formed to hold such concessions, by incurring
      aggregate exploration expenditures of not less than USD 3,700,000, as
      follows:

-
    USD 200,000 on or before December
      1, 2003 (incurred);-
    USD 800,000 on or before December
      1, 2004 (incurred);-
    USD 1,200,000 on or before
      December 1, 2005 (incurred); and-
    USD 3,700,000 on or before
      December 1, 2006 (see below).


Upon Anglo incurring an aggregate USD
3,700,000 of exploration expenditures, a joint venture would be formed, with
each party required to contribute its pro rata share of all future
exploration expenditures. A non-participating party can be diluted to a minimum
10% working interest, below which percentage its interest would be automatically
converted to a 5% net profit interest.

Pursuant to an amending agreement
dated June 30, 2005 between the Company and Anglo, the Company assumed operation
of the project. Under the terms of the amending agreement, the Company was
required to incur exploration expenditures of not less than USD 500,000 within a
12-month period and, upon doing so, earned an additional 10% interest, thereby
increasing its retained interest in the project to 40% upon the exercise by
Anglo of its option. Upon having incurred the required USD 500,000 in
exploration expenditures, the Company could either elect to terminate its
expenditure period by delivering a resumption notice to Anglo, or to elect to
remain as operator and continue to incur exploration expenditures. If the
Company elected to continue incurring exploration expenditures following the USD
500,000 having been incurred, it would earn an additional 0.1% interest for each
additional USD 10,000 of exploration expenditures incurred. If the Company
elected to continue incurring exploration expenditures, at such time as it has
incurred an aggregate of USD 1,400,000 (and has thereby increased its retained
interest to 49% upon the exercise by Anglo of its option), it was required to
deliver an election request notice to Anglo. Upon receipt by Anglo of a
resumption notice or an election request notice, Anglo was required (unless it
otherwise so elected) to immediately resume incurring aggregate exploration
expenditures of USD 3,700,000 in order to earn its interest in the project
(which will range from 60% to 51%, depending upon the amount of exploration
expenditures incurred by the Company prior to the delivery of a resumption
notice) with the original exploration expenditure dates extended to take into
account the time the Company acted as operator. If the Company delivered a
resumption notice, or if the Company delivered an election request notice and
Anglo elected to continue incurring exploration expenditures, and thereafter
Anglo fails to maintain its option in good standing, the Company could terminate
the agreement. If the Company delivered an election request notice and Anglo did
not elect to resume incurring exploration expenditures, the agreement would be
automatically terminated. In either case, in the event of termination, the
Company would retain its 100% interest in the project, with Anglo having no
residual interest therein.

16

---

|CARDERO RESOURCE CORP.                     
|-------------------------------------------
|(AN EXPLORATION STAGE COMPANY)             
|Notes to Consolidated Financial Statements 
|Years ended October 31, 2011, 2010 and 2009
|                                           

|7. | RESOURCE PROPERTIES (Continued)
|-- | -------------------------------
|   |                                
|   | (a)                            
|   |                                
|   |                                
|   |                                
|   |                                
|   |                                
|   |                                
|   |                                
|   |                                
|   |                                
|   |                                
|   |                                
|   |                                
|   |                                
|   |                                
|   |                                

-
    USD 24,000 on execution (paid);-
    USD 18,000 on or before January
      23, 2008 (paid);-
    USD 15,000 on or before October
      23, 2008 (paid);-
    USD 60,000 on or before October
      23, 2009 (note 7(a)(iv));-
    USD 90,000 on or before October
      23, 2010 (note 7(a)(iv));-
    USD 100,000 on or before October
      23, 2011 (note 7(a)(iv)); and-
    USD 350,000 on or before October
      23, 2012.


The Company has granted to a public
company the option to acquire up to a 70% interest in the Corrales property (see
note 7(a)(iv)).

17

---

|CARDERO RESOURCE CORP.                     
|-------------------------------------------
|(AN EXPLORATION STAGE COMPANY)             
|Notes to Consolidated Financial Statements 
|Years ended October 31, 2011, 2010 and 2009
|                                           

|7. | RESOURCE PROPERTIES
(Continued)
|-- | -------------------------------

| | (a) | Mexico (Continued)
| | --- | ------------------

| | iii. | Santa Teresa Property, Coahuila State                                                                                                                                                                                                                                                                                                                                                                          
| | ---- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |      |                                                                                                                                                                                                                                                                                                                                                                                                                
| |      | The Santa Teresa property consists of 8,715 hectares of
      exploration concessions held 100% by the Company. The Company has granted
      to a public company the option to acquire up to a 70% interest in the
      Santa Teresa property (note 7(a)(iv)).                                                                                                                                               
| |      |                                                                                                                                                                                                                                                                                                                                                                                                                
| | iv.  | Ethos Capital Corp. Option/Joint Venture,
Mexico                                                                                                                                                                                                                                                                                                                                                               
| |      |                                                                                                                                                                                                                                                                                                                                                                                                                
| |      | The Company signed a letter of intent (LOI) dated June
      12, 2008, as amended October 9, 2008 and May 29, 2009, with Ethos Capital
      Corp., a company listed on the TSX Venture Exchange (TSXV), pursuant to
      which Ethos has been granted an option to earn an interest in the
      Companys Corrales and Santa Teresa silver-lead-zinc projects in Mexico
      (notes 7(a)(ii) and (iii).
| |      |                                                                                                                                                                                                                                                                                                                                                                                                                
| |      | Pursuant to the LOI, Ethos has an exclusive option to
      earn an undivided 70% interest in the Corrales and Santa Teresa properties
      by:                                                                                                                                                                                                                                                               

| | (a) | paying to the Company the sum of $500,000 (subsequently
      amended to $300,000), as follows :
| | --- | ------------------------------------------------------------------------------------------------

| | (i)   | $100,000 by July 17, 2009 (the Acceptance Date), which
      is five days after the LOI is accepted for filing by the TSXV (received
      August 18, 2009);         
| | ----- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | (ii)  | an additional $150,000 (subsequently amended to $75,000)
      by the day, which is one year after the Acceptance Date (received on
      December 10, 2010);          
| | (iii) | an additional $250,000 (subsequently amended to $125,000)
      by the day, which is two years after the Acceptance Date (not paid,
      currently under negotiation);

| | (b) | delivering to the Company 1,434,000 (subsequently amended
      to 1,100,300) Ethos common shares, as follows:
| | --- | --------------------------------------------------------------------------------------------------------------

| | (i)   | 100,000 shares with a fair value of $17,000 on the
      Acceptance Date (received);                                                                                               
| | ----- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | (ii)  | 266,800 (subsequently amended to 150,000 with a fair
      value of $147,000) shares by the day, which is one year after the
      Acceptance Date (received on December 10, 2010);
| | (iii) | an additional 466,900 (subsequently amended to 250,000)
      shares by the day, which is two years after the Acceptance Date (not
      issued, currently under negotiation); and 
| | (iv)  | an additional 600,300 shares by the day, which is three
      years after the Acceptance Date; and                                                                                 

| | (c) | maintaining the properties (including making all required
      payments pursuant to the underlying option agreements) in good standing
      during the option period.
| | --- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------

Following the exercise of the option
by Ethos, the Mexican subsidiaries of Ethos and the Company will enter into a
joint venture, with each party being responsible for its ongoing share of
further expenditures. If the interest of a participant is diluted to 10% or
less, the interest of that participant will be converted to a 10% net profits
interest royalty.

During the year ended October 31,
2009, the Company received $255,143 from Ethos, comprised of $138,143 of
expenditure reimbursement and $117,000 of option payments.

During the year ended October 31,
2011, the Company received $222,000 in option payments from Ethos.

18

---

|CARDERO RESOURCE CORP.                     
|-------------------------------------------
|(AN EXPLORATION STAGE COMPANY)             
|Notes to Consolidated Financial Statements 
|Years ended October 31, 2011, 2010 and 2009
|                                           

|7. | RESOURCE PROPERTIES
(Continued)
|-- | -------------------------------

| | (b) | Argentina
| | --- | ---------

| | i. | Chingolo Silver Project, Jujuy Province, Argentina,
      consisting of the following concessions:
| | -- | --------------------------------------------------------------------------------------------------

-           Cavok
Property, Jujuy Province, Argentina

Pursuant to an agreement dated May 22,
2002 between the Company and a private Argentinean company, the Company has the
right to acquire a 100% interest in three mineral concessions in Jujuy Province,
Argentina, by making a payment of USD 10,000 on or before October 18, 2002
(paid) and issuing an aggregate of 250,000 common shares, as follows:

| | - | 50,000 common shares on or before
      October 18, 2002 (issued);     
| | - | -----------------------------------------------------------------------
| | - | 100,000 common shares on or
      before October 18, 2003 (issued); and
| | - | 100,000 common shares on or
      before October 18, 2006 (issued).    

Two of these concessions form part of
the Olaroz Silver Project and, during the fiscal year ended October 31, 2004,
these two concessions were written down by $4,381,701 to a nominal value of $1.
The third concession forms part of the Chingolo Silver Project. During the year
ended October 31, 2009, the Company relinquished or abandoned, or commenced the
process of relinquishing or abandoning, all properties relating to its
investment in the Chingolo Project, resulting in a charge to operations of
$679,055.

| | ii. | Huachi Property, Argentina                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
| | --- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
| |     | Pursuant to an agreement dated June 13, 2005 between the
      Company and a private Argentinean company, the Company can acquire a 100%
      interest in 30 mining concessions referred to as the Huachi Property in
      the Province of San Juan, Argentina. In order to maintain the option in
      good standing and to be permitted to carry out exploration activities
      prior to such exercise, the Company is required to make payments and incur
      exploration expenditures as follows:
| |     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
| |     | Payments of USD 5,500,000, as
follows:                                                                                                                                                                                                                                                                                                                                                                                                                                                                      

| | - | USD 70,000 on June 13, 2005 (paid);                                                         
| | - | --------------------------------------------------------------------------------------------
| | - | USD 70,000 on or before April 13, 2006 (paid);                                              
| | - | USD 200,000 on or before June 13, 2007 (paid);                                              
| | - | USD 600,000 on or before April 13, 2008
      (renegotiated to USD 110,000, which was paid);
| | - | USD 1,000,000 on or before June 13, 2009 (see
      below); and                             
| | - | USD 3,560,000 on or before June 13, 2010.                                                   

Exploration expenditures of USD
2,000,000, as follows:

| | - | USD 750,000 on or before December 13, 2007
      (incurred); and
| | - | ----------------------------------------------------------------
| | - | USD 1,250,000 on or before June 13, 2010 (see
      below).     

Pursuant to an agreement dated
November 30, 2006 between the Company and an Argentinean individual, the Company
can acquire a 50% interest in one mining concession (mina) adjacent to the 30
Huachi concessions noted above. In order to maintain the option in good
standing, to be permitted to carry out exploration activities prior to such
exercise, and to exercise the option, the Company is required to make aggregate
payments of USD 965,000 to the vendor, as follows:

19

---

|CARDERO RESOURCE CORP.                     
|-------------------------------------------
|(AN EXPLORATION STAGE COMPANY)             
|Notes to Consolidated Financial Statements 
|Years ended October 31, 2011, 2010 and 2009
|                                           

|7. | RESOURCE PROPERTIES
(Continued)
|-- | -------------------------------

| | (b) | Argentina (Continued)
| | --- | ---------------------

| | ii. | Huachi Property, Argentina
(Continued)
| | --- | --------------------------------------

-
    USD 5,000 on signing (paid);-
    USD 10,000 on November 30, 2007 (
      paid);-
    USD 50,000 on November 30, 2008
      (see below);-
    USD 150,000 on November 30, 2009;-
    USD 250,000 on November 30, 2010;
      and-
    USD 500,000 on November 30, 2011.


| |      | The Company has relinquished or abandoned, or is in the
      process of relinquishing or abandoning, all properties relating to its
      investment in the Huachi Project, resulting in a charge to operations of
      $1,917,437 during the year ended October 31, 2009.
| | ---- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |      |                                                                                                                                                                                                                                                                             
| | iii. | Other Argentinean Properties                                                                                                                                                                                                                                                

| | (a) | Organullo Property, Salta Province, Argentina                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
| | --- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
| |     | Pursuant to an agreement dated October 1, 2004 between
      the Company and an Argentinean individual, the Company purchased a 100%
      interest in eight minas in Salta Province, Argentina, in consideration of
      the issuance of 70,000 common shares. These common shares were issued
      during the year ended October 31, 2005.                                                                                                                                                                                                                                                                                                                                                                                                                                           
| |     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
| |     | Pursuant to an agreement dated September 1, 2011 between
      the Company and Artha Resources Corporation (Artha) as accepted by Artha
      on September 9, 2011, the Company optioned its Organullo Gold project to
      Artha, whereby Artha can earn an undivided 55% working interest in the
      Organullo Project, and thereafter form a Joint Venture with Cardero
      Argentina.                                                                                                                                                                                                                                                                                                                                                                                         
| |     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
| |     | Artha has the option to earn an undivided 55% right,
      title and working interest in and to the Organullo property by incurring
      an aggregate of USD 1,500,000 in exploration expenditures over four years
      (USD 250,000 by September 9, 2012) and by issuing an aggregate of 350,000
      common shares in the capital of Artha, also over three years (50,000
      shares within 15 days of Exchange acceptance - received). Upon Artha
      having earned its initial 55% interest, Cardero has a right to maintain
      its 45% interest through pro-rata funding of exploration work going
      forward. Alternatively, Cardero may choose to be diluted down to a minimum
      of 10%, at which point its interest will be converted to a 2% NSR
      royalty.
| |     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
| | (b) | Los Manantiales Property (formerly Mina Angela), Chubut
      Province, Argentina                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
| |     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
| |     | Pursuant to an agreement dated April 25, 2004 between the
      Company and a private Argentinean company, the Company can acquire a 100%
      interest in 44 mineral concessions in Chubut Province, Argentina, subject
      to a 1% NSR to the vendor, in consideration of aggregate cash payments to
      the vendor of USD 400,000, as follows:                                                                                                                                                                                                                                                                                                                                                                                                                                   

-
    USD 50,000 on or before April 25, 2005 (paid);-
    USD 50,000 on or before April 25, 2006 (renegotiated,
      with $10,000 paid on April 25, 2006 and the balance of USD 40,000 paid in
      October 2006);-
    USD 150,000 on or before April 25, 2007 (paid); and-
    USD 150,000 on or before April 25, 2008 (paid).


20

---

|CARDERO RESOURCE CORP.                     
|-------------------------------------------
|(AN EXPLORATION STAGE COMPANY)             
|Notes to Consolidated Financial Statements 
|Years ended October 31, 2011, 2010 and 2009
|                                           

|7. | RESOURCE PROPERTIES
(Continued)
|-- | -------------------------------

| | (b) | Argentina (Continued)
| | --- | ---------------------

| | iii. | Other Argentinean Properties
(Continued)
| | ---- | ----------------------------------------

| | (b) | Los Manantiales Property (formerly Mina Angela), Chubut
    Province, Argentina (Continued)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
| | --- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
| |     | The Company has the option to purchase the 1% NSR royalty
      from the vendor for the sum of USD 500,000 at any time.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
| |     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
| |     | Pursuant to a binding LOI dated March 12, 2007, the
      Company has granted to a public company the option to acquire up to a 70%
      interest in the property. Pursuant to the LOI, the optionee had a period
      of 60 days to carry out due diligence. The Company received a payment of
      USD 40,000 on signing of the LOI, which was refundable to the optionee if
      it declined to proceed. The optionee elected to proceed. The optionee may
      earn an initial 60% interest in the property by incurring an aggregate of
      USD 3,500,000 in expenditures over four years (including making all
      payments required pursuant to the underlying agreement). Upon the optionee
      having earned an initial 60% interest, the Company may elect to either
      participate at its 40% interest level, or request the optionee to fund the
      preparation of a bankable feasibility study within four years of such
      request and thereby earn an additional 10% interest in the joint venture.
      Upon such request being made by the Company, the optionee may elect to
      fund the bankable feasibility study. If it does so, it will earn the
      additional 10% interest upon completion of the bankable feasibility study.
      Following the formation of the joint venture and the completion of its
      earn-in requirements by the optionee, each participant is responsible for
      funding its share of joint venture expenditures. If it does not do so, its
      interest will be diluted. Upon the interest of a participant being diluted
      to less than 10%, such interest will be converted to a 2% NSR.
| |     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
| |     | In June 2007, the optionee elected to make all remaining
      payments required under the underlying agreement, and thereby permit the
      Company to exercise the option and acquire the property (subject to the 1%
      NSR royalty). The property has been transferred to the Company. On
      December 3, 2008, the optionee terminated the option and returned all
      interest in the property to the Company.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
| |     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
| | (c) | Pirquitas Property, Jujuy Province, Argentina                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
| |     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
| |     | The Pirquitas Property consists of one cateo
      (approximately 4,382 hectares) near the town of Minas Pirquitas. The
      property was acquired by the Company through staking and application
      therefor.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
| |     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
| |     | The Company has entered into an agreement dated July 9,
      2009 with a private Australian company (subsequently assigned by the
      private company to a public British Columbia company), whereby the
      optionee may earn a 55% interest in the Pirquitas Property by incurring
      exploration expenditures of USD 1,000,000 over four years, of which USD
      50,000 must be incurred in the first year (incurred) and an additional USD
      100,000 in the second year (incurred). The effective date of the agreement
      is July 14, 2009. Following the optionee having earned its interest, the
      parties will enter into a joint venture, and thereafter each party is
      required to contribute its proportional share of further expenditures or
      be diluted on a straight-line basis.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     

21

---

|CARDERO RESOURCE CORP.                     
|-------------------------------------------
|(AN EXPLORATION STAGE COMPANY)             
|Notes to Consolidated Financial Statements 
|Years ended October 31, 2011, 2010 and 2009
|                                           

|7. | RESOURCE PROPERTIES
(Continued)
|-- | -------------------------------

| | (c) | Peru
| | --- | ----

| | i. | Marcona Project, Lucanas, Nazca and Caraveli Provinces,
      Peru (Carbonera and Daniella Properties)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
| | -- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
| |    | Pursuant to option agreements dated October 1, 2003 and
      October 23, 2003 between the Company and a private Peruvian company, the
      Company acquired mineral concessions covering approximately 30,000
      hectares in Lucanas, Nazca and Caraveli Provinces, Peru. Approximately
      10,500 hectares of these concessions are subject to an underlying
      agreement with Rio Tinto Mining and Exploration                                                                                                                                                                                                                                                                                          
| |    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
| |    | Limited (Rio Tinto). The private company holds the
      exclusive right and option to acquire a 100% interest from Rio Tinto,
      subject to a 0.5% NSR to Rio Tinto, by incurring USD 450,000 in
      exploration expenditures over three years ending August 22, 2006 and by
      paying Rio Tinto USD 500,000 (of which USD 50,000 has been paid) on or
      before January 27, 2008. The Company can earn a 100% interest in all
      30,000 hectares by assuming and performing all commitments to Rio Tinto
      pursuant to the underlying agreement, paying the vendor an aggregate of
      USD 120,000 (paid) and issuing an aggregate of 650,000 common shares to
      the vendor, as follows:

| | - | 150,000 common shares on TSXV
      acceptance (issued);                
| | - | ------------------------------------------------------------------------
| | - | 100,000 common shares on or
      before May 28, 2004 (issued);         
| | - | 200,000 common shares on or
      before November 28, 2004 (issued); and
| | - | 200,000 common shares on or
      before November 28, 2005 (issued).    

| |     | The Company determined not to exercise the option from
      Rio Tinto, and terminated the underlying agreement with Rio Tinto. In
      addition, the Company abandoned all but five of the concessions (3,200
      hectares) held by Minera Koripampa del Peru S.A. (Koripampa), (which
      retained concessions form part of the Companys Iron Sands project (see
      note 7(c)(iii)).                                                                                                                               
| | --- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
| | ii. | Pampa de Pongo Property, Caraveli Province,
Peru                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
| |     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
| |     | Pursuant to an option agreement dated February 2, 2004
      between the Company and a private Peruvian company, the Company can
      acquire a 100% interest in mineral concessions covering approximately
      7,970 hectares in Caraveli Province, Peru. The private Peruvian company
      holds the exclusive right and option to acquire a 100% interest in these
      concessions from Rio Tinto in consideration of the payment to Rio Tinto of
      aggregate payments of USD 500,000 over four years as
  follows:

-
    USD 50,000 on or before January
      27, 2005 (paid);-
    USD 50,000 on or before January
      27, 2006 (paid);-
    USD 100,000 on or before January
      27, 2007 (paid); and-
    USD 300,000 on or before January
      27, 2008 (paid).


The Company can earn a 100% interest
in the property by assuming all of the obligations of the private company
pursuant to the underlying agreement with Rio Tinto, and making the following
payments and share issuances:

Payments aggregating USD 130,900 as
follows:

-
    USD 65,900 on or before March 12,
      2004 (for back taxes on the property) (paid); and-
    USD 65,000 on or before March 12,
      2004 (paid).


Issuance of an aggregate of 70,000
common shares, as follows:

| | - | 35,000 shares on or before March
      12, 2004 (issued); and
| | - | -------------------------------------------------------------
| | - | 35,000 shares on or before
      September 12, 2004 (issued).

22

---

|CARDERO RESOURCE CORP.                     
|-------------------------------------------
|(AN EXPLORATION STAGE COMPANY)             
|Notes to Consolidated Financial Statements 
|Years ended October 31, 2011, 2010 and 2009
|                                           

|7. | RESOURCE PROPERTIES
(Continued)
|-- | -------------------------------

| | (c) | Peru (Continued)
| | --- | ----------------

| | ii. | Pampa de Pongo Property, Caraveli Province, Peru
      (Continued)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
| | --- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
| |     | In January 2008, the Company gave notice to Rio Tinto
      that it was exercising the option, and made the final USD 300,000 payment
      as required to do so. Rio Tinto transferred title to the concessions to a
      Peruvian subsidiary of the Company in November 2008, subject to their
      continuing right of first refusal concerning any disposition of these
      concessions by the Company.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
| |     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
| |     | In the summer of 2008, the Company made applications for
      ten additional concessions surrounding the Rio Tinto concessions (19,900
      hectares), all of which form part of the Pampa de Pongo
property.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
| |     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
| |     | On October 24, 2008, the Company entered into an
      agreement with Nanjinzhao Group Co., Ltd., (Nanjinzhao), a private
      Chinese enterprise located in Zibo City, Shandong Province, PRC, whereby
      the Company agreed to sell the Pampa de Pongo property to Nanjinzhao for
      USD 200 million (subject to Rio Tinto declining to exercise its right of
      first refusal in respect thereof). The agreement requires an initial
      deposit of USD 10 million, payable on or before March 17, 2009, with a
      final payment of USD 190 million due on or before September 17, 2009.
      During the initial three-month period, Nanjinzhao will obtain the
      appropriate Chinese governmental consents to the transaction. The Pampa de
      Pongo property will be transferred to a Peruvian subsidiary of Nanjinzhao
      once the USD 10 million deposit has been received. The agreement permits
      Cardero to decline to proceed with the transaction at any time prior to
      the receipt of the USD 190 million final payment, provided that, if such
      decision is made at any time after the initial USD 10 million deposit has
      been paid, Cardero is required to return the deposit and pay Nanjinzhao an
      additional USD 20 million as a break-up fee. Upon repayment of the deposit
      (and break-up fee, if required), the Pampa de Pongo property will be retransferred to the
        Company. The Company will pay a finders fee to an arms length private
        company in consideration of the finder introducing Cardero to Nanjinzhao
        and providing ongoing advice in the negotiations. On December 17, 2008,
        the Company received notification from Rio Tinto that it was declining to
        exercise its right of first refusal with respect to the October 24, 2008
      transaction between the Company and Nanjinzhao.
|
| |     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
| |     | The Company, Cardero Iron Peru and Zibo Hongda Mining
      Co., Ltd. (Hongda), a subsidiary of Nanjinzhao, agreed to amend the
      provisions of the October 24, 2008 sale agreement among the Company,
      Cardero Iron Peru and Nanjinzhao (the interest of Nanjinzhao in which was
      assigned to Hongda on April 3, 2009) for the purchase by Hongda of the
      Pampa de Pongo Iron Deposit in Peru.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
| |     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
| |     | Hongda had requested a purchase price reduction due to
      difficult global economic conditions that have significantly adversely
      impacted iron ore prices. Following negotiations, Cardero and Cardero Iron
      Peru agreed to revise the final sale price to USD 100 million (of which
      USD 2 million had already been paid).                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
| |     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
| |     | Accordingly, on May 21, 2009 Hongda paid the required USD
      10 million deposit to Cardero Iron Peru, which is non-refundable unless
      either (i) Cardero terminates the agreement or (ii) Rio Tinto exercises
      its right of first offer. Due to the new lower purchase price, pursuant to
      its right of first offer Rio Tinto had another 45-day period (expired on
      July 9, 2009) to match the revised terms. The Rio Tinto right of first
      offer expired unexercised, and therefore the USD 10 million deposit from
      Hongda is non-refundable unless Cardero chooses to terminate the purchase
      agreement.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
| |     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
| |     | The balance of the purchase price of USD 88 million was
      split into three payments and paid as follows:                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 

-
    USD 18 million, received on
      December 17, 2009;-
    USD 40 million, received on
      December 17, 2009; and-
    USD 30 million, to be received on
      December 31, 2009 (received January 11, 2010).


23

---

|CARDERO RESOURCE CORP.                     
|-------------------------------------------
|(AN EXPLORATION STAGE COMPANY)             
|Notes to Consolidated Financial Statements 
|Years ended October 31, 2011, 2010 and 2009
|                                           

|7. | RESOURCE PROPERTIES (Continued)
|-- | -------------------------------
|   |                                
|   | (c)                            
|   |                                
|   |                                
|   |                                
|   |                                
|   |                                
|   |                                
|   |                                
|   |                                

The Companys Iron Sands Project
consists of approximately 32,000 hectares of unconsolidated and
semi-consolidated mineral bearing sands, the rights to which are encompassed by
certain of the mineral claims comprising the Carbonera and Daniella properties
(note 7(c)(i)), and an additional 39 mineral claims acquired by staking at a
cost of USD 77,000, in the Departments of Arequipa, (Caraveli Province) and Ica
(Nazca Province), Peru. As a result of work to date, some of the foregoing
concessions have been dropped, and the property now consists of 16 concessions
(12,100 hectares in four areas) owned 100% by the Company and five concessions
(3,600 hectares in two areas) held under option as described below.

The Company has assumed, from a
private Peruvian company, all rights and obligations under an agreement dated
December 16, 2005 between a private Peruvian company and Minera Ataspacas S.A.
(Minera Ataspacas), an arms length private Peruvian company, whereby the
private Peruvian company has the option to acquire, from Minera Ataspacas, an
initial 70% interest in five mineral sand concessions (3,600 hectares total)
surrounded by certain of the Companys mineral tenures noted above. In order to
exercise the option, the Company is required to pay a total of USD 6,830,000
over five years to December 15, 2010 (with an initial payment of USD 20,000 on
or before December 16, 2005 (paid)) and incur exploration expenditures of not
less than USD 250,000 over the same period, as follows and as amended (see
below):

-
    USD 80,000 on or before December
      16, 2006 (paid);-
    USD 100,000 on or before December
      16, 2007 (paid);-
    USD 150,000 on or before December
      16, 2008 (paid);-
    USD 500,000 on or before December
      16, 2009 (paid); and USD 6,000,000 on or before December 16, 2011
      (amended to February 8, 2012) (not paid);-
    USD 50,000 on or before December
      16, 2007 (incurred);-
    USD 50,000 on or before December
      16, 2008 (incurred);-
    USD 50,000 on or before December
      16, 2009 (incurred);-
    USD 50,000 on or before December
      16, 2010 (incurred); and-
    USD 50,000 on or before December
      16, 2011 (incurred).


Upon the Company having acquired the
70% interest, a joint venture company will be formed with Minera Ataspacas, and
each party will thereafter be required to contribute its share of ongoing
expenditures or be diluted. If either party is diluted to less than 10%, such
interest will be converted to a 2% NSR royalty. If Minera Ataspacas is reduced
to the 2% NSR, the Company may purchase half the NSR (1%) for USD 2,000,000
within 24 months of the exercise of the option, and the remaining half (1%) for
USD 8,000,000 within 36 months of the exercise of the option.

24

---

|CARDERO RESOURCE CORP.                     
|-------------------------------------------
|(AN EXPLORATION STAGE COMPANY)             
|Notes to Consolidated Financial Statements 
|Years ended October 31, 2011, 2010 and 2009
|                                           

|7. | RESOURCE PROPERTIES (Continued)
|-- | -------------------------------
|   |                                
|   | (c)                            
|   |                                
|   |                                
|   |                                
|   |                                
|   |                                
|   |                                
|   |                                
|   |                                
|   |                                
|   |                                
|   |                                
|   |                                
|   |                                
|   |                                

25

---

|CARDERO RESOURCE CORP.                     
|-------------------------------------------
|(AN EXPLORATION STAGE COMPANY)             
|Notes to Consolidated Financial Statements 
|Years ended October 31, 2011, 2010 and 2009
|                                           

|7. | RESOURCE PROPERTIES
(Continued)
|-- | -------------------------------

| | (d) | United States of
America
| | --- | ------------------------

| | i.  | TiTac Property, Minnesota                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
| | --- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
| |     | Pursuant to an option agreement dated July 1, 2008 (as
      amended on July 24, 2008) between the                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
| |     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
| |     | Company and an arms length private mineral owner, the
      Company has a two-year option to enter into a mining lease for an
      aggregate of 1,402 acres (567 hectares) of mineral rights located in Louis
      County, Minnesota. The mining lease will grant a lease over any mineral
      substance of a metalliferous nature, including those intermingled or
      associated materials or substances, recovered from each ton of crude ore
      for the purpose of extracting iron (essentially, iron, titanium and
      vanadium).                                                                                                                                                                                                             
| |     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
| |     | The option agreement requires an initial payment of USD
      5,000 on execution (paid) plus an extension payment of USD 25,000 due on
      the first anniversary of the agreement in order to extend the option for
      an additional year (option exercised). There are no work commitments under
      the option, but the Company is required to comply with all laws and to
      maintain specified insurance in place during the option term.                                                                                                                                                                                                                                                                                                        
| |     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
| |     | The initial term of the mining lease is for a period of
      20 years, provided that the lease may be extended for an additional
      five-year period if the Company gives notice at least 180 days prior to
      the end of such term, and has either paid to the owner at least USD
      10,000,000 in royalties over the initial term or pays to the owner the
      difference between the royalties actually paid and USD 10,000,000. In like
      manner, the lease can be extended for up to three additional five-year
      terms, provided that the appropriate notice is given and that the Company
      has paid to the owner at least USD 5,000,000 in royalties during the
      previous five-year term (or pays any deficiency in cash).
| |     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
| |     | On May 29, 2009, the Company, through Cardero Iron US,
      exercised its option to enter into a mining lease with respect to the
      TiTac property in Minnesota, and made the initial USD 2,500 payment
      required upon execution of the lease (which is dated July 1,
  2009).                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
| |     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
| | ii. | Longnose Property, Minnesota                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
| |     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
| |     | Pursuant to an agreement dated November 26, 2008 between
      the Company and an arms length individual on behalf of an arms length
      B.C. company, the Company was granted the option to acquire up to an 85%
      interest in the interest of the optionor in certain existing mineral
      leases, and in a lease to be entered into, covering 100% of the fee
      mineral rights (approximately 200 acres) located in St. Louis County,
      Minnesota, just north of the town of Hoyt Lakes. The Company can earn an
      initial 70% in the interest of the optionor interest by incurring
      cumulative expenditures of USD 1,850,000 as
follows:                                                                                       

-
    USD 100,000 on or before December
      8, 2009 (incurred);-
    USD 250,000 on or before December
      8, 2010 (incurred);-
    USD 500,000 on or before December
      8, 2011 (incurred); and-
    USD 1,000,000 on or before
      December 8, 2012.


A payment of USD 50,000 (paid) to the
optionor is required on or before August 15, 2009 (and each and every August 28
thereafter) to be used by the optionor to make the annual USD 50,000 advance
royalty payment due to the underlying landowners. The Company can earn an
additional 15% interest of the optionor (85% overall) by delivering a
feasibility study (no time limit for delivery). Upon the Company having earned a
70% or 85% interest, the optionor can elect to convert its interest to a 10% net
profits interest (if the Company elects not to earn the additional 15% interest)
or a 5% net profits interest (if the Company elects to earn the full 85%
interest). If the optionor does not so elect, upon the Company having earned its
70% or 85% interest, as applicable, the Company and the optionor will enter into
a joint venture, with each party being responsible for its pro rata share of all
joint venture expenditures. If a party to the joint venture is diluted to a 10%
or lesser interest, such interest will be converted to a 2.5% net profits
interest.

26

---

|CARDERO RESOURCE CORP.                     
|-------------------------------------------
|(AN EXPLORATION STAGE COMPANY)             
|Notes to Consolidated Financial Statements 
|Years ended October 31, 2011, 2010 and 2009
|                                           

|7. | RESOURCE PROPERTIES
(Continued)
|-- | -------------------------------

| | (d) | United States of America
  (Continued)
| | --- | --------------------------------------

| | ii. | Longnose Property, Minnesota
(Continued)
| | --- | ----------------------------------------

| |     | During the year ended October 31, 2010, the Company
      issued 75,000 common shares valued at $111,500 as a finders fee in
      connection with the acquisition of its interests in the TiTac and Longnose
      properties in Minnesota.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
| | --- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
| | (e) | Ghana                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
| |     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
| |     | Pursuant to an agreement dated November 22, 2010 between
      Cardero Ghana and a private Ghanaian company, the parties entered into an
      arrangement under which Cardero Ghana will provide the financial resources
      and exploration expertise for the purpose of enabling the private Ghanaian
      company to apply to the Minerals Commission of Ghana for a prospecting
      license in respect of the certain lands in north-eastern Ghana referred to
      as the Sheini Iron Ore deposit. If the private Ghanaian company is
      successful in being awarded the prospecting license then, subject to the
      consent of the Government of Ghana, Cardero Ghana and the private Ghanaian
      company will enter into a joint venture to explore and, if warranted,
      develop and mine such deposit.
| |     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
| |     | All costs incurred prior to receiving prospecting license
      have been reflected in Property Evaluations in the Consolidated Statements
      of Operations.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
| |     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
| |     | Upon the formation of such joint venture, the
      participants will be deemed to have the following respective
    interests:                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   

Cardero Ghana  100% participating
interest 
  Private Ghanaian Company  10% net profit interest

Upon the issuance of a mining lease
subsequent to the expiry of the term of the prospecting license for the deposit,
the Republic of Ghana will hold a ten percent free carried equity interest in
the property subject to the mining lease.

Subsequent to October 31, 2011, three
separate prospecting licenses covering the Sheini Iron Ore deposit were granted
(dated December 8, 2011) and Cardero Ghana and the Private Ghanaian Company have
entered into three separate joint ventures (one for each prospecting license),
each dated December 12, 2011, to explore and, if warranted, develop the lands
subject to the prospecting licenses.

Under the three joint ventures,
Cardero Ghana will fund all expenditures under the particular joint venture and
make the following payments to the Private Ghanaian Company:

For the Sheini Hills North prospecting
license:

-
    USD 25,000 upon the agreement to enter into the joint
      venture (paid);-
    USD 250,000 as an initial joint venture payment (paid);-
    USD 1,000,000 upon the formation of the joint venture
      (Effective Date) (paid USD 700,000 and USD 300,000 subsequent to
      October 31, 2011);-
    USD 1,000,000 six months after the Effective Date (paid);-
    USD 500,000 one year after the Effective Date;-
    USD 1,000,000 two years after the Effective Date;-
    USD 1,000,000 three years after the Effective Date;-
    USD 500,000 four years after the Effective Date; and-
    USD 500,000 five years after the Effective Date.


27

---

|CARDERO RESOURCE CORP.                     
|-------------------------------------------
|(AN EXPLORATION STAGE COMPANY)             
|Notes to Consolidated Financial Statements 
|Years ended October 31, 2011, 2010 and 2009
|                                           

|7. | RESOURCE PROPERTIES
(Continued)
|-- | -------------------------------

| | (e) | Ghana (Continued)                           
| | --- | --------------------------------------------
| |     |                                             
| |     | For the Middle Sheini prospecting
  license:

-
    USD 25,000 upon the agreement to enter into the joint
      venture (paid);-
    USD 250,000 as an initial joint venture payment (paid);-
    USD 1,000,000 upon the formation of the joint venture
      (Effective Date) (paid subsequent to October 31, 2011);-
    USD 1,000,000 six months after the Effective Date (paid
      USD 100,000 subsequent to October 31, 2011);-
    USD 500,000 one year after the Effective Date (paid);-
    USD 1,000,000 two years after the Effective Date;-
    USD 1,000,000 three years after the Effective Date;-
    USD 500,000 four years after the Effective Date; and-
    USD 500,000 five years after the Effective Date.


For the Sheini South prospecting
license:

-
    USD 3,000,000 upon the formation of the joint venture
      (Effective Date) (paid subsequent to October 31, 2011);-
    USD 1,000,000 one year after the Effective Date; and-
    USD 1,000,000 two years after the Effective Date.


| |     | The Company has agreed to issue, subject to regulatory
      acceptance, a finders fee of 2,000,000 common shares to an arms length
      British Columbia company in connection with the acquisition of the Sheini
      project. The shares are to be issued in stages, as to 500,000 upon
      execution of one or more joint venture agreements on the Sheini
      properties, and an additional 500,000 shares after 6, 12 and 18 months,
      provided that at least one of the joint venture agreements is still in
      effect and that further work is planned. Regulator acceptance has not yet
      been received.
| | --- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
| | (f) | CanadaCarbon Creek Property, British
      Columbia                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
| |     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
| |     | To acquire its interest in the Carbon Creek Metallurgical
      Coal Property, Cardero Coal entered into the following
  agreements:                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                

| | i.  | Johnson Agreement                                                                                                                                                                                                                                                                                                                                                          
| | --- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |     |                                                                                                                                                                                                                                                                                                                                                                            
| |     | On May 18, 2010, Cardero Coal entered into a Coal Tenure
      Option Agreement (Johnson Agreement) to acquire, upon issuance, one coal
      license (Johnson License) over an area located in the Peace River Land
      District of British Columbia. Consideration for a 100% interest in the
      license consists of the following payments and share issuances:
| |     |                                                                                                                                                                                                                                                                                                                                                                            
| |     | -                                                                                                                                                                                                                                                                                                                                                                          
| |     | -                                                                                                                                                                                                                                                                                                                                                                          
| |     | -                                                                                                                                                                                                                                                                                                                                                                          
| |     |                                                                                                                                                                                                                                                                                                                                                                            
| | ii. | Burns Agreement                                                                                                                                                                                                                                                                                                                                                            
| |     |                                                                                                                                                                                                                                                                                                                                                                            
| |     | On June 15, 2010, Cardero Coal entered into an option
      agreement (Burns Agreement) to acquire a lease of the coal situated on
      10 Crown granted district lots (CGDL) located in the Peace River Land
      District of British Columbia. To maintain its option, Cardero Coal has
      paid $3,500,000 to date and is                                       

28

---

|CARDERO RESOURCE CORP.                     
|-------------------------------------------
|(AN EXPLORATION STAGE COMPANY)             
|Notes to Consolidated Financial Statements 
|Years ended October 31, 2011, 2010 and 2009
|                                           

|7. | RESOURCE PROPERTIES
(Continued)
|-- | -------------------------------

| | (f) | CanadaCarbon Creek Property, British
      Columbia (Continued)
| | --- | ----------------------------------------------------------------

| | ii | Burns Agreement (continued)                                                                                                                                                                                                                                         
| | -- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |    |                                                                                                                                                                                                                                                                     
| |    | required to make a further $2,500,000 payment on or
      before December 30, 2011 (paid) (note 17). Upon making the final payment,
      Cardero Coal may exercise the option upon payment of $1.                                                                  
| |    |                                                                                                                                                                                                                                                                     
| |    | Under the lease agreement (Burns Lease), Cardero Coal
      will pay a 5% freight on rail royalty on all coal sold or $2 per metric
      tonne of coal sold, whichever is greater, and 20% on sales for any coal
      substances sold or consumed on the CGDL.

| | iii. | Joint Venture Agreement                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
| | ---- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |      |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
| |      | On June 15, 2010, Cardero Coal entered into a joint
      venture agreement (the Joint Venture Agreement) with a private Alberta
      partnership, to participate in common operation and exploration,
      development and production of the Carbon Creek Property. Under the Joint
      Venture Agreement, the Carbon Creek Property subject to the joint venture
      will consist of Cardero Coals interest in the Johnson License (once
      issued and transferred to Cardero Coal), Cardero Coals interest in the
      Burns Lease (once the option has been exercised), 10 coal licenses held by
      the joint venture partner (once issued), one coal license held by Cardero
      Coal (once issued) and any additional coal licenses acquired by a joint
      venturer within 25 kilometres of the balance of the Carbon Creek Property.
      Pursuant to the Joint Venture Agreement, the Company will have a 75%
      interest in the joint venture and is responsible for incurring all costs
      of carrying out the required exploration, development and mining of the
      Carbon Creek Property and the marketing of the product produced. The joint
      venture partner will have a 25% carried interest in the joint venture and
      will not be required to contribute to any such costs. The joint venture
      partner is entitled to receive 25% of the net proceeds of production
      following Cardero Coal having recovered, from the proceeds of any
      production, all monies paid under the Johnson Agreement and all costs
      incurred by Cardero Coal to develop the mine site and put it into
      production.
| |      |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
| |      | To acquire its interest in the joint venture, the Company
      was required to issue 1,600,000 common shares (issued) plus warrants to
      purchase an additional 1,600,000 common shares (issued) and make total
      payments of $6,000,000, of which it has paid a total of $3,500,000 to date
      and is required to make a final payment of $2,500,000 on or before
      December 30, 2011 (paid) (note 17).                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
| |      |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
| |      | On June 1, 2011, the Company acquired the balance of the
      outstanding securities of Cardero Coal (note
3).                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  

| | (g) | Title and environmental                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
| | --- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
| |     | Although the Company has taken steps to verify the title
      to mineral properties in which it has or had a right to acquire an
      interest in accordance with industry standards for the current stage of
      exploration of such properties, these procedures do not guarantee title
      (whether of the Company or of any underlying vendor(s) from whom the
      Company may be acquiring its interest). Title to mineral properties may be
      subject to unregistered prior agreements or transfers, and may also be
      affected by undetected defects or the rights of indigenous peoples.
      Environmental legislations are becoming increasingly stringent and costs
      and expenses of regulatory compliance are increasing. The impact of new
      and future environmental legislations on the Companys operations may
      cause additional expenses and restrictions. If the restrictions adversely
      affect the scope of exploration and development on the mineral properties,
      the potential for production on the property may be diminished or
      negated.
| |     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
| | (h) | Asset retirement obligations                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
| |     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
| |     | The Company is not aware of any AROs as of October 31,
      2011 and 2010.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      

29

---

|CARDERO RESOURCE CORP.                     
|-------------------------------------------
|(AN EXPLORATION STAGE COMPANY)             
|Notes to Consolidated Financial Statements 
|Years ended October 31, 2011, 2010 and 2009
|                                           

|8. | CAPITAL STOCK
|-- | -------------
|   |              
|   | (a)          
|   |              
|   |              
|   |              
|   |              
|   |              
|   | (b)          
|   |              
|   |              

| |                                             |  | 2011      |   |   |          | 2010 | 
| | ------------------------------------------- |  | --------- | - | - | -------- | ---- | 
| |                                             |  |           |   |   | Weighted |      | 
| |                                             |  |           |   |   | Average  |      | 
| |                                             |  | Number of |   |   | Exercise |      | 
| |                                             |  | Warrants  |   |   | Price    |      | 
| |                                             |  |           |   |   |          |      | 
| | Warrants outstanding, beginning of the year |  | -         |   | $ | -        |      | 
| | Issued pursuant to Acquisition (note 3)     |  | 3,856,400 |   | $ | 0.39     |      | 
| | Exercised                                   |  | (443,800  | ) | $ | (0.39    | )    | 
| | Expired                                     |  | -         |   | $ | -        |      | 
| |                                             |  |           |   |   |          |      | 
| | Warrants outstanding,
      end of the year |  | 3,412,600 |   | $ | 0.39     |      | 

Warrants outstanding are as follows:

| |                             |   | 2011     |  |  |           | 2010 | 
| | --------------------------- | - | -------- |  |  | --------- | ---- | 
| |                             |   | Exercise |  |  | Number of |      | 
| | Expiry Date                 |   | Price    |  |  | Warrants  |      | 
| |                             |   |          |  |  |           |      | 
| | December 17, 2011 (note 17) | $ | 0.63     |  |  | 428,400   |      | 
| | March 1, 2012               | $ | 0.06     |  |  | 240,000   |      | 
| | March 29, 2012              | $ | 0.16     |  |  | 5,600     |      | 
| | April 6, 2012               | $ | 0.16     |  |  | 12,600    |      | 
| | May 20, 2012                | $ | 0.06     |  |  | 120,000   |      | 
| | June 14, 2012               | $ | 0.38     |  |  | 336,000   |      | 
| | June 15, 2012               | $ | 0.06     |  |  | 120,000   |      | 
| | September 22, 2012          | $ | 0.44     |  |  | 70,000    |      | 
| | January 12, 2013            | $ | 0.13     |  |  | 240,000   |      | 
| | May 29, 2013                | $ | 0.13     |  |  | 240,000   |      | 
| | June 1, 2013                | $ | 0.50     |  |  | 1,600,000 |      | 
| |                             |   |          |  |  |           |      | 
| |                             |   |          |  |  | 3,412,600 |      | 

30

---

|CARDERO RESOURCE CORP.                     
|-------------------------------------------
|(AN EXPLORATION STAGE COMPANY)             
|Notes to Consolidated Financial Statements 
|Years ended October 31, 2011, 2010 and 2009
|                                           

|8. | CAPITAL STOCK (Continued)
|-- | -------------------------
|   |                          
|   | (c)                      
|   |                          
|   |                          

| |                                            |  | 2011       |   |   |          | 2010 | 
| | ------------------------------------------ |  | ---------- | - | - | -------- | ---- | 
| |                                            |  |            |   |   | Weighted |      | 
| |                                            |  |            |   |   | Average  |      | 
| |                                            |  | Number of  |   |   | Exercise |      | 
| |                                            |  | Options    |   |   | Price    |      | 
| |                                            |  |            |   |   |          |      | 
| | Options outstanding, beginning of the year |  | 5,310,000  |   | $ | 1.23     |      | 
| | Granted pursuant to Acquisition (note 3)   |  | 2,029,143  |   | $ | 0.32     |      | 
| | Granted                                    |  | 1,100,000  |   | $ | 1.83     |      | 
| | Expired                                    |  | (1,000,000 | ) | $ | 1.30     |      | 
| | Exercised                                  |  | (840,000   | ) | $ | 1.22     |      | 
| |                                            |  |            |   |   |          |      | 
| | Options outstanding, end of the year       |  | 6,599,143  |   | $ | 1.04     |      | 

The weighted average remaining
contractual life of options outstanding at October 31, 2011 was 1.02 years (2010
 1.3 years).

Stock options outstanding are as
follows:

2011
      
      
      
      2010Exercisable
      
      
      
      
      
      
      
      
      
      ExercisableExercise
      
      
      Number of
      
      
      at Year
      
      
      
      Exercise
      
      
      Number of
      
      
      at Year-Expiry Date
      
      Price
      
      
      Options
      
      
      End
      
      
      
      Price
      
      
      Options
      
      
      EndDecember 9, 2010
      $
      1.16
      
      
      -
      
      
      -
      
      
      $
      1.16
      
      
      575,000
      
      
      575,000April 9, 2011
      $
      1.39
      
      
      -
      
      
      -
      
      
      $
      1.39
      
      
      225,000
      
      
      225,000September 11, 2011
      $
      1.30
      
      
      -
      
      
      -
      
      
      $
      1.30
      
      
      1,000,000
      
      
      1,000,000December 1, 2011 
         (note17)
      $
      1.31
      
      
      360,000
      
      
      360,000
      
      
      $
      1.31
      
      
      360,000
      
      
      360,000February 2, 2012
      $
      1.41
      
      
      500,000
      
      
      500,000
      
      
      $
      1.41
      
      
      500,000
      
      
      500,000July 29, 2012
      $
      1.16
      
      
      1,485,000
      
      
      1,485,000
      
      
      $
      1.16
      
      
      1,525,000
      
      
      1,525,000August 11, 2012
      $
      1.16
      
      
      1,125,000
      
      
      1,125,000
      
      
      $
      1.16
      
      
      1,125,000
      
      
      1,125,000September 8, 2012
      $
      1.28
      
      
      100,000
      
      
      100,000
      
      
      $
      -
      
      
      -
      
      
      -January 28, 2013
      $
      1.83
      
      
      1,000,000
      
      
      1,000,000
      
      
      $
      -
      
      
      -
      
      
      -June 1, 2013
      $
      0.06
      
      
      280,000
      
      
      -
      
      
      $
      -
      
      
      -
      
      
      -June 1, 2013
      $
      0.16
      
      
      100,000
      
      
      -
      
      
      $
      -
      
      
      -
      
      
      -June 1, 2013
      $
      0.31
      
      
      320,000
      
      
      -
      
      
      $
      -
      
      
      -
      
      
      -June 1, 2013
      $
      0.38
      
      
      980,000
      
      
      -
      
      
      $
      -
      
      
      -
      
      
      -June 1, 2013
      $
      0.44
      
      
      349,143
      
      
      -
      
      
      $
      -
      
      
      -
      
      
      -6,599,143
      
      
      4,570,000
      
      
      
      
      
      
      5,310,000
      
      
      5,310,000


31

---

|CARDERO RESOURCE CORP.                     
|-------------------------------------------
|(AN EXPLORATION STAGE COMPANY)             
|Notes to Consolidated Financial Statements 
|Years ended October 31, 2011, 2010 and 2009
|                                           

|8. | CAPITAL STOCK (Continued)
|-- | -------------------------
|   |                          
|   | (c)                      
|   |                          
|   |                          
|   |                          
|   |                          

| |                       | 2011   | 2010   | 2009   
| | --------------------- | ------ | ------ | -------
| |                       |        |        |        
| | Expected life (years) | 2.0    | 2.0    | 2.0    
| | Interest rate         | 1.35%  | 1.43%  | 1.32%  
| | Volatility (average)  | 61.21% | 72.33% | 102.04%
| | Dividend yield        | 0.00%  | 0.00%  | 0.00%  

Stock-based compensation charges for
the year ended October 31, 2011 totalled $1,301,935 (2010 - $1,695,941; 2009 -
$1,192,109), allocated as follows:

| |                       |   | 2011      |  |   | 2010      |  |   | 2009      | 
| | --------------------- | - | --------- |  | - | --------- |  | - | --------- | 
| |                       |   |           |  |   |           |  |   |           | 
| | Consulting fees       | $ | 15,135    |  | $ | 217,132   |  | $ | 492,953   | 
| | Investor relations    |   | 294,066   |  |   | 371,965   |  |   | 50,395    | 
| | Salaries and benefits |   | 992,734   |  |   | 1,106,844 |  |   | 648,761   | 
| |                       |   |           |  |   |           |  |   |           | 
| |                       | $ | 1,301,935 |  | $ | 1,695,941 |  | $ | 1,192,109 | 

The weighted average fair value of
options granted during the year was $0.60 (2010 - $0.48) .

|9. | RELATED PARTY TRANSACTIONS
|-- | --------------------------
|   |                           
|   | (a)                       
|   |                           
|   |                           

| |                   |   | 2011    |  |   | 2010    |  |   | 2009    | 
| | ----------------- | - | ------- |  | - | ------- |  | - | ------- | 
| |                   |   |         |  |   |         |  |   |         | 
| | Consulting fees   | $ | 115,000 |  | $ | 224,159 |  | $ | 90,000  | 
| | Professional fees | $ | 82,500  |  | $ | 87,056  |  | $ | 136,425 | 

At October 31, 2011,there was $Nil (2010 - $7,700) included in accounts
payable and accrued liabilities. Professional fees include amounts paid to a law
firm of which a director is a shareholder.

32

---

|CARDERO RESOURCE CORP.                     
|-------------------------------------------
|(AN EXPLORATION STAGE COMPANY)             
|Notes to Consolidated Financial Statements 
|Years ended October 31, 2011, 2010 and 2009
|                                           

|9. | RELATED PARTY TRANSACTIONS (Continued)
|-- | --------------------------------------
|   |                                       
|   | (b)                                   
|   |                                       
|   |                                       

| |                                                                                                                                       |   | 2011      |  |   | 2010      | 
| | ------------------------------------------------------------------------------------------------------------------------------------- | - | --------- |  | - | --------- | 
| |                                                                                                                                       |   |           |  |   |           | 
| | Unsecured promissory notes, 1% per annum,
      due the earlier of 30 days 
         after demand or the due date,
    if applicable: |   |           |  |   |           | 
| | Trevali                                                                                                                               | $ | 142,945   |  | $ | 78,227    | 
| | Wealth                                                                                                                                |   | 495,312   |  |   | 305,871   | 
| | Dorato                                                                                                                                |   | 261,882   |  |   | 143,193   | 
| | Indico                                                                                                                                |   | 49,891    |  |   | 468,819   | 
| | Abzu                                                                                                                                  |   | 171,268   |  |   | 208,345   | 
| | IMM                                                                                                                                   |   | 18,805    |  |   | 18,820    | 
| | ITH                                                                                                                                   |   | 22,899    |  |   | 11,185    | 
| | Others                                                                                                                                |   | 76,041    |  |   | 127,090   | 
| |                                                                                                                                       |   |           |  |   |           | 
| |                                                                                                                                       | $ | 1,239,043 |  | $ | 1,361,550 | 

| |     | The Company recovered $1,331,389 during the year ended
      October 31, 2011 (2010 - $894,131, 2009 - $764,875) in rent and
      administration costs from Wealth, ITH, Dorato, Indico, Trevali, Balmoral,
      Abzu, Corvus and Lawrence W. Talbot Law Corporation (LWTLC), companies
      with common officers or directors.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
| | --- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
| |     | These charges were measured by the exchange amount, which
      is the amount agreed upon by the transacting parties.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
| |     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
| | (c) | Loan receivable                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
| |     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
| |     | The Company entered into a loan agreement with Kria
      whereby the Company advanced Kria $8,064,000 (the Loan) to fund the USD 8,000,000 property payment due by
        Kria to Xstrata Canada Corporation (Xstrata) on or before January 16,
        2011 under the terms of the revised Halfmile and Stratmat property
        purchase agreement dated July 15, 2009, between Kria and Xstrata. The Loan
        bears interest at 10% per annum, calculated monthly, not in advance. As
        security for the Loan, Kria has granted in favour of the Company a first
        charge, mortgage and security interest over all its assets and
        undertakings. In connection with the Loan, Kria issued to the Company
        6,400,000 common share purchase warrants of Kria (the Bonus Warrants).
        Each Bonus Warrant entitles the holder to acquire a common share of Kria
        at an exercise price of $0.25 until January 14, 2012. The fair value of
        the warrants was calculated at $1,131,136 using the Black-Scholes model,
        and this amount was recognized as additional interest income under the
        term of the loan. On April 7, 2011, Trevali acquired Kria and the
        6,400,000 Kria Bonus Warrants were exchanged for 1,280,000 Trevali
        warrants on 5:1 exchange ratio. The interest rate of the Loan was
        retroactively reduced to 8% to be calculated monthly and not in advance
        and is due on or before January 14, 2012 (note 17). Accrued interest of
      $516,096 is included in the loan balance presented.
| |     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
| | (d) | Related parties                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
| |     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
| |     | Mr. Stephan Fitch, a director of the Company, is a
      director and significant shareholder of a private company that is the
      major shareholder (67%) of IMM. The Company has acquired a 15% interest in
      IMMG, a subsidiary of IMM (note 6(c)). This transaction was approved by
      the Companys audit committee and Board of Directors (other than Mr.
      Fitch, who abstained from voting in each case). The Company considered the
      collectability of advances totalling $468,099 to IMMG to be doubtful and,
      accordingly, wrote them off during the year ended October 31,
  2009.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               

33

---

|CARDERO RESOURCE CORP.                     
|-------------------------------------------
|(AN EXPLORATION STAGE COMPANY)             
|Notes to Consolidated Financial Statements 
|Years ended October 31, 2011, 2010 and 2009
|                                           

|9.  | RELATED PARTY TRANSACTIONS (Continued)                                                                                                                                                                                                                                                         
|--- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|    |                                                                                                                                                                                                                                                                                                
|    | (d)                                                                                                                                                                                                                                                                                            
|    |                                                                                                                                                                                                                                                                                                
|    |                                                                                                                                                                                                                                                                                                
|    |                                                                                                                                                                                                                                                                                                
|    |                                                                                                                                                                                                                                                                                                
|    |                                                                                                                                                                                                                                                                                                
|    |                                                                                                                                                                                                                                                                                                
|    |                                                                                                                                                                                                                                                                                                
|10. | GEOGRAPHIC SEGMENTED DATA                                                                                                                                                                                                                                                                      
|    |                                                                                                                                                                                                                                                                                                
|    | The Company operates in one industry segment, the mineral
      resources industry, and in six geographical segments, Canada, Peru,
      Mexico, Argentina, Ghana and the United States. The significant asset
      categories identifiable with these geographical areas are as
    follows:

| |                              |   | 2011        | 
| | ---------------------------- | - | ----------- | 
| |                              |   | Canada      | 
| |                              |   |             | 
| | Resource properties          | $ | 62,953,380  | 
| | Cash and cash equivalents    |   | 5,821,354   | 
| | Resource related investments |   | 32,551,104  | 
| | Others                       |   | 12,452,096  | 
| |                              |   |             | 
| |                              | $ | 113,777,934 | 

| |                              |   | 2010       | 
| | ---------------------------- | - | ---------- | 
| |                              |   | Canada     | 
| |                              |   |            | 
| | Resource properties          | $ | -          | 
| | Cash and cash equivalents    |   | 6,152,489  | 
| | Resource related investments |   | 60,685,650 | 
| | Equity investments           |   | 5,236,540  | 
| | Others                       |   | 972,345    | 
| |                              |   |            | 
| |                              | $ | 73,047,024 | 

34

---

|CARDERO RESOURCE CORP.                     
|-------------------------------------------
|(AN EXPLORATION STAGE COMPANY)             
|Notes to Consolidated Financial Statements 
|Years ended October 31, 2011, 2010 and 2009
|                                           

|11. | INCOME TAXES                                                                                                                                                        
|--- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------
|    |                                                                                                                                                                     
|    | A reconciliation of income taxes at Canadian statutory
      rates (2011  26.83%; 2010  30.31%; 2009  27.42%) is as follows for the
      years ended October 31:

| |                                                          |   | 2011        |   |   | 2010       |   |   | 2009       |  
| | -------------------------------------------------------- | - | ----------- | - | - | ---------- | - | - | ---------- | -
| |                                                          |   |             |   |   |            |   |   |            |  
| | Income tax expense (benefits)                            | $ | (5,404,676  | ) | $ | 20,715,743 |   | $ | 130,966    |  
| | Permanent differences                                    |   | 38,991      |   |   | (255,155   | ) |   | (69,679    | )
| | Stock-based compensation                                 |   | 349,353     |   |   | 487,583    |   |   | 359,620    |  
| | Non-taxable portion of capital gains                     |   | (1,185,149  | ) |   | (135,075   | ) |   | (410,004   | )
| | Change in timing differences on mineral
      properties |   | -           |   |   | 5,463,032  |   |   | -          |  
| | Write-off of resource property                           |   | 3,275,441   |   |   | 2,443,199  |   |   | 924,735    |  
| | Future income taxes on sale of Pampa de
      Pongo      |   | -           |   |   | -          |   |   | (2,564,900 | )
| | Other temporary differences                              |   | (1,574,676  | ) |   | 714,802    |   |   | 398,566    |  
| | Change in timing differences                             |   | (11,466,565 | ) |   | 206,620    |   |   | -          |  
| | Effect of tax rates in other jurisdictions               |   | (33,992     | ) |   | (62,996    | ) |   | (23,470    | )
| | Effect of rate change                                    |   | 828,255     |   |   | (316,272   | ) |   | 62,945     |  
| | Change in
      valuation allowance                      |   | 19,764,889  |   |   | (5,879,979 | ) |   | 1,923,341  |  
| |                                                          |   |             |   |   |            |   |   |            |  
| |                                                          | $ | 4,591,871   |   | $ | 23,381,502 |   | $ | 732,120    |  

The components of future income tax assets
  (liabilities) are as follows:

| |                                                                                                                             |   | 2011        |   |   | 2010       |  
| | --------------------------------------------------------------------------------------------------------------------------- | - | ----------- | - | - | ---------- | -
| | Future income tax assets                                                                                                    |   |             |   |   |            |  
| | Non-capital loss
      carry-forwards                                                                                       | $ | 14,587,869  |   | $ | 9,584,878  |  
| | Difference between undepreciated
      capital cost over net book value of
      
               property and
    equipment |   | 133,630     |   |   | 56,628     |  
| | Cumulative eligible
      capital deduction                                                                                 |   | 13,678      |   |   | 13,678     |  
| | Share issue costs                                                                                                           |   | 162,765     |   |   | 154,416    |  
| | Tax value in excess of
      book value of resource properties                                                              |   | 5,585,137   |   |   | -          |  
| | Other                                                                                                                       |   | 1,436,957   |   |   | 297,085    |  
| |                                                                                                                             |   |             |   |   |            |  
| | Total future income tax assets                                                                                              |   | 21,920,036  |   |   | 10,106,685 |  
| | Valuation allowance                                                                                                         |   | (21,065,584 | ) |   | (586,039   | )
| |                                                                                                                             |   |             |   |   |            |  
| | Net future income tax assets                                                                                                | $ | 854,452     |   | $ | 9,520,646  |  
| |                                                                                                                             |   |             |   |   |            |  
| | Future income tax liabilities                                                                                               |   |             |   |   |            |  
| | Book value in excess of tax values of
      investments                                                                     | $ | (854,452    | ) | $ | (4,649,040 | )
| | Book value in excess of tax values of
      resource properties  Cardero Coal
            (note 3)                         |   | (11,713,033 | ) |   | (4,871,606 | )
| |                                                                                                                             |   |             |   |   |            |  
| | Total future income tax liabilities                                                                                         | $ | (12,567,485 | ) | $ | (9,520,646 | )
| |                                                                                                                             |   |             |   |   |            |  
| | Net income tax assets (liabilities)                                                                                         | $ | (11,713,033 | ) | $ | -          |  

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

35

---

|CARDERO RESOURCE CORP.                     
|-------------------------------------------
|(AN EXPLORATION STAGE COMPANY)             
|Notes to Consolidated Financial Statements 
|Years ended October 31, 2011, 2010 and 2009
|                                           

|11. | INCOME TAXES (Continued)                                                                                                                                                                                              
|--- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|    |                                                                                                                                                                                                                       
|    | The Company has available approximate non-capital losses
      that may be carried forward to apply against future years' income for
      income tax purposes in all jurisdictions. The losses expire as
    follows:

| | Available to    |   | Canada     |  |   | Foreign    |  |   | Total      | 
| | --------------- | - | ---------- |  | - | ---------- |  | - | ---------- | 
| |                 |   |            |  |   |            |  |   |            | 
| | 2012            | $ | -          |  | $ | 1,465,295  |  | $ | 1,465,295  | 
| | 2013            |   | -          |  |   | 894,185    |  |   | 894,185    | 
| | 2014            |   | 1,446,622  |  |   | 693,716    |  |   | 2,140,338  | 
| | 2015            |   | 2,950,454  |  |   | 511,021    |  |   | 3,461,475  | 
| | 2016            |   | 2,850,458  |  |   | 4,909,884  |  |   | 7,760,342  | 
| | 2017            |   | -          |  |   | 356,852    |  |   | 356,852    | 
| | 2018            |   | -          |  |   | 918,397    |  |   | 918,397    | 
| | 2019            |   | -          |  |   | 477,096    |  |   | 477,096    | 
| | 2020            |   | -          |  |   | 1,066,883  |  |   | 1,066,883  | 
| | 2021            |   | -          |  |   | 488,452    |  |   | 488,452    | 
| | 2027            |   | 3,086,818  |  |   | 69,804     |  |   | 3,156,622  | 
| | 2028            |   | 4,130,985  |  |   | 354,363    |  |   | 4,485,348  | 
| | 2029            |   | 2,258,886  |  |   | 230,673    |  |   | 2,489,559  | 
| | 2030            |   | 6,446,014  |  |   | 559,083    |  |   | 7,005,097  | 
| | 2031            |   | 14,217,604 |  |   | 659,878    |  |   | 14,877,482 | 
| | Deferred expiry |   | -          |  |   | 3,174,361  |  |   | 3,174,361  | 
| |                 |   |            |  |   |            |  |   |            | 
| |                 | $ | 37,387,841 |  | $ | 16,829,943 |  | $ | 54,217,784 | 

|12. | COMMITMENTS                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
|--- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
|    | The Company was committed to monthly lease payments of
      $11,907 for its premises at 1901  1177 West Hastings Street, Vancouver,
      under its current lease, which expired August 31, 2010. On September 8,
      2008, the Company sub-leased the premises to another company for the
      remaining term of the lease with the landlords consent. The Company
      entered into a sub-lease dated May 14, 2008 for new office space located
      at 1920  1188 West Georgia Street, Vancouver. The new sub-lease commenced
      August 1, 2008 for a term of 51 months. The initial lease payments are
      $14,654 per month for basic rent and $9,623 per month for estimated
      operating costs, commencing in September 2008.
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
|    | The Company entered into a lease dated November 18, 2010
      for office space located at 2300  1177 West Hastings Street, Vancouver
      for a term commencing April 1, 2011 for a period of ten years to March 31,
      2021 (subject to renewal for an additional five years). The rent for the
      first three years is $312,579 per annum, plus operating costs and $335,733
      per annum, plus operating costs for the next two years.                                                                                                                                                                                                                                                                                                
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
|    | The Companys subsidiary Cardero Coal entered into a
      lease dated November 24, 2011 for office space located at 1800 - 1177 West
      Hastings Street, Vancouver for a term commencing May 1, 2012 for a period
      of eight years and eleven months. The rent for the first three years is
      $139,023 per annum, plus operating cost and $149,321 plus operating costs
      per annum for the next two years.                                                                                                                                                                                                                                                                                                                          
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
|    | Other commitments are disclosed elsewhere in these
      consolidated financial statements as appropriate.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
|13. | RISK AND CAPITAL MANAGEMENT; FINANCIAL
      INSTRUMENTS                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
|    | The Company manages its capital structure, and makes
      adjustments to it, based on the funds available to the Company in order to
      support future business opportunities. The Company defines its capital as
      shareholders equity. The Board of Directors does not establish
      quantitative return on capital criteria for management, but rather relies
      on the expertise of the Companys management to sustain future development
      of the business.                                                                                                                                                                                                                                                                  

36

---

|CARDERO RESOURCE CORP.                     
|-------------------------------------------
|(AN EXPLORATION STAGE COMPANY)             
|Notes to Consolidated Financial Statements 
|Years ended October 31, 2011, 2010 and 2009
|                                           

|13. | RISK AND CAPITAL MANAGEMENT; FINANCIAL INSTRUMENTS
      (Continued)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
|--- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
|    | The Company currently has no source of revenues; as such,
      the Company is dependent upon external financings or the sale of assets
      (or an interest therein) to fund activities. In order to carry future
      projects and pay for administrative costs, the Company will spend its
      existing working capital and raise additional funds as needed. Management
      reviews its capital management approach on an ongoing basis and believes
      that this approach, given the relative size of the Company, is reasonable.
      There were no changes in the Companys approach to capital management
      during the year ended October 31, 2011. The Company is not subject to
      externally imposed capital requirements.    
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
|    | The Company classified its cash and cash equivalents as
      held-for-trading; accounts receivable and due from related parties as
      loans and receivables; and accounts payable and accrued liabilities as
      other financial liabilities. The classification of resource related
      investments is set out in note 5. The carrying values of cash and cash
      equivalents, accounts receivable, and accounts payable and accrued
      liabilities approximate their fair values due to the short-term maturity
      of these financial instruments. The fair values of amounts due from
      related parties have not been disclosed, as their fair values cannot be
      reliably measured since the parties are not at arms length.
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
|    | The Canadian Institute of Chartered Accountants (CICA)
      Handbook Section 3862 establishes a fair value hierarchy that prioritizes
      the inputs to valuation techniques used to measure fair value as
      follows:                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            

Level 1  quoted prices (unadjusted) in
active markets for identical assets or liabilities;

Level 2  inputs other than quoted
prices included in Level 1 that are observable for the asset or liability,
either directly (i.e., as prices) or indirectly (i.e., derived from prices); and

Level 3  inputs for the asset or
liability that are not based on observable market data (unobservable inputs).

The following table sets forth the
Companys financial assets measured at fair value by level within the fair value
hierarchy.

| | 2011                         |   | Level 1    |  |   | Level 2 |  |   | Level 3 |  |   | Total      | 
| | ---------------------------- | - | ---------- |  | - | ------- |  | - | ------- |  | - | ---------- | 
| |                              |   |            |  |   |         |  |   |         |  |   |            | 
| | Cash and cash equivalents    | $ | 5,985,634  |  | $ | -       |  | $ | -       |  | $ | 5,985,634  | 
| | Resource related investments |   | 32,006,649 |  |   | -       |  |   | -       |  |   | 32,006,649 | 
| | Resource related investments |   | -          |  |   | 544,455 |  |   | -       |  |   | 544,455    | 
| |                              |   |            |  |   |         |  |   |         |  |   |            | 
| |                              | $ | 37,992,283 |  | $ | 544,455 |  | $ | -       |  | $ | 38,536,738 | 

| | 2010                         |   | Level 1     |  |   | Level 2   |  |   | Level 3 |  |   | Total       | 
| | ---------------------------- | - | ----------- |  | - | --------- |  | - | ------- |  | - | ----------- | 
| |                              |   |             |  |   |           |  |   |         |  |   |             | 
| | Cash and cash equivalents    | $ | 52,264,003  |  | $ | -         |  | $ | -       |  | $ | 52,264,003  | 
| | Resource related investments |   | 57,041,708  |  |   | -         |  |   | -       |  |   | 57,041,708  | 
| | Resource related investments |   | -           |  |   | 3,643,942 |  |   | -       |  |   | 3,643,942   | 
| |                              |   |             |  |   |           |  |   |         |  |   |             | 
| |                              | $ | 109,305,711 |  | $ | 3,643,942 |  | $ | -       |  | $ | 112,949,653 | 

37

---

|CARDERO RESOURCE CORP.                     
|-------------------------------------------
|(AN EXPLORATION STAGE COMPANY)             
|Notes to Consolidated Financial Statements 
|Years ended October 31, 2011, 2010 and 2009
|                                           

|13. | RISK AND CAPITAL MANAGEMENT; FINANCIAL INSTRUMENTS
      (Continued)                  
|--- | --------------------------------------------------------------------------------------
|    |                                                                                       
|    | The Companys exposure to risk on its financial
      instruments is summarized below:
|    |                                                                                       
|    | (a)                                                                                   
|    |                                                                                       
|    |                                                                                       
|    |                                                                                       
|    |                                                                                       

| |                        |   | 2011      |  |   | 2010       | 
| | ---------------------- | - | --------- |  | - | ---------- | 
| |                        |   |           |  |   |            | 
| | Bank accounts - Canada | $ | 5,436,725 |  | $ | 6,035,679  | 
| | Bank accounts - Peru   |   | 457       |  |   | 46,042,361 | 
| | Bank accounts - Others |   | 548,452   |  |   | 185,963    | 
| |                        |   |           |  |   |            | 
| |                        | $ | 5,985,634 |  | $ | 52,264,003 | 

| |     | The credit risk associated with cash and cash equivalents
      is minimized substantially by ensuring that these financial assets are
      placed with major financial institutions with strong investment-grade
      ratings given by a primary ratings agency. The Company does not hold any
      asset-backed securities.                                                                                                                                                                                                                                                                                                                                                                                                                                     
| | --- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
| |     | With respect to the $1,239,043 (2010 - $1,361,550) due
      from related parties, the credit risk has been assessed as low by
      management as the Company has strong working relationships with the
      related parties involved.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
| |     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
| | (b) | Liquidity risk                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
| |     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
| |     | Liquidity risk is the risk that the Company will
      encounter difficulty in settling its commitments. The Companys approach
      to managing liquidity risk is to provide reasonable assurance that it will
      have sufficient funds to meet liabilities when due. The Company manages
      its liquidity risk by forecasting cash flows from operations and
      anticipated investing and financing activities. The Company maintains
      sufficient cash and cash equivalents at October 31, 2011 of $5,985,634
      (2010 - $52,264,003) in order to meet short-term business requirements. At
      October 31, 2011, the Company had accounts payable and accrued liabilities
      of $4,038,261 (2010 - $832,087), which are due within 30 days.
| |     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
| | (c) | Market risk                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
| |     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
| |     | Market risk is the risk that the fair value or future
      cash flows of a financial instrument will fluctuate because of changes in
      market prices. Market risk comprises three types of risk: interest rate
      risk, foreign currency risk and other price risk.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
| |     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
| |     | i.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
| |     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
| |     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      

38

---

|CARDERO RESOURCE CORP.                     
|-------------------------------------------
|(AN EXPLORATION STAGE COMPANY)             
|Notes to Consolidated Financial Statements 
|Years ended October 31, 2011, 2010 and 2009
|                                           

|13. | RISK AND CAPITAL MANAGEMENT; FINANCIAL INSTRUMENTS
      (Continued)
|--- | --------------------------------------------------------------------
|    |                                                                     
|    | (c)                                                                 
|    |                                                                     
|    |                                                                     
|    |                                                                     
|    |                                                                     
|    |                                                                     
|    |                                                                     
|    |                                                                     
|    |                                                                     

|14. | COMPARATIVE FIGURES                                                                                                                     
|--- | ----------------------------------------------------------------------------------------------------------------------------------------
|    |                                                                                                                                         
|    | Certain of the figures for 2010 and 2009 have been
      reclassified to conform to the presentation adopted for the current
      year.

39

---

|CARDERO RESOURCE CORP.                     
|-------------------------------------------
|(AN EXPLORATION STAGE COMPANY)             
|Notes to Consolidated Financial Statements 
|Years ended October 31, 2011, 2010 and 2009
|                                           

|15. | DIFFERENCES BETWEEN CANADIAN AND US GAAP
|--- | ----------------------------------------
|    |                                         
|    | Differences in accounting principles    
|    |                                         
|    | (a)                                     
|    |                                         
|    |                                         
|    |                                         
|    |                                         
|    |                                         
|    |                                         
|    |                                         
|    |                                         
|    |                                         
|    | (b)                                     

| |                                                                              |   | 2011        |   |   | 2010        |  
| | ---------------------------------------------------------------------------- | - | ----------- | - | - | ----------- | -
| | Total assets per Canadian GAAP                                               | $ | 121,329,283 |   | $ | 136,205,154 |  
| | Exploration
      expenditures on resource properties expensed under US GAAP |   | (11,828,028 | ) |   | (11,808,350 | )
| | Total assets per US GAAP                                                     | $ | 109,501,255 |   | $ | 124,396,804 |  
| | Total liabilities
      per Canadian and US GAAP                             | $ | 15,751,294  |   | $ | 27,679,401  |  
| | Total shareholders equity per Canadian
      GAAP                           |   | 105,577,989 |   |   | 108,525,753 |  
| | Exploration
      expenditures on resource properties expensed under US GAAP |   | (11,828,028 | ) |   | (11,808,350 | )
| | Total shareholders equity per US GAAP                                       |   | 93,749,961  |   |   | 96,717,403  |  
| | Total liabilities
      and shareholders equity per US GAAP                 | $ | 109,501,255 |   | $ | 124,396,804 |  

40

---

|CARDERO RESOURCE CORP.                     
|-------------------------------------------
|(AN EXPLORATION STAGE COMPANY)             
|Notes to Consolidated Financial Statements 
|Years ended October 31, 2011, 2010 and 2009
|                                           

|15. | DIFFERENCES BETWEEN CANADIAN AND US GAAP
      (Continued)
|--- | ----------------------------------------------------------
|    |                                                           
|    | Differences in accounting principles
      (Continued)    
|    |                                                           
|    | (c)                                                       
|    |                                                           
|    |                                                           

| |                                                                                          |   | 2011        |   |   | 2010       |   |   | 2009       |  
| | ---------------------------------------------------------------------------------------- | - | ----------- | - | - | ---------- | - | - | ---------- | -
| |                                                                                          |   |             |   |   |            |   |   |            |  
| | Net income (loss) per Canadian GAAP                                                      | $ | (24,733,528 | ) | $ | 44,950,970 |   | $ | (254,628   | )
| |                                                                                          |   |             |   |   |            |   |   |            |  
| | Exploration and development costs                                                        |   | (8,027,063  | ) |   | (5,765,991 | ) |   | (2,789,143 | )
| | Reverse exploration and developments costs 
        
    written-off                     |   | 7,716,830   |   |   | 4,930,505  |   |   | 1,668,856  |  
| | Exploration and development costs recovered                                              |   | 297,383     |   |   | -          |   |   | 3,399,882  |  
| |                                                                                          |   |             |   |   |            |   |   |            |  
| | Total difference                                                                         |   | (12,850     | ) |   | (835,486   | ) |   | 2,279,595  |  
| |                                                                                          |   |             |   |   |            |   |   |            |  
| | Net income (loss) per US GAAP                                                            | $ | (24,746,378 | ) | $ | 44,115,484 |   | $ | 2,024,967  |  
| |                                                                                          |   |             |   |   |            |   |   |            |  
| | Weighted average number of common shares 
        
    outstanding                       |   | 68,988,456  |   |   | 58,571,515 |   |   | 58,421,309 |  
| |                                                                                          |   |             |   |   |            |   |   |            |  
| | Basic and diluted income (loss) per share
      in 
       accordance with Canadian GAAP | $ | (0.36       | ) | $ | 0.77       |   | $ | (0.01      | )
| | Total differences                                                                        |   | (0.00       | ) |   | (0.02      | ) |   | 0.04       |  
| | Basic and diluted income (loss) per share in
      
       accordance with US GAAP       | $ | (0.36       | ) | $ | 0.75       |   | $ | 0.03       |  

Statements of comprehensive income
(loss) for the years ended October 31:

| |                                                                             |   | 2011        |   |   | 2010       |   |   | 2009       | 
| | --------------------------------------------------------------------------- | - | ----------- | - | - | ---------- | - | - | ---------- | 
| |                                                                             |   |             |   |   |            |   |   |            | 
| | Comprehensive income (loss) in accordance
         with Canadian GAAP       | $ | (45,885,557 | ) | $ | 62,175,067 |   | $ | 10,131,128 | 
| | Total difference
      in net income (loss) between    Canadian and US GAAP |   | (12,850     | ) |   | (835,486   | ) |   | 2,279,595  | 
| |                                                                             |   |             |   |   |            |   |   |            | 
| | Total
      comprehensive income (loss) in    accordance with US GAAP       | $ | (45,898,407 | ) | $ | 61,339,581 |   | $ | 12,410,723 | 

41

---

|CARDERO RESOURCE CORP.                     
|-------------------------------------------
|(AN EXPLORATION STAGE COMPANY)             
|Notes to Consolidated Financial Statements 
|Years ended October 31, 2011, 2010 and 2009
|                                           

|15. | DIFFERENCES BETWEEN CANADIAN AND US GAAP (Continued)
      Differences in accounting principles
      (Continued)
|--- | -----------------------------------------------------------------------------------------------------------------
|    |                                                                                                                  
|    | (d)                                                                                                              
|    |                                                                                                                  
|    |                                                                                                                  

| |                                                                                                                              |   | 2011        |   |   | 2010        |   |   | 2009       |  
| | ---------------------------------------------------------------------------------------------------------------------------- | - | ----------- | - | - | ----------- | - | - | ---------- | -
| |                                                                                                                              |   |             |   |   |             |   |   |            |  
| | Net cash used in operating activities in
      accordance    with Canadian GAAP                                              | $ | (44,769,071 | ) | $ | (10,923,832 | ) | $ | (5,057,303 | )
| | Adjustments to net
      loss involving use of cash    Write-off of capitalized
      resource property    exploration costs |   | (5,124,364  | ) |   | (5,855,417  | ) |   | (2,919,150 | )
| | Net cash used in operating activities in
      accordance    with US GAAP                                                    |   | (49,893,435 | ) |   | (16,779,249 | ) |   | (7,976,453 | )
| |                                                                                                                              |   |             |   |   |             |   |   |            |  
| | Net cash provided by (used in) investing
      activities in    accordance with Canadian GAAP                                |   | (1,337,411  | ) |   | 60,525,140  |   |   | 9,459,769  |  
| | Reclassification
      of capitalized resource property    exploration costs                                                 |   | 5,124,364   |   |   | 5,855,417   |   |   | 2,919,150  |  
| | Net cash provided by (used in) investing
      activities    in accordance with US GAAP                                      |   | 3,786,953   |   |   | 66,380,557  |   |   | 12,378,919 |  
| |                                                                                                                              |   |             |   |   |             |   |   |            |  
| | Net cash flows provided by (used in)financing
      activities 
         in accordance with Canadian and US
    GAAP         |   | 1,197,868   |   |   | (283,075    | ) |   | 164,250    |  
| |                                                                                                                              |   |             |   |   |             |   |   |            |  
| | Effect of foreign exchange on cash in accordance
      with    Canadian and US GAAP                                          |   | (1,369,755  | ) |   | (2,877,426  | ) |   | (32,360    | )
| |                                                                                                                              |   |             |   |   |             |   |   |            |  
| | Net (decrease) increase in cash and cash
      equivalents    in accordance with Canadian and US
      GAAP                  |   | (46,278,369 | ) |   | 46,440,807  |   |   | 4,534,356  |  
| | Cash and cash
      equivalents, beginning of the year in    accordance
      with Canadian and US GAAP                      |   | 52,264,003  |   |   | 5,823,196   |   |   | 1,288,840  |  
| | Cash and cash equivalents, end of the year
      in    accordance with Canadian and US GAAP                                  | $ | 5,985,634   |   | $ | 52,264,003  |   | $ | 5,823,196  |  

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

42

---

|CARDERO RESOURCE CORP.                     
|-------------------------------------------
|(AN EXPLORATION STAGE COMPANY)             
|Notes to Consolidated Financial Statements 
|Years ended October 31, 2011, 2010 and 2009
|                                           

|15. | DIFFERENCES BETWEEN CANADIAN AND US GAAP
      (Continued)
|--- | ----------------------------------------------------------
|    |                                                           
|    | Differences in accounting principles
      (Continued)    
|    |                                                           
|    | (f)                                                       
|    |                                                           
|    |                                                           
|    |                                                           
|    |                                                           
|    |                                                           
|    |                                                           
|    |                                                           
|    | (g)                                                       
|    |                                                           
|    |                                                           
|    |                                                           
|    |                                                           
|    |                                                           
|    | (h)                                                       
|    |                                                           
|    |                                                           
|    |                                                           
|    | (i)                                                       
|    |                                                           
|    |                                                           

43

---

|CARDERO RESOURCE CORP.                     
|-------------------------------------------
|(AN EXPLORATION STAGE COMPANY)             
|Notes to Consolidated Financial Statements 
|Years ended October 31, 2011, 2010 and 2009
|                                           

|16. | SUPPLEMENTAL CASH FLOW
  INFORMATION
|--- | ------------------------------------

| |                                                             |   | 2011       |  |   | 2010      |  |   | 2009    | 
| | ----------------------------------------------------------- | - | ---------- |  | - | --------- |  | - | ------- | 
| |                                                             |   |            |  |   |           |  |   |         | 
| | Supplemental Cash Flow Information                          |   |            |  |   |           |  |   |         | 
| |                                                             |   |            |  |   |           |  |   |         | 
| | Accounts payable related to
      property expenditure      | $ | 3,195,677  |  | $ | 292,977   |  | $ | 203,551 | 
| | Accounts receivable related to property
      expenditure   | $ | 769,880    |  | $ | -         |  | $ | -       | 
| | Shares issued on Acquisition
      of Cardero Coal (note 3) | $ | 35,095,503 |  | $ | -         |  | $ | -       | 
| | Shares issued for debt settlement                           | $ | -          |  | $ | -         |  | $ | 204,676 | 
| | Shares issued for equity
      investment                   | $ | -          |  | $ | -         |  | $ | 795,000 | 
| | Shares issued for property option payments                  | $ | -          |  | $ | 111,500   |  | $ | -       | 
| | Option payment received in
      shares                     | $ | -          |  | $ | -         |  | $ | 17,000  | 
| | Obligation to issue shares                                  | $ | -          |  | $ | -         |  | $ | 111,500 | 
| | Interest paid                                               | $ | -          |  | $ | -         |  | $ | -       | 
| | Income taxes paid                                           | $ | 25,601,634 |  | $ | 2,138,634 |  | $ | -       | 

|17. | SUBSEQUENT EVENTS              
|--- | -------------------------------
|    |                                
|    | Subsequent to October 31, 2011:
|    |                                
|    | (a)                            
|    |                                
|    | (b)                            
|    |                                
|    | (c)                            
|    |                                
|    |                                

| |  | In consideration of the payment of $3.5 million, and the
      issuance of 500,000 common shares of the Company plus warrants to acquire
      an additional 1,000,000 common shares of the Company at a price of $1.40
      per share for a period of 18 months after closing, Cardero will be granted
      the option (First Option) to acquire 50% of the issued shares of Trefi.                                                                                                                                                                                
| | - | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | In order to exercise the First Option, the Company will
      be required to deliver a bankable feasibility study (BFS) with respect
      to the Trefi Coal project within four years of closing.                                                                                                                                                                                                                                                                                                                                                                    
| |  | If the BFS delivered by the Company is positive (defined
      as a BFS which demonstrates an IRR greater than 20%, utilizing a discount
      rate of 10% and an industry consensus forward looking 4 year price for the
      coal proposed to be delivered from the project), the Company may acquire
      the balance of Trefi (50%) by making a production decision, paying Anglo
      Pacific $5.0 million and issuing $1 million of Cardero shares (valued at
      the 5 day VWAP price to the date of issuance).                                             
| |  | If the BFS is positive, but the Company does not elect to
      make a production decision, then Anglo Pacific will have the option to
      reacquire the 50% of Trefi from the Company by paying the Company 50% of
      the total expenditures by the Company on the BFS.                                                                                                                                                                                                                                                                                           
| |  | If the BFS is not positive, then the Company will retain
      its 50% of Trefi and commit to periodic reviews of the BFS. If, after 2
      years, the BFS remains not positive and Company has not elected to make a
      production decision and acquire the balance of Trefi by making the $5.0
      million payment and issuing the $1.0 million of Cardero shares, then a
      buy-sell process may be initiated, by which the party offering to pay the
      highest price to the other party will be able to purchase the interest of
      the other party.
| |  | Once in production, Anglo Pacific will be paid a gross
      revenue royalty of 3% to be priced on an FOB basis, with the obligation
      for payment of the royalty to be secured.                                                                                                                                                                                                                                                                                                                                                                                    

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|CARDERO RESOURCE CORP.                     
|-------------------------------------------
|(AN EXPLORATION STAGE COMPANY)             
|Notes to Consolidated Financial Statements 
|Years ended October 31, 2011, 2010 and 2009
|                                           

|17. | SUBSEQUENT EVENTS (Continued)
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