---

Technical Report on
the TitacIlmenite Exploration Project,Minnesota, USA



Report Prepared for

Cardero Resource Corp.





| | Report Prepared by
      SRK Consulting (Canada)
        Inc. 
        2CC031.004 
        December 31 2011
| | -----------------------------------------------------------------------------------------------------------



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|------------------------------ | ------------
|Titac Project NI
      43-101  | Page
      i

Technical Report on the Titac IlmeniteExploration Project, Minnesota, USA

Cardero Resource Corp.
  Suite 2300  1177 West Hastings Street Vancouver,
BC,V6E 2K3

website: www.cardero.com Tel: +1.604.408.7488 
  Fax: +1.604.408.7499

SRK Consulting (Canada) Inc.Suite 2200  1066 West
Hastings Street 
  Vancouver, BC, V6E 3X2

e-mail: vancouver@srk.com website: www.srk.com Tel:
+1.604.681.4196 
  Fax: + 1.604.687.5532

SRK Project Number 2CC031.004

|Effective date: | January19,2012
|--------------- | --------------
|Report date:    | January27,2012

|Authored by:                                                       |  |                            
|------------------------------------------------------------------ |  | ---------------------------
|                                                                   |  |                            
|                                                                   |  |                            
|Darrell Farrow, P.Geo.                                             |  | Mike Johnson, P.Geo.       
|Associate Consultant (Geology)                                     |  | Senior Consultant (Geology)
|                                                                   |  |                            
|                                                                   |  |                            
|**Peer Reviewed by:**                                              |  |                            
|                                                                   |  |                            
|                                                                   |  |                            
|Wayne Barnett, Pr.Sci.Nat                                          |  |                            
|Principle Consultant (Geology)                                     |  |                            
|                                                                   |  |                            
|____________________                                               |  |                            
|Cover: Photo of drill support road at Titac (source
      Cardero) |  |                            

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Important Notice

This report was prepared as a National
Instrument 43-101 Technical Report for Cardero Resources Corp. (Cardero or the
Company) by SRK Consulting (Canada) Inc. (SRK). The quality of information,
conclusions, and estimates contained herein is consistent with the level of
effort involved in SRKs services, based on: i) information available at the
time of preparation, ii) data supplied by outside sources, and iii) the
assumptions, conditions, and qualifications set forth in this report. This
report is intended for use by Cardero, subject to the terms and conditions of
its contract with SRK and relevant securities legislation. The contract permits
Cardero to file this report as a Technical Report with Canadian securities
regulatory authorities pursuant to National Instrument 43-101(NI 43-101),
Standards of Disclosure for Mineral Projects.

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Executive Summary

This technical report documents the
Mineral Resource estimate for the Titac Project (the Project). It was prepared
following the guidelines of the Canadian Securities Administrators National
Instrument 43-101 (NI 43-101) and Form 43-101F1, and in conformity with
generally accepted CIM Estimation of Mineral Resources and Mineral Reserves
Best Practice Guidelines. This report has been written by SRK Consulting
(Canada) Inc. (SRK) on behalf of Cardero Resources Corp. (Cardero or the
Company).

Property Description and Location

The land making up the Project
(Project Area) is located in northeastern Minnesota in St. Louis County,
Township 55N, Range 14W, Section 34, and Township 54N, Range 14W, Section 3. The
property is approximately centered at: (Coordinate system: Universal Trans
Mercator, Zone 15 North, North American 1983 Datum) 568000 m East, 5228000 m
North.

The Project Area interests are held by
Cardero Iron Ore (USA) Inc. (CIOUS), a wholly owned indirect subsidiary of
Cardero, and work on the property is carried on through Cardero Iron Ore
Management (USA) Inc., an indirectly wholly owned subsidiary of Cardero. Cardero
holds a 100% leasehold interest in the Project Area under a mining lease dated
July 1, 2009. The lease is for an initial term of 20 years, subject to extension
for up to 20 additional years, and requires annual rental payments until
commercial production and thereafter production royalty payments (minimum
$200,000/year).

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

Accessibility, Climate, Local
Resources, Infrastructure and Physiography

Topographic relief on the Titac
property is generally low, and the surface is flat-laying. Elevations range
between 470 m and 490 m above mean sea level. The ground cover is a mixture of
Palustrine, forested wetlands (Cowardin classification system), and higher dry
forested ground. Overburden, consisting of glacial till, is present and the
depth to bedrock is approximately 20 to 30 m (m) from surface.

Accessibility is excellent, with the
Project Area located along a paved county highway.

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

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

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

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History

Exploration of the Project Area,
historically known as Section 34, has been limited, though several exploratory
bore holes and geophysical surveys have been completed. Six holes were drilled
historically (by United States Steel Corp), and Cardero completed 30 holes in
2010 and 2 holes in 2011. A ground magnetic survey was conducted in the
mid-1960s by United States Steel Corp. A small amount of metallurgical testwork
was completed by United States Steel Corp. in 1971.

Geological Setting and
Mineralization

The Project Area is located within the
Superior Province of the Canadian Shield, and is underlain by intrusive rocks
generated during the formation of the Midcontinent Rift. Mineralization is
hosted by Oxide-bearing Ultramafic Intrusions (OUIs) that intruded into
layered series intrusions of the Duluth Complex. OUIs are dominantly composed of
coarse-grained to pegmatitic pyroxenite, peridotite, and dunite that contain
approximately 15-40% titanium-iron oxide mineralization. Typically, zones of
massive and semi-massive oxide are also present throughout the stratigraphy.
Locally, some OUIs also contain abundant copper-nickel sulfide mineralization.
Most OUIs occur along the western margin of the southern portion of the Duluth
Complex, and display numerous shapes (sheet-, funnel, dike- and pipe-like
geometries), and inclinations (flat-lying, moderately-dipping, and
sub-vertical). The Titac OUIs are geologically interpreted to be late-stage
intrusions that cut early Duluth Complex stratigraphy, and are associated with
magmatism generated by the 1.1 billion year old Midcontinent Rift system.

The Titac OUls contain disseminated,
semi-massive, and massive titanium-iron oxide mineralization, dominantly
ilmenite (TiFeO3) and magnetite and titaniferous magnetite
(Fe3O4, Fe2TiO4). The Project Area
contains at least two mineralized OUIs (Titac North and Titac South). Titac
North is at least 450 m thick (open at depth) and has a vertical pipe-like
geometry. Titac South is at least 490 m thick, and also has a pipe-like
geometry.

Exploration and Drilling

Exploration of the Project Area by
CIOUS began in 2010. Reinterpretation of the ground magnetic survey conducted by
USSC confirmed the presence of multiple titaniferous-iron oxide-bearing
intrusions at the Project Area including two large intrusions referred to as
Titac North and Titac South. No bedrock is exposed on the Project Area with the
result that bedrock mapping has not been undertaken.

Drilling at the Project Area is complex
because of the stratigraphy of the Titac intrusions.

During 2010 and 2011, a total of
11,034.4 m were completed for 32 drill-holes, 8 (2685.3 m) of which were drilled
at Titac North and 24 (8349.1 m) at Titac South. The drilling confirmed
titanium-iron-oxide mineralization at the Project Area and determined that the
Titac property contains at least two intrusions with large zones of
titanium-iron-oxide mineralization (Titac North and Titac South). All assay
results from the 2010 and 2011 drilling campaigns have been received and are
included in this report.

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Sample Preparation, Analyses and
Security

Cardero has utilized a thorough and
robust procedure for sampling, sample preparation, analysis and security.

Procedures for core handling, logging,
sampling, and sample shipping were well thought out and well implemented.
Analysis was completed by ALS, one of the largest commercial laboratories in the
world. A robust program of quality assurance and quality control samples was
implemented and met or exceeded industry standard procedures. Sample security
and chain of custody documentation was maintained throughout the process and was
thoroughly reviewed by SRK.

Data Verifications

Exploration data verification for the
Project Area has included a site visit by SRK, enforced database structures,
analytical quality assurance and quality control samples, independent sampling
and assay checking.

SRKs Wayne Barnett, Pri. Sci. Nat.
visited the site in July 2009 and Mike Johnson, P. Geo, visited the site in
March 2010. During these site visits, SRK verified drill hole locations,
drilling, logging and sampling procedures, security and documentation. SRK also
collected independent sampling during these site visits and confirmed the
TiO2and Fe2O3values for two Titac
samples.

Cardero utilized an onsite database
which validated the data entry process as it was being completed and reduced
clerical errors. In addition, Carderos head office checked the data upon import
into their main exploration database in order to minimize data errors.

SRK verified 100% of the assay database
by downloading these records directly from the commercial laboratory and
checking them against the Mineral Resource database.

Cardero completed QA/QC sampling
(blanks, standards, duplicates) totalling 1075 samples, equal to 22% of the
total samples. SRK has reviewed the QA/QC sample insertion rate and results and
found that they indicate that the analytical data should be reliable. However,
analytical standards selection and certain standard results should be more
carefully scrutinized for future programs.

Mineral Processing and Metallurgical
Testing

Metallurgical test work (Davies Tube
tests) was completed on two samples from one of the historical drill holes
(26002) on the Project Area in 1972.

The historic metallurgical test work
indicates a relatively simple processing flow sheet. It would include crushing
the material to a selected size and processing the ore by density and then by
magnetic properties. The density separation would remove the silicates from the
much more dense oxides. The oxides would then be split into a non-magnetic /
paramagnetic fraction as well as a magnetic fraction. Magnetite would partition
into the magnetic fraction, while the ilmenite would partition into the
non-magnetic / paramagnetic fraction. The magnetic fraction could be further
upgraded to recover some ilmenite that would partition into that fraction. The
ilmenite concentrate could then be sold to an external processing site, or could
be processed at a newly created process facility as part of a further
beneficiation/added value processing project; however, a potential upgrading
facility would have very significant capital costs.

Cardero has completed very limited
metallurgical testing at this stage. Recent work includes only Davies Tube
tests, used to determine the proportion of magnetic iron commonly associated
with magnetite. Significant further
metallurgical work is required for the Project if further economic analysis is
contemplated.

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Mineral Resource Estimates

In July 2009, SRK was retained by
Cardero to complete a Mineral Resource for the Titac OUI deposits, as well as
update the technical report for the project.

SRK utilized Gemcoms Gems version
6.3.1 to complete the Mineral Resource estimation. A comprehensive and validated
drill hole database was utilized to complete the analysis. The database includes
32 drill holes, 8 of which were drilled in Titac North and 24 of which were
drilled in Titac South. Drilling in Titac North was insufficient for the
delineation of mineralized domains and resource estimation. The Mineral Resource
presented here only includes Titac South. The estimation process utilized 2837
samples out of the databases 3929 samples for Titac South. A total of 855
specific gravity measurements were utilized to estimate bulk densities.

Three geological domains were modelled
for the estimation process. The domains were defined by peridotite or pyroxenite
dominated oxide bearing ultramafic rocks. A marginal zone of mixed perdidotite,
pyroxenite and country rock was also modelled.

The Titac South resources were
estimated using GemsTM(a Gemcom software product) block modeling
software in multiple passes in 10 x 10 x 10 m blocks. Grade estimates were based
on 1.8 m composited samples. Capping of TiO2and
Fe2O3assays was not applied in any of the three domains.
Ordinary kriging was used to estimate TiO2 and Fe2O3. Inverse distance squared
was used to estimate the specific gravity
data. Mineral resources were classified in accordance with definitions provided
by the Canadian Institute of Mining (CIM) as stipulated in NI43-101. All
interpolated blocks were classified as Inferred Mineral Resource.

In order to quantify the Mineral
Resources requirement of reasonable prospects of economic extraction, the
block model was subjected to conceptual mining limits using an open pit
optimization program. The process uses reasonable mining and processing
parameters to define a conceptual pit within which the material with reasonable
economic prospects should be contained. For the Titac Project optimization runs, it was
assumed that all TiO2is contained in the mineral Ilmenite and no
value was associated with the Fe2O3material in order to
avoid double counting of the value associated with iron. Historic metallurgical
data indicates that a very high percentage of the TiO2is contained
within ilmenite, with a small component in titaniferous magnetite and silicates.

The Mineral Resource Statement for the Project is presented in Table 1-1 below.

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Table i: Mineral Resource
Statement*, Titac Project, Minnesota, USA, SRK Consulting (Canada) Inc,
effective date, January 19, 2012

Category
      Estimated Quantity
      Estimated GradeTiO2
      Adjusted
        Fe2O3***Mt
      %
      %Open Pit**Inferred
      45.1
      15.0
      14.74


| | *   | Mineral resources are reported in relation to a
      conceptual pit shell. Mineral resources are not mineral reserves and do
      not have demonstrated economic viability. All figures are rounded to
      reflect the relative accuracy of the estimate. All composites have been
      capped where appropriate.
| | --- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | **  | Open pit mineral resources are reported at a cut-off
      grade of 8% TiO2. Cut-off grades are based on a price of US$170
      per tonne of Ilmenite back calculated to TiO2and recoveries of
      70 percent, without considering revenues from other metals.                                                     
| | *** | Reported Fe2O3has been lowered to
      reflect the amount of Fe estimated to be contained in ilmenite based on
      the assumption that all Ti has been assigned to ilmenite. At this time,
      accurately quantifying the amount of magnetite contained within this
      estimate is not possible.              

As stated above, the Mineral Resource
has been quantified in terms of TiO2and Fe2O3,
the analytical components captured for assays of titanium and iron. In any
potential mining scenario, the Project would produce ilmenite
(FeTiO3) and potentially titaniferous magnetite
(TiFe2O4) and magnetite (Fe3O4) as a
by-product. The Fe2O3values have been reduced to reflect
Fe found within the ilmenite associated with the TiO2, however
accurately quantifying magnetite is not possible at this time as further
mineralogical work will be needed.

Based on the assumption that all Ti is
  found within ilmenite, the contained ilmenite metal in the Mineral Resource
  is summarized in Table 1-2.

Table ii: Summary of Titac Project
ilmenite content within the Mineral Resource

Category
      Quantity
      Ilmenite Grade
      Contained Ilmenite(FeTiO3)Mt
      %
      Mt.Inferred
      45.1
      28.5
      12.9


Interpretation and Conclusions

Ilmenite and to a lesser extent
titaniferous magnetite is used as a source material for titanium used as
pigments and as a metal alloy. Rutile is the ideal source material for titanium
as it contains nearly twice as much Ti as ilmenite; however, ilmenite is by far
the more common source.

Ilmenite is an industrial mineral and
there are risks and uncertainties associated with this ilmenite resource, many
of which are common to industrial mineral deposits. Industrial minerals have
special risks that are not typically associated with precious or base metal
mines. Special concerns include mineralogy of material, deleterious elements
(such as silica, calcium, magnesium and manganese), and special market factors
such as market size or proprietary technology. Because of these and other
issues, industrial mineral deposits carry additional risk compared to more
common metal products.

Historic metallurgical tests of the
Titac material are very limited. Small scale testing indicates that a viable
ilmenite concentrate could be created from processing of Titac material,
although higher than ideal deleterious element values, such as magnesium, may
reduce the potential ilmenite product price. The ilmenite may be sold as a
concentrate to an existing ilmenite processor as the deposit is amicable to shipping due to its
proximity to rail and a short haul to bulk ports on the western shore of Lake
Superior. As well, local beneficiation could be considered, particularly when
other nearby OUI bodies are considered for increased scale. The main hurdle to
overcome with future exploitation of the Titac deposit revolves around
metallurgical optimization to create the highest grade concentrate while
reducing potential deleterious element contamination of the concentrate. Further
economic analysis of this project is anticipated and should include resolution
of the mineralogical, metallurgical and processing issues.

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Based upon a relatively simple
processing flow sheet for ilmenite concentrate, a recent increase in demand for
ilmenite and the projects close proximity to other bulk mines and inexpensive
shipping routes, SRK believes that the Project meets the criteria for having
reasonable prospects of economic extraction.

The mineral resources for Titac South
presented in this report represent the first time disclosure of Mineral Resource
for the Project Area. Drilling on the Titac North deposit is insufficient for
delineation of the deposit and evaluation of a resource for Titac North has not
been undertaken.

The Mineral Resource for the Titac
South deposit at a cut-off grade of 8% TiO2includes 45.1 million
tonnes at an average grade of 15.0% TiO2. Based on the assumption that all Ti is
found within ilmenite, the contained ilmenite in the Mineral Resource includes
12.8 million tonnes at an average grade of 28.5% ilmenite. While not quantified
here, the potential for extraction of iron from magnetite exists and would
provide an upside to the project. As well, vanadium may be of economic interest,
although it has not been significantly analyzed by SRK.

Recommendations

The Project Area is at an early
exploration stage and merits additional work. The drilling program conducted in
2010 and 2011 by CIOUS has confirmed strong titanium-iron-oxide mineralization
at the Project Area, and determined that the Project Area contains at least two
OUIs with large zones of titanium-iron-oxide mineralization (Titac North and
Titac South). The Titac South intrusion was extensively drilled by CIOUS in 2010
and 2011, and has been fairly well defined by this drilling. A modest in-fill
drilling program is recommended at Titac South to further define contacts with
country rock, and to fill-in local gaps within the intrusion. Ore mineral
speciation and metallurgical/beneficiation studies, as well as a preliminary
economic assessment, should also be conducted SRK recommends the following work
and expenditures:

| |  | An in-fill drilling program consisting of 6 diamond drill
      holes and ~1,800 m of core is recommended;                                                                                                                                                                                               
| | - | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | A petrographic and mineral chemistry study of typical
      oxide and sulfide mineralization present at Titac should be conducted to
      identify the specific oxide and sulfide minerals present, and their
      elemental make-up;                                                                  
| |  | Metallurgical test work in conjunction with the
      mineralogical studies, to assist with better understanding of ilmenite and
      magnetite recovery, project economic analysis: 100 kg composite from
      sample coarse rejects should be collected that represents average
      TiO2grades; and
| |  | A preliminary economic assessment should be conducted.                                                                                                                                                                                                                                                   

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

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Table iii: Estimated Cost for the
Exploration Program Proposed for the Titac Project

Recommendation
      Estimated Cost (US$)Titac South in-fill drilling (6 holes/1,800 m @ $180/m*)
    324,000Petrographic and mineral chemistry study
    20,000Metallurgical testing
    50,000Preliminary economic assessment study
    100,000TOTAL
    494,000


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

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Table of Contents

**Important Notice**
      1**Executive Summary**
      2Property Description and Location
      2Accessibility, Climate, Local Resources, Infrastructure and
        Physiography
      2History
      3Geological Setting and Mineralization
      3Exploration and Drilling
      3Sample Preparation, Analyses and Security
      4Data Verifications
      4Mineral Processing and Metallurgical Testing
      4Mineral Resource Estimates
      5Interpretation and Conclusions
      6Recommendations
      7**Table of Contents**
      9**List of Tables**
      12**List of Figures**
      121
      Introduction and Terms of Reference
      151.1
      Work Program
      151.2
      Basis of Technical Report
      161.3
      Qualifications of SRK and SRK Team
      161.4
      Site Visit
      161.5
      Acknowledgement
      171.6
      Declaration
      172
      Reliance on Other Experts
      183
      Property Description and Location
      193.1
      Mineral Tenure
      203.2
      Titac Interest
      213.3
      Permits and Authorization
      233.4
      Environmental Considerations
      234
      Accessibility, Climate, Local Resources, Infrastructure
        and Physiography
      244.1
      Accessibility
      244.2
      Local Resources and Infrastructure
      244.3
      Climate
      254.4
      Physiography
      265
      History
      275.1
      Titaniferous Iron Oxide Mineralization in the Duluth Complex
      275.2
      Titac Property
      275.2.1
      Historic Titac and OUI Metallurgical Analysis
      286
      Geological Setting and Mineralization
      306.1
      Regional Geology
      306.2
      Property Geology
      326.3
      Geology of the Titac Property
      32


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6.4
      Mineralization at Titac
      377
      Deposit Types
      398
      Exploration
      419
      Drilling
      439.1
      Drilling Results
      4510
      Sample Preparation, Analyses, and Security
      4710.1
      Sampling Method and Approach
      4710.2
      Drill Core and Sample Interval Preparation
      4710.3
      Sample Collection and Preparation
      4810.4
      Sample Preparation, Analyses and Security
      4910.5
      Sample Analysis
      4910.6
      Sample Security
      5010.7
      Quality Assurance and Quality Control Programs
      5010.8
      SRK Comments
      5211
      Data Verification
      5311.1
      Quality Control Results
      5311.2
      Verifications by Cardero
      5911.3
      Verifications by SRK
      5911.3.1
      Site Visit
      6011.3.2
      Verifications of Analytical Quality Control Data
      6011.3.3
      Independent Verification Sampling
      6011.3.4
      Independent Assay Verification
      6112
      Mineral Processing and Metallurgical Testing
      6212.1
      Recent Metallurgical Testwork
      6213
      Mineral Resource Estimates
      6313.1
      Introduction
      6313.2
      Resource Estimation Procedures
      6313.3
      Resource Database
      6313.4
      Solid Body Modelling
      6413.5
      Specific Gravity
      6613.6
      Compositing
      6613.7
      Capping
      6713.8
      Statistical Analysis and Variography
      6713.8.1
      Sample and Composite Statistics
      6713.8.
      Variography
      7113.9
      Block Model and Grade Estimation
      7313.9.1
      Grade Interpolation
      7313.9.2
      Specific Gravity Interpolation
      7313.10
      Model Validation
      7313.11
      Mineral Resource Classification
      7713.12
      Mineral Resource Statement
      7713.13
      Grade Sensitivity Analysis
      7913.14
      Mineral Resource Risks
      8114
      Adjacent Properties
      8215
      Other Relevant Data and Information
      8316
      Interpretation and Conclusions
      84


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|17 | Recommendations | 86
|-- | --------------- | --
|   |                 |   
|18 | References      | 87

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List of Tables

|Table
      i: Mineral Resource Statement*, Titac Project, Minnesota, USA, SRK
      Consulting (Canada) Inc, effective date, January 19, 2012    | 6 
|------------------------------------------------------------------------------------------------------------------------------------------------- | --
|Table
      ii: Summary of Titac Project ilmenite content within the Mineral Resource                                                             | 6 
|Table
      iii: Estimated Cost for the Exploration Program Proposed for the Titac
      Project                                                  | 8 
|Table
      3-1: Mineral Tenure Information                                                                                                       | 22
|Table
      4-1: Average monthly temperatures and precipitation for the Hoyt Lakes,
      Minnesota area (data from weather.com)                  | 25
|Table
      9-1: Contemporary and historic drilling at the Titac property                                                                         | 44
|Table
      10-1: Analytes and Ranges of ALS Laboratory Group sample analysis method
      ME- ICP06                                              | 49
|Table
      10-2: Analytes and Ranges of ALS Laboratory Group sample analysis method
      ME- 4ACD81                                             | 49
|Table
      10-3: Analytes and Ranges of ALS Laboratory Group sample analysis method
      ME- MS81                                               | 50
|Table
      11-1: Summary of Analytical Quality Control Data Produced By Cardero on
      the Project, 2010/11                                    | 60
|Table
      11-2: Assay Results for Verification Samples Collected SRK on the Titac
      Project.                                                | 61
|Table
      13-1: Summary of Titac drill hole data                                                                                                | 64
|Table
      13-2: Statistical Summary of Database Assay Results for Titac South                                                                   | 64
|Table
      13-3: Statistical Summary of Database Specific Gravity Results for Titac
      South                                                  | 64
|Table
      13-4: Block model location and setup                                                                                                  | 73
|Table
      13-5: Modelled semi-variograms for Titac South Pyroxenite Domain                                                                      | 75
|Table
      13-6: Search ellipse parameters for Titac South Domains                                                                               | 75
|Table
      13-7: Search ellipse parameters for Titac South Domains                                                                               | 75
|Table
      13-8: Assumptions Considered for Conceptual Open Pit Optimization.                                                                    | 78
|Table
      13-9: Mineral Resource Statement*, Titac Project, Minnesota, USA, SRK
      Consulting (Canada) Inc, effective date, January 19, 2012 | 79
|Table
      13-10: Summary of Titac Project ilmenite content within the Mineral
      Resource                                                    | 79
|Table
      13-11: Global Block Model Quantities and Grade Estimates*, Titac Project
      at Various cut-off Grades                              | 80
|Table
      17-1: Estimated Cost for the Exploration Program Proposed for the Project.                                                            | 86

List of Figures

|Figure
      3.1: Location of the Titac property                                                        | 19
|------------------------------------------------------------------------------------------------------- | --
|Figure
      3.2: Titac Property boundary with drill collar locations                                   | 20
|Figure
      5.1: Map showing the locations of historic diamond drill holes on the
      Titac property | 28

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|Figure
      6.2: Geologic Map of northeastern Minnesota                                                                                                                                                                             | 31
|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------ | --
|Figure
      6.3: Magnetic map of the Project Area                                                                                                                                                                                   | 33
|Figure
      6.4: Rock classification scheme for Duluth Complex rocks, after Severson
      and Hauck, 1990                                                                                                                          | 35
|Figure
      6.5: Schematic cross-section through the Titac Oxide-bearing Ultramafic
      Intrusion (Titac South)                                                                                                                   | 36
|Figure
      6.6: Schematic cross-section through the Titac Oxide-bearing Ultramafic
      Intrusion (Titac North)                                                                                                                   | 37
|Figure
      8.1: Re-interpretation of 1967 ground magnetic data, confirms the presence
      of multiple titaniferous-iron oxide-bearing intrusions at Titac, including
      the two main intrusions (Titac North and Titac South) | 42
|Figure
      11.1: Blank analytical results over time for Pokegama Quartzite Blank
      samples submitted with Titac deposit samples                                                                                                | 53
|Figure
      11.2: Scatterplot graph of TiO2data for quarter core field
      duplicates for the Titac Project                                                                                                                       | 54
|Figure
      11.3: Half Relative Deviation Plot of TiO2data for quarter
      core field duplicates for the Titac Project                                                                                                            | 54
|Figure
      11.4: Ranked Half Absolute Relative Deviation Plot of TiO2data
      for quarter core field duplicates for the Titac Project                                                                                            | 55
|Figure
      11.5: Scatterplot graph of TiO2data for preparation duplicates
      for the Titac Project                                                                                                                              | 55
|Figure
      11.6: Half Relative Deviation Plot of TiO2data for preparation
      duplicates for the Titac Project                                                                                                                   | 56
|Figure
      11.7: Ranked Half Absolute Relative Deviation Plot of TiO2data
      for preparation duplicates for the Titac Project                                                                                                   | 56
|Figure
      11.11: Scatterplots presenting analytical umpire (check) assays versus
      original assay results for Fe2O3(left) and
      TiO2(right) data                                                                          | 59
|Figure
      13.2 Titac South 3-D model domains                                                                                                                                                                                      | 66
|Figure
      13.3 Histogram of Sample Lengths                                                                                                                                                                                        | 67
|Figure
      13.4: Histogram of composite TiO2Assay samples within the
      Pyroxenite Domain                                                                                                                                       | 68
|Figure
      13.5: Histogram of composite TiO2Assay samples within the
      Peridotite Domain.                                                                                                                                      | 68
|Figure
      13.6: Histogram of composite TiO2Assay samples within the
      Mixed Domain                                                                                                                                            | 69
|Figure
      13.7: Histogram of composite Fe2O3Assay samples
      within the Pyroxenite Domain                                                                                                                                      | 70
|Figure
      13.8: Histogram of composite Fe2O3Assay samples
      within the Peridotite Domain                                                                                                                                      | 70
|Figure
      13.9: Histogram of composite Fe2O3Assay samples
      within the Mixed Domain                                                                                                                                           | 71
|Figure
      13.10: Modelled directional and down hole semi-variograms for the
      Pyroxenite Domain                                                                                                                               | 72
|Figure
      13.11: Scatter plots showing correlation between OK, ID2 and average
      composite TiO2and Fe2O3sample grades
      for Pyroxenite Domain                                                                             | 76
|Figure
      13.12: Scatter plots showing correlation between OK, ID2 and average
      composite TiO2and Fe2O3sample grades
      for Peridotite Domain                                                                             | 76

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|Figure
      13.13: Scatter plots showing correlation between OK, ID2 and average
      composite TiO2and Fe2O3sample grades
      for Mixed Domain | 77
|--------------------------------------------------------------------------------------------------------------------------------------------------- | --
|Figure
      13.14: Grade Tonnage Curves for the Titac Project                                                                                      | 80

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|1 | Introduction and Terms of
  Reference                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
|- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
|  | This technical report for the Titac Project (the
      Project), located in Minnesota, USA, has been prepared for Cardero
      Resource Corp. (Cardero or the Company). Cardero is a mineral
      exploration company with corporate headquarters in Vancouver, B.C.,
      Canada, and is listed on the Toronto Stock Exchange and the NYSE-Amex
      Stock Exchange. The Project interests are held by Cardero Iron Ore (USA)
      Inc. (CIOUS), a wholly owned indirect subsidiary of Cardero, and work on
      the Project is carried on through Cardero Iron Ore Management (USA) Inc.,
      an indirectly wholly owned subsidiary of Cardero.
|  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
|  | This report relies on historical data collected from the
      Minnesota Department of Natural Resources and other governmental sources,
      publicly available information, the underlying land owners of the Project
      and personal communications with geologists and other professionals active
      in the area. In addition, this report incorporates data from drill testing
      of the land making up the Project (Project Area) commissioned by Cardero
      in 2010 and 2011.                                                                                                                                                              
|  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
|  | The Project Area is located in northeastern Minnesota
      near Aurora (Figure 1.1). It represents one of the numerous oxide
      ultramafic intrusions (OUI) hosted by the Duluth Complex, which feature
      strong titaniferous-iron oxide mineralization. Exploration of the property
      is at an early stage. At the Project Area, 38 diamond drill holes have
      been completed: six by United States Steel Corp. dating to the late
      1960s, and 32 by Cardero in 2010 and 2011.                                                                                                                                                          
|  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
|  | In July 2009, Cardero commissioned SRK Consulting
      (Canada) Inc. (SRK) to visit the property and prepare a geological and
      Mineral Resource model for the Project. The services were rendered between
      July 2009 and January 2012, leading to the preparation of the Mineral
      Resource Statement, reported herein.                                                                                                                                                                                                                                                                                                                         
|  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
|  | This technical report documents a Mineral Resource
      Statement for the Project prepared by SRK. It was prepared following the
      guidelines of the Canadian Securities Administrators National Instrument
      43-101 (NI 43-101) and Form 43-101F1. The Mineral Resource Statement
      reported herein was prepared in conformity with generally accepted CIM
      Estimation of Mineral Resources and Mineral Reserves Best Practice
      Guidelines.                                                                                                                                                                                         

|1.1 | Work Program                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
|--- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
|    | The Mineral Resource Statement reported herein is a
      collaborative effort between Cardero and SRK personnel. The exploration
      database was compiled and maintained by Cardero, and was audited by SRK.
      The geological model and outlines for the OUI mineralization were
      constructed by SRK from drill hole logs provided by Cardero. In the
      opinion of SRK, the geological model is a reasonable representation of the
      distribution of the targeted mineralization at the current level of
      sampling. The geostatistical analysis, variography and grade models were
      completed by SRK during the months of September and December,
  2011.
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
|    | The Mineral Resource Statement reported herein was
      prepared in conformity with generally accepted CIM Exploration Best
      Practices and Estimation of Mineral Resource and Mineral Reserves Best
      Practices guidelines. This technical report was prepared following the
      guidelines of the Canadian Securities Administrators NI 43-101 and Form
      43-101F1.                                                                                                                                                                                                                                                                                                
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
|    | The technical report was assembled in SRK Vancouvers
      office during January 2012.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 

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|1.2 | Basis of Technical Report                                                                                                                                                                                                                                                                                                                                                                      
|--- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|    |                                                                                                                                                                                                                                                                                                                                                                                                
|    | This report is based on information collected by SRK
      during a site visit performed between March 12 and March 13, 2010 and on
      additional information provided by Cardero throughout the course of SRKs
      investigations. Other information was obtained from the public domain. SRK
      has no reason to doubt the reliability of the information provided by
      Cardero.
|    |                                                                                                                                                                                                                                                                                                                                                                                                
|    | This technical report is based on the following sources
      of information:                                                                                                                                                                                                                                                                                                                  

| |  | Discussions with Cardero
      personnel;                  
| | - | -----------------------------------------------------------
| |  | Inspection of the Project Area,
      including drill core;
| |  | Review of exploration data
      collected by CIOUS; and   
| |  | Additional information from
      public domain sources.   

|1.3 | Qualifications of SRK and SRK Team                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
|--- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
|    | The SRK Group comprises over 1,000 professionals,
      offering expertise in a wide range of resource engineering disciplines.
      The SRK Groups independence is ensured by the fact that it holds no
      equity in any project and that its ownership rests solely with its staff.
      This fact permits SRK to provide its clients with conflict-free and
      objective recommendations on crucial judgment issues. SRK has a
      demonstrated track record in undertaking independent assessments of
      Mineral Resources and Mineral Reserves, project evaluations and audits,
      technical reports and independent feasibility evaluations to bankable
      standards on behalf of exploration and mining companies and financial
      institutions worldwide. The SRK Group has also worked with a large number
      of major international mining companies and their projects, providing
      mining industry consultancy service inputs.
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
|    | The resource evaluation work and the compilation of this
      technical report was completed by Darrell Farrow, M.Sc., Pr.Sci.Nat.,
      under the supervision of Mike Johnson, P.Geo. By virtue of their
      education, memberships to recognized professional associations and
      relevant work experience, Darrell Farrow and Mike Johnson are independent
      Qualified Persons as this term is defined by NI43-101.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
|    | Dr. Wayne Barnett, Pr.Sci.Nat, a Principal with SRK,
      reviewed drafts of this technical report prior to their delivery to
      Cardero as per SRK internal quality management procedures. Dr. Wayne
      Barnett visited the project in July 2009.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
|1.4 | Site Visit                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
|    | In accordance with NI 43-101 guidelines, Mike Johnson of
      SRK visited the Project on March 12 and 13, 2010, accompanied by Chris
      White, Senior Site geologist for CIOUS. In addition, SRKs Wayne Barnett
      had previously visited the site in July 2009 accompanied by Carderos
      Tansy Parsons- OConnor.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
|    | The purpose of the most recent site visit was to review
      the digitalization of the exploration database and validation procedures,
      review exploration procedures, define geological modelling procedures,
      examine drill core, interview project personnel, and to collect all
      relevant information for the preparation of a Mineral Resource model and
      the compilation of a technical report. During the visit, particular
      attention was given to the procedures being implemented during drilling,
      logging and sampling.                                                                                                                                                                                                                                                                                                                                                                                                      

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|    | The site visit was completed while drilling was taking
      place on the Project. SRK staff was able to observe drilling, surveying,
      logging, sampling and sample handling, and shipping.                                                                                                                                                                                                                                                                                        
|--- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
|    | SRK was given full access to relevant data and conducted
      interviews of Cardero/CIOUS personnel to obtain information on the past
      exploration work, in order to understand procedures used to collect,
      record, store and analyze historical and current exploration
  data.                                                                                                                                                                                            
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
|1.5 | Acknowledgement                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
|    | SRK would like to acknowledge the support and
      collaboration provided by Cardero/CIOUS personnel for this assignment,
      particularly Chris White and Tansy OConnor-Parsons. Their collaboration
      was greatly appreciated and instrumental to the success of this
      project.                                                                                                                                                                                          
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
|    | As well, the authors would like to thank SRKs Dr. Gilles
      Arseneau, P.Geo., Marek Nowak, P.Eng, and Dr. Adrian Dance for their
      contributions, reviews and advice during analysis and reporting of this
      Mineral Resource.                                                                                                                                                                                                                                              
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
|1.6 | Declaration                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
|    | SRKs opinion, contained herein and effective January 19,
      2012, is based on information collected by SRK throughout the course of
      SRKs investigations, which in turn reflect various technical and economic
      conditions at the time of writing. Given the nature of the mining
      business, these conditions can change significantly over relatively short
      periods of time. Consequently, actual results may be significantly more or
      less favourable.
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
|    | This report may include technical information that
      requires subsequent calculations to derive sub- totals, totals and
      weighted averages. Such calculations inherently involve a degree of
      rounding and consequently introduce a margin of error. Where these occur,
      SRK does not consider them to be material.                                                                                                                                                  
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
|    | SRK is not an insider, associate or an affiliate of
      Cardero, and neither SRK nor any affiliate has acted as an advisor to
      Cardero, its subsidiaries, or its affiliates in connection with the
      Project. The results of the technical review by SRK are not dependent on
      any prior agreements concerning the conclusions to be reached, nor are
      there any undisclosed understandings concerning any future business
      dealings.                         

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|2 | Reliance on Other Experts                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
|- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
|  | In preparing this report, SRK has relied on information
      provided by Cardero for matters pertaining to environmental,
      socioeconomic, and permitting issues. SRK has not performed an independent
      verification of land title and tenure as summarized in Section 3 of this
      report. SRK did not verify the legality of any underlying agreement(s)
      that may exist concerning the permits or other agreement(s) between third
      parties, but have relied on preliminary title work carried out by
      Minnesota counsel to Cardero.
|  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
|  | SRK was informed by Cardero that there are no known
      litigations potentially affecting the Project.                                                                                                                                                                                                                                                                                                                                                                                                                                                           

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|3 | Property Description and Location                                                                                                                                                                                               
|- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|  |                                                                                                                                                                                                                                 
|  | The Project Area is located in northeastern Minnesota,
      near Aurora (Figure 3.1). The Project Area is located in St. Louis County,
      Township 55N, Range 14W, Section 34, and Township 54N, Range 14W, Section
      3.



(image sourced from the Minnesota
Department of Transportation)

Figure 3.1: Location of the
Titac property

The Project Area is approximately
centered at: (Coordinate system: Universal Trans Mercator, Zone 15 North, North
American 1983 Datum) 568,000 m East, 5,228,000 m North. CIOUS has a mineral
lease on 1402 acres (567 hectares) at the Project Area.

Properties in Minnesota are defined
using the Township and Range, Section, quarter-section, quarter-section,
quarter-section method. Sections are marked by corner posts; however, corner
posts are not always present. CIOUS has conducted a geographical location survey
on the Project Area. This survey mainly focused on locating historical drill
collars and the original sampling grid cut baseline. An in-depth property
boundary survey has not been completed; however, the property boundaries have
been located on aerial photographs (Figure 3.2) .

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|    | Figure 3.2: Titac Property boundary with drill collar
      locations                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
|--- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
|    | Known zones of mineralization at the Project Area are
      approximately centered at: (Coordinate system: Universal Trans Mercator,
      Zone 15 North, North American 1983 Datum), 568,130 m East, 5,228,310 m
      North (Titac North); and 568,000 m East, 5,227,500 m North (Titac South).
      There have been no commercial mining operations at the Project
  Area.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
|3.1 | Mineral Tenure                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
|    | Minerals in Minnesota are typically held as fee simple
      interests; either as part of the overall land estate or as a separate
      property interest. In many cases, ownership of the mineral estate has been
      severed from the surface estate, and may be held by a different owner.
      Although title to the mineral estate is often held by the State of
      Minnesota or the US Federal government, there are significant areas of
      private mineral ownership in Minnesota. Thus, there is often split-estate
      ownership, where the person or entity owning the surface may be, and often
      is, different than the person or entity that owns the mineral rights.
      Additionally, mineral rights themselves may also be split (e.g. the
      hydrocarbon rights owner may be different than the non-hydrocarbon mineral
      rights owner). United States law indicates that in split-estate
      situations, mineral rights are the dominant estate and have precedence
      over all other property rights (including surface). However, the mineral
      rights owner must have due regard for the surface estate and only
      occupy/use those portions of the surface that are necessary for mineral
      development.
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
|    | Land holdings at the Project Area are a split-estate
      wherein St Louis County (the County) holds the surface rights, and a
      private mineral owner holds the mineral rights. CIOUS has entered an
      authorization agreement with the County dated June 11, 2008, pursuant to
      which CIOUS is authorized, on a non-exclusive basis, to enter upon the
      surface lands and conduct drilling operations, subject to compliance with
      applicable laws and the Countys approval of the
specific drilling plans of CIOUS. CIOUS pays the County a fixed
      fee per bore hole drilled, and has agreed to carry out all required
  reclamation and indemnify, save and hold harmless the County.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                

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|3.2 | Titac Interest                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
|--- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
|    | CIOUS has entered into a mining lease with a private
      mineral owner over an aggregate of 1,402 acres (567 hectares) of mineral
      rights located in sections 2 and 3 of Township 54 North and sections 34
      and 35 of Township 55 North, all Range 14 West, St. Louis County,
      Minnesota (Table 1). The mining lease covers any mineral substance of a
      metalliferous nature, including those intermingled or associated materials
      or substances, recovered from each tonne of crude ore for the purpose of
      extracting iron (essentially, iron, titanium and vanadium). All other
      minerals are reserved to the private mineral owner.                                                                                                                                                                                                                                                                                            
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
|    | The initial term of the mining lease is for a period of
      20 years, commencing July 1, 2009, provided that the lease may be extended
      for an additional 5 year period if CIOUS gives notice at least 180 days
      prior to the end of such term, and has either paid to the owner at least
      USD $10,000,000 in royalties or pays to the owner the difference between
      the royalties actually paid and USD $10,000,000. In like manner, the lease
      can be extended for up to three additional 5 year terms, provided that the
      appropriate notice is given and that CIOUS has paid to the owner at least
      USD $5,000,000 in royalties during the previous 5 year term (or pays any
      deficiency in cash). CIOUS can terminate the lease at any time on sixty
      days' notice. CIOUS is required to make a bonus payment of USD $2,500 upon
      entering into the lease, plus yearly rental payments under the lease
      of:


    the greater of USD $2,500 and USD
      $2/acre in years one and two;
    the greater of USD $5,000 and USD
      $5/acre in years three through five;
    the greater of USD $7,500 or USD
      $10/acre in years six through ten;
    the greater of $USD 10,000 or USD
      $25/acre in years eleven through fifteen; and
    the greater of USD $50,000 or USD
      $50/acre in years sixteen through twenty.


These rental payments cease upon the
commencement of commercial production, following which yearly minimum royalty
payments of USD $200,000 apply. Following the commencement of commercial
production, CIOUS is required to pay a royalty of USD $0.85 per ton of crude
iron ore (adjusted quarterly based on variation in the quoted price of certain
iron ore products) and 5% of the net return values (calculated in accordance
with the provisions of the lease) for any other products produced (subject to a
minimum royalty of USD $0.02 per pound of titanium). CIOUS is required to incur
minimum work expenditures of USD $50,000 prior to the second anniversary of the
lease, and USD $50,000 per year thereafter (any deficiency being payable in cash
to the owner). Up to October 31, 2011, CIOUS had incurred an aggregate of USD
$1,802,121 in expenditures and made all of the required rental payments to July
1, 2011.

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Table 3-1: Mineral Tenure
Information



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|3.3 | Permits and Authorization                                                                                                                                                                                                                                    
|--- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|    |                                                                                                                                                                                                                                                              
|    | All licenses, permits, and registrations required to
      conduct exploratory drilling in Minnesota have been obtained by CIOUS, and
      are up to date. The required licenses, permits, and registrations that
      CIOUS has obtained are listed below:

| |  | Licensed Exploratory Borer with the Minnesota Department
      of Natural Resources (MDNR); License number: A10-0102 (annual renewal);                                                                                                         
| | - | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | Licensed Explorer Company with the Minnesota Department
      of Health (MDH); License number 2850 (annual renewal);                                                                                                                           
| |  | Licensed Explorer Responsible Individual with the
      Minnesota Department of Health: License number: 2841 (Chris White;
      lifetime license);                                                                                            
| |  | Permit for drilling in wetlands with the United States
      Army Corp of Engineers for both properties (Permit expires on August 22,
      2011);                                                                                             
| |  | Permit with the St. Louis County highway department to
      install temporary gravel access points along St. Louis County highway 4 to
      access specific areas of the Project Area (renewed as required); and                             
| |  | Storm Water Pollution Prevention Plan Permit (SWPPP) with
      the Minnesota Pollution Control Agency for each property (permit open
      until project completion, must notify MPCA upon completion of project for
      closure of permit).

|3.4 | Environmental Considerations                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
|--- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
|    | MDH regulations require that CIOUS must file a drill plan
      with the MDNR and the MDH at least 14 days prior to drilling operations,
      and the Explorer Responsible Individual must file well abandonment forms
      with the MDNR and the MDH within 30 days of completing each drill hole,
      and that exploratory bore holes must be sealed upon completion of drilling
      in compliance with MDH rules and regulations. Upon filling an initial
      drill plan CIOUS may begin drilling operations after 14 days, and may
      revise, or expand the drill plan by notifying the MDNR and MDH within 1
      day of executing the new drill plan.
      MPCA regulations state that any
        ground disturbance greater than 1 acre requires the development, approval,
        and institution of a SWPPP. The plan must be drafted by a person, or
        persons certified by the MPCA, and a certified SWPPP site manager must
        oversee implementation of the plan, and application of the plan throughout
        the duration of the project. This plan must be modified as the project
        progresses to reflect any change in operations that warrant additional or
        different pollution prevention measures. CIOUSs consulting geologist,
        Chris White, has obtained the proper certification with the MPCA to draft
        the SWPP, and to act as the SWPPP site manager; and Warren Johnson, a
        CIOUS contractor, is a certified SWPPP contractor with the MPCA. Chris
        White has been retained by CIOUS to oversee the overall and day-to-day
        project operations, and Warren Johnsons company has been retained to
        install all drill trails and drill pads at the Project
    Area.

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|4 | Accessibility, Climate, Local Resources,
      Infrastructure and Physiography
|- | ------------------------------------------------------------------------------

|4.1 | Accessibility                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
|--- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
|    | Accessibility is excellent, with the Project Area located
      along a paved county highway.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
|    | The Project Area is located approximately 24.5 miles
      (39.4 km) south of Aurora, Minnesota. CIOUS is leasing a large portion of
      an old school building (Cina Building, 200 S. 2ndSt. E.,
      Aurora, MN 55705) in Aurora, Minnesota that serves as a field office, a
      drill core logging, preparation, and sampling facility, and a drill core,
      coarse sample, and sample pulp storage facility.                                                                                                                                                                                                                                                                                                              
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
|    | To access the Project Area from Aurora, MN: Beginning at
      the intersection between St. Louis County highway 99 and St. Louis County
      highway 110, travel south on St. Louis County highway 99 for 11.0 miles
      (17.7 km). Turn right, traveling west on St. Louis County highway 16 for
      2.2 miles (3.5 km). Turn left, traveling south on St. Louis County highway
      4 for 16.6 miles (26.7 km) to Marshall Trail.                                                                                                                                                                                                                                                                                            
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
|4.2 | Local Resources and Infrastructure                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
|    | The population of Aurora, Minnesota is approximately
      1,850, and the nearby city of Hoyt Lakes, Minnesota (5 miles east of
      Aurora) has a population of approximately 2,000 people. Duluth, Minnesota
      (pop. 84,419) is located approximately 30 miles (48.3 km) south of the
      Project Area. Virginia, Minnesota (pop. 8,481) is located approximately 70
      miles (112.7 km) west-northwest of the Project Area.                                                                                                                                                                                                                                                                                              
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
|    | Northeastern Minnesota has been supporting mining
      activities since the Soudan mine opened in 1882. Currently, northeastern
      Minnesota facilitates six taconite (iron ore) mines located approximately
      within 100 miles (161 km) west-northwest of the Project Area in the Iron
      Range of Minnesota in the Virginia, and Hibbing, Minnesota area. When at
      full production, the taconite (iron ore) mining industry directly employs
      nearly 4,000 people in northeastern Minnesota.                                                                                                                                                                                                                   
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
|    | The infrastructure in northeastern Minnesota related to
      mining activities is excellent with low cost electricity, railroads, paved
      state and county highways, international shipping ports, mining
      professionals, mining vendors, and trained labor all readily available.
      International shipping ports are located along the north shore of Lake
      Superior including Duluth/Superior, Silver Bay, Taconite Harbor, and Two
      Harbors with linked rail systems to all.                                                                                                                                                                                                                               
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
|    | Northeastern Minnesota is easily accessible through air
      travel with three airports located within 60 miles (96.5 km) of Hoyt
      Lakes, Minnesota including the Eveleth Virginia Municipal Airport located
      in Virginia, Minnesota; the Range Regional Airport (RRA), located in
      Hibbing, Minnesota; and the Duluth International Airport (DIA), located
      in Duluth, Minnesota. Commercial flights are offered by Delta Airlines at
      RRA and DIA, and also by Allegiant Air at DIA. The Minneapolis/St. Paul
      airport is located approximately 200 miles (321.7 km) south of Hoyt Lakes,
      Minnesota. Connecting flights are available from Minneapolis/St. Paul to
      both DIA, and RRA.
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
|    | The Laskin Energy Center is located near Hoyt Lakes,
      Minnesota (less than 25 miles, or 40 km, from the Project Area), providing
      110 megawatts of electric service. The DM&IR (Canadian
  National) railway services the Laskin Energy Park, located next to
      the Laskin Energy Center. The Laskin Energy Park also provides natural
  gas, water and waste water, and industrial steam power services.                                                                                                                                                                                                                                                                                                               

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|    | The Erie
        plant (formerly owned by LTV Steel Mining Company and currently owned by
        Polymet Mining Corporation), a large crushing, grinding, and milling
        facility, is located approximately 14 miles (22.5 km) west-northwest of
        the Aurora. The Erie plant was built in the 1950s, and processed
        approximately 100,000 tons of taconite (low-grade iron) ore per day until
        2001 when LTV Steel Mining Company filed for bankruptcy. Polymet intends
        to use the Erie plant to process the copper- nickel-platinum group element
        ore from its NorthMet deposit, and estimates that the plant will provide
    400 full-time jobs.
|--- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
|    | The Steel Dynamics, Inc., Mesabi Nugget plant is located
      just north of Hoyt Lakes, Minnesota. Mesabi Nugget uses an innovative
      direct-reduction process to produce pig-iron nuggets. Production began at
      Mesabi Nugget in December of 2009, and the plant has a capacity to produce
      500,000 tonnes of pig-iron nuggets a year. The Mesabi Nugget plant
      currently provides approximately 90 full- time jobs.                                                                                                                                                                                                                                                      
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
|4.3 | Climate                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
|    | The climate in northeastern Minnesota is mid-continental.
      Winter conditions usually begin in mid- December and last until mid-March,
      with frozen ground beginning in late-December to early-January. The spring
      thaw usually begins in mid-March to late-April, with stable, dry
      spring-summer-fall conditions occurring from late-April to mid-December.
      Table 4.1 below displays the monthly average temperatures and
      precipitation for the Hoyt Lakes area.                                                                                                                                                                                             

Table 4.1: Average monthly temperatures and
precipitation for the Hoyt Lakes, Minnesota area (data from weather.com)

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


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|4.4 | Physiography                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
|--- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
|    | Topographic relief on the Project
      Area is generally low, and the surface is flat-laying.
      Elevations range between 470 m and 490 m. The
      ground cover isa mixture of Palustrine, forested
      wetlands (Cowardin classification system), and
      higher dry forested ground (Figure 4.1). Bug creek
      runsthrough the Project Area. Overburden,
      consisting of glacial till composed of
      pebbles, cobbles,and boulders within asand
      and clay matrix, covers much ofthe property. Depth
      to bedrock is generally between 20 m and 30
      m.



Figure 4.1: Typical Landscape in the
Project Area

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|5   | History                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
|--- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
|    | Northeastern Minnesota has a strong history of iron and
      taconite mining, as well as copper, nickel, and platinum group element
      exploration. Titaniferous iron deposits were first discovered in
      northeastern Minnesota in the mid to late 1800s in the northern portion
      of the Duluth Complex. Additional titaniferous iron deposits were
      discovered in the southern part of the Duluth Complex in the mid to late
      1900s during reconnaissance exploration for copper and nickel.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
|5.1 | Titaniferous Iron Oxide Mineralization in the Duluth
      Complex                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
|    | In 1967 several companies began exploring magnetic
      anomalies delineated from state geophysical surveys in the southern part
      of the Duluth Complex. Exploration drilling targeted these magnetic
      anomalies searching for copper-nickel sulfide mineralization. While
      copper-nickel sulfide mineralization was intersected in many drill holes,
      the magnetic anomalies were largely composed of titaniferous-iron oxide
      mineralization. At the time these intrusions were generally thought to be
      of little importance, because copper-nickel grades were too low to have
      economic significance during that time period. However, several
      titaniferous iron oxide intrusions have been explored in detail. The
      following summarizes the known history of the Project Area.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
|5.2 | Titac Property                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
|    | Exploration of the Project Area, historically known as
      Section 34, has been limited, though several exploratory bore holes and
      geophysical surveys have been completed. United States Steel Corp. (USSC)
      drilled six holes into the Section 34 OUI following a ground magnetic
      survey conducted in the mid 1960s by USSC (Figure 5.1). Exploration of
      Section 34 was part of a larger exploration program in which USSC drilled
      holes into numerous magnetic anomalies, delineated during state run
      airborne geophysical surveys, proximal to the western contact of the
      southern portion of the Duluth Complex. USSC was exploring for
      copper-nickel sulfides, which were intersected, however, the magnetic
      anomalies were created by titanium-iron oxide mineralization. Three of the
      six initial drill holes at Titac (Section 34) intersected strong
      titanium-iron mineralization throughout their length, while the remaining
      three holes intersected various apophyges of titanium-iron mineralization
      (Severson, 1995). To the best of the authors knowledge no other
      exploration has been conducted at the Project Area (Section 34), until the
      recent (2010-2011) exploration by CIOUS, in which 32 boreholes were
      completed at the property.

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|      | Figure 5.1: Map showing the locations of historic
      diamond drill holes on the Titac property                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
|----- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|      |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
|5.2.1 | Historic Titac and OUI Metallurgical
    Analysis                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
|      |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
|      | Metallurgical test work has been completed on a variety
      of OUI bodies including the Titac deposit itself.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
|      |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
|      | Testwork completed on Titac (then Section 34) was based
      upon composite samples collected from early drilling completed on Titac
      North. Tests were limited to Davis Tube testing to determine the fraction
      weight and chemical character of a magnetic fraction of crushed samples
      from drill core.
      Approximately 158 m (520 feet) of drill core was
        composited into two samples. The samples were crushed to minus 20 mesh and
        screened into two sizes at 150 mesh. Heavy liquid gravity concentrates
        were made, with the heavy concentrate further separated into magnetic and
    non/para- magnetic fractions.
|      |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
|      | Heavy liquid concentrates from these samples averaged 49
      % Fe and 27.5 % TiO2, compared to sample head grades of 42.7 %
      Fe and 22.5 % TiO2. Magnetic separation produced a non-mag
      concentrate of 45-47 % TiO2(Niles, H.B.,
  1971).                                                                                                                                                                                                                                                                                                                                                                                                                   

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The results of this work lead H.B.
Niles to recommend quantifying the Titac material in order to determine if
further testwork was warranted to further refine potential processing
characteristics. More detailed testwork was completed on the Longnose OUI
deposit, 40km north of Titac. This deposit is of a similar style to the Titac
deposit.

Three bulk samples weighing 600 kg, 39
tonnes and 60 tonnes respectively were collected by American Shield Corp
throughout the 1990s. The larger samples were collected from outcrop within the
western part of the Longnose deposit. A processing flow sheet was developed and
the sample was beneficiated by grinding, spiral separation, magnetic
concentration, and dry high tension concentration. The first full-scale pilot
plant run was made on October 3, 1994. (Coleraine Minerals, 1994).

Results of these larger scale tests
indicated that it was possible to scale up creation of an ilmenite concentrate
>45 % TiO2 as well as complete further beneficiation that results in a high
grade TiO2 product suitable for the pigment market. (CMRL, 1994, 1996).

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|6   | Geological Setting and
  Mineralization                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
|--- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
|6.1 | Regional Geology                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
|    | The Project Area is located within the Superior Province
      of the Canadian Shield. The regional basement rocks are composed of
      Archean granitoid intrusions, metasedimentary rocks, and metavolcanic
      rocks; and Paleoproterozoic sedimentary rocks. Mafic flows, mafic and
      felsic intrusives, and related interflow sedimentary rocks cut these
      basement rocks during the development of the Mesoproterozoic Midcontinent
      Rift System (MCR).                                                                                                     
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
|    | The Midcontinent Rift System stretches from Lake Superior
      to Iowa (Figure 6.1), and is largely buried by sediments; however MCR
      bedrock is relatively well exposed in the Lake Superior region. In
      northeastern Minnesota the MCR is dominantly composed of several groups of
      rocks including: the North Shore Volcanic Group (NSVG), the Beaver Bay
      Complex, and the Duluth Complex. The roof zone of the MCR is largely
      composed of NSVG lava flows, and the Duluth Complex is generally the
      intrusive equivalent of the NSVG lava flows.



Figure 6.1: Bouguer Gravity Anomaly
shows the Mid Continent Rift

Figure 6.1 shows the Bouger Gravity
Anomaly which extends from Lake Superior through Iowa, USA, (source
eo.umn.edu/mgs/nicegeo/pdfs/boug_grav.pdf)

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The multiple intrusions of the Duluth
  Complex occur within an arcing band from Duluth to near the Canadian border that
  is 270 km long and up to 40 km wide. In terms of areal exposure, it is the second largest mafic intrusive complex
on Earth after the Bushveld Complex of South Africa. The Duluth Complex is
typically subdivided into four intrusive series based on dominant lithology,
general age, and internal structure. In order of relative decreasing age, these
series are the felsic series, the early gabbroic series, the anorthositic
series, and the layered series (Miller et al., 2002). Field evidence suggests
that the layered series intruded into the anorthositic series, however U-Pd
dates obtained by Paces and Miller (1993) show that the anorthositic series and
the layered series are virtually identical in age. This indicates that the
layered series likely intruded into the anorthositic series when it was still
quite warm, and possibly semi-molten. The anorthositic series has not been
subdivided into individual intrusions; however the layered series has been shown
to consist of at least 12 distinct mafic layered intrusions (Miller et al.,
2002; Figure 6.2) .



Figure 6.2: Geologic Map of
northeastern Minnesota

Figure 6.2 displays the Duluth Complex
and associated formations with the layered series intrusions. Lithology codes
include: TI  Tuscarora intrusion, L1T  Lake One Troctolite, WLI  Wilder Lake
intrusion, SKI  South Kawishiwi intrusion, BEI  Bald Eagle intrusion, OLI 
Osier Lake intrusion, GLI  Greenwood Lake intrusion, PRI  Partridge River
intrusion, WMI  Western Margin intrusion, BLI  Boulder Lake intrusion, DLS 
Layered Series at Duluth (Miller et al. 2002).

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|6.2 | Property Geology                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
|--- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
|    | Several layered series intrusions host numerous OUIs in
      the Duluth Complex, including (from north to south) the Partridge River
      intrusion, the Western Margin intrusion, and the Boulder Lake intrusion.
      All known OUIs occur proximal to the western contact of the Duluth Complex
      in a straight line beginning just south of Babbitt, Minnesota, and ending
      just north of Duluth, Minnesota. Known OUI intrusions in the Duluth
      Complex include Section 17, Longear, Longnose, Section 22, Skibo, Water
      Hen, Section 34 (Titac), Boulder Creek, Boulder Lake North, and Boulder
      Lake South. Oxide Ultramafic intrusions cut the layered series intrusions,
      and are generally regarded as late occurring events in the development of
      the MCR. Geometrically, OUIs have various shapes and sizes including
      pipe-like, sheet-like, and funnel-like, and their emplacement may be
      structurally controlled (Severson, 1995).
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
|6.3 | Geology of the Titac Property                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
|    | Little was known about the Project Area at the time of
      CIOUSs acquisition of the property. There is no exposed bedrock on the
      property, as glacial till covers the area, and only six diamond drill
      holes had been drilled on the property prior to 2010. Everything that is
      known about the geology of the property comes from geophysical surveys,
      six historic diamond drill holes, and 32 holes drilled by CIOUS in 2010
      and 2011 (Figure 6.3).                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
|    | A ground magnetic survey conducted by USSC in the 1960s,
      and re-interpreted for Cardero by Quantec in 2010 demonstrates that the
      Titac intrusion consists of numerous strongly magnetic intrusions (Figure
      6.3). Drill core shows that the Titac intrusion is hosted by troctolite
      and augite troctolite of the Western Margin intrusion, and that there is
      also a large fraction of anorthositic rocks, which are likely inclusions,
      or roof pendants of the anorthositic series within the Western Margin
      intrusion.                                                                                                                                                                                                                                                                                                                                                                                                                                 

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Figure 6.3: Magnetic map of the Project
Area

Figure 6.3 shows ground magnetic data
re-interpreted 1967 USSC ground geophysical survey, showing survey, showing the
Titac North, and Titac South OUIs, as well as the six historic diamond drill
holes and 30 Cardero 2010 diamond drill holes on the property, and the location
of the cross-sections in figures 7-8 (through Titac South) and 7-9 (through
Titac North)

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There are two large intrusions at
Titac, herein referred to as Titac North and Titac South (Figure 6.3), with
numerous smaller intrusions to the west and northwest of the two main
intrusions. Titac North is approximately 500 m north of Titac South. Titac North
is approximately 600 m long, between 180 m and 330 m wide, and is at least 450 m
thick (the deepest vertical hole at Titac North measures 275 m in length, and
ends in titanium-iron oxide mineralization; however, diamond drill hole
TTC-005-2010 was an inclined hole that reached a depth of approximately 450 m.
Titac South is approximately 270 m by 260 m in dimension, and is at least 490 m
thick (the deepest vertical hole at Titac South measure 488 m in length, and
ends in titanium-iron oxide mineralization). None of the remaining intrusions at
Titac have been drilled.

The Titac intrusion or intrusions
dominantly consist of coarse-grained to pegmatitic pyroxenite and peridotite as
defined by the Severson and Hauck (1990) rock classification scheme for Duluth
Complex rocks (Figure 6.4), with lesser amounts of medium- to coarse-grained
dunite, and numerous zones of massive and semi-massive oxide (45-100%
titanium-iron oxide mineralization). Pyroxenite, peridotite, and dunite
typically contain 15-35% titanium-iron oxide mineralization. Locally, contacts
between the Titac OUI intrusions and the hosting country rock are marked by
fine- to medium-grained melatroctolite, which features sub-vertical serpentine
veining. Contacts between lithologies within the OUI, or OUIs can be sharp or
gradational, however they are usually sharp (cm to m).

Both Titac North and Titac South appear
to be vertical pipe-like intrusions, with complex sub-vertical sheet-like,
and/or zoned stratigraphies/lithological variations (Figures 6.5 and 6.6) . Both
Titac North and Titac South are open at depth.

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Figure 6.4: Rock classification scheme for Duluth Complex
rocks, after Severson and Hauck, 1990

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Figure 6.5: Schematic cross-section through the Titac
Oxide-bearing Ultramafic Intrusion (Titac South)

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Figure 6.6: Schematic cross-section through the Titac
Oxide-bearing Ultramafic Intrusion (Titac North)

|6.4 | Mineralization at Titac                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
|--- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
|    | Titaniferous-iron oxide mineralization at Titac consists
      of disseminated to net-textured, medium- to course-grained, magnetite and
      ilmentie with some fraction of titaniferous magnetite. It is quite
      difficult to tell the difference between titanium-rich mineralization and
      iron-rich mineralization in hand sample, however the general statement
      could be made that drill core exhibiting a dark-silvery color is
      ilmenite-rich, drill core exhibiting a dull-black color is rich in
      titaniferous magnetite, and drill core exhibiting a shiny-black color is
      magnetite-rich. Olivine-rich ultramafic rocks (peridotite, feldspathic
      peridotite, and dunite) host the majority of the titanium-iron oxide
      mineralization found in the Titac OUI, and will often be net-textured with
      oxide minerals interstitial to silicates. When mineralization is hosted by
      olivine-rich ultramafic rocks it is typically medium- to coarse-grained,
      disseminated to net- textured, and interstitial to silicate minerals.
      However, when the mineralization is hosted by pyroxenite, the oxide
      mineralization typically occurs as medium- to coarse-grained clumps or
      clots up to approximately 5 cm in size (typically 2-4
  cm).

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

Mineralization at Titac North appears to be vertically continuous, as
  historic diamond drill hole 26002 was drilled vertically near the center of
  Titac North (Figure 6.6), and encountered strongly mineralized pyroxenite, and
  massive and semi-massive oxide throughout its length (~275 m). Mineralization at
  Titac South also appears to be vertically continuous as CIOUS diamond drill hole
  TTC-019-2010 was drilled vertically near the center of the Titac South (Figure
  6.5) magnetic anomaly, and intersected strongly mineralized pyroxenite,
  peridotite, and numerous zones of massive and semi-massive oxide throughout its
  length (approximately 490 m). Titac North and Titac South appear to be somewhat
  laterally continuous as well, though there does seem to be anorthositic, locally
  basaltic, rarely sedimentary, and possibly troctolitic inclusions within both
  intrusions, and the lateral stratigraphy of both intrusions seems to be quite
  heterogeneous.

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|7 | Deposit Types                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
|- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
|  | Titaniferous iron oxide intrusions within the Duluth
      Complex were first discovered in 1867, approximately coincident with the
      discovery of the Mesabi Range iron ores (Winchell, 1897). Broderick (1917)
      was the first to classify the intrusions while working in the northern
      part of the Duluth Complex, subdividing them into 4 groups: A) inclusions
      of Gunflint Iron-Formation, B) gabbroic banded segregations, C) irregular
      late intrusions of titaniferous magnetite, and D) dike-like intrusions of
      titaniferous magnetite. Severson (1988), and Severson and Hauck (1990)
      recognized types 3 and 4 while working in the western and southern
      portions of the Duluth Complex and reclassified them together as OUIs,
      based on their ultramafic composition, high oxide content, and
      cross-cutting relationships to the layered series troctolitic intrusions
      that host them. Hauck et al. (1997) reclassified Brodericks (1917)
      subdivisions into three general types: Type 1, banded or layered,
      oxide-rich metasedimentary inclusions in mafic and ultramafic rocks; Type
      2, banded or layered oxide segregations (cumulates) in mafic rocks; and
      Type 3, discordant OUIs with semi- massive to massive oxide zones. The
      Titac intrusion is classified as Type 3 titaniferous iron oxide intrusion
      (Hauck et al. 1997) as described below.
|  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
|  | Type 3 titaniferous iron oxide intrusions in the Duluth
      Complex are somewhat similar to the ultramafic intrusions of the Bushveld
      Complex, the Stillwater Complex, and the Rio Jacare Intrusion of Brazil
      (Hauck et al. 1997). They are typically composed of coarse-grained to
      pegmatitic, oxide- bearing (>5% to 30% oxide minerals) pyroxenite,
      peridotite, and dunite, which contain lenses of semi-massive (>30% to
      90% oxide minerals) and massive oxide (>90% oxide minerals). OUIs in
      the Duluth Complex vary in size and shape, but generally seem to occur as
      sheet-like intrusions (sills), funnel-like intrusions, dike-like
      intrusions, or pipe-like intrusions. They can be zoned with numerous
      apophyses around a centralized ultramafic core. When they are zoned, they
      tend to feature pegmatitic pyroxenite generally surrounding a core of
      coarse-grained to pegmatitic peridotite and dunite. They appear to be
      deep-seated and several Duluth Complex OUIs seem to be root-less.
      Genesis
        of the Duluth Complex OUIs is speculative and several theories have been
    proposed as described below:                                                                                                                                                                                                                                                

| | 1) | Severson (1988, 1991, and 1994), and Severson and Hauck
      (1990) suggest that a spatial/empirical relationship between the Duluth
      Complex OUIs and the Biwabik Iron-Formation exists, and that incorporation
      of the Biwabik Iron-Formation by the Duluth Complex at the basal contact
      may have inspired the genesis of the Duluth Complex OUIs. This does not
      directly explain the high titanium content of the Duluth Complex OUIs
      however; Muhich (1993) finds that the Biwabik Iron-Formation is locally
      enriched in titanium proximal to the Duluth Complex basal contact.
      Muhichs (1993) observations suggest that the Duluth Complex OUIs may be
      genetically related to the Biwabik Iron-Formation, and may be assimilated
      inclusions of Biwabik Iron-Formation that have been enriched in titanium
      and iron from Duluth Complex magmas and fluids.
| | -- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
| | 2) | Severson (1988, 1994) and Severson and Hauck (1990) also
      suggested, as did Ross (1985) that Duluth Complex OUIs formed by
      infiltration metasomatism. Infiltration metasomatism calls on the upward
      streaming of intercumulus fluids that are derived from within a
      crystallizing cumulus pile, or more simply put, the magma itself. This
      genesis mechanism has been suggested for the formation of similar
      ultramafic plugs in the Bushveld Complex (Schiffries, 1982; Viljoen and
      Scoon, 1985).                                                                                                                                                                                                                                                                                                                                                                               

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

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

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|8 | Exploration                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
|- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
|  | Exploration of the Project Area by CIOUS began in the
      summer of 2010 with field searches for historic drill collars. Benchmark
      Engineering (Mountain Iron, Minnesota) was contracted to conduct the
      search with key CIOUS personnel on hand to oversee the work.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
|  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
|  | No bedrock is exposed at the Project Area. Because of
      this, no bedrock mapping has been completed by CIOUS to date (January
      2012).                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
|  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
|  | An airborne geophysical survey was conducted by the
      Minnesota Geological Survey which provided the initial template for early
      exploration. A ground magnetic survey was conducted by USSC in 1967 on the
      Project Area and has been obtained by CIOUS. A map of this survey,
      including the original grid, reading stations, readings, and the collar
      location for the first drill hole drilled on the property (DDH 26000) was
      obtained from the archives at the Minnesota Department of Natural
      Resources office in Hibbing, Minnesota in 2010. This map has been
      georeferenced based on the drill collar and road locations. The grid and
      station locations were then converted to m in the Universal Trans Mercator
      projection, using the North American 1983 datum. The station locations and
      magnetic readings were then entered into a spreadsheet, and the data was
      re-interpreted by Quantec Geoscience. The results of this
      re-interpretation confirmed the presence of multiple titaniferous-iron
      oxide-bearing intrusions at the Project Area (Figure 8.1) including two
      large intrusions here referred to as Titac North and Titac South, as well
      as numerous smaller intrusions to the west and
northwest.

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Figure 8.1: Re-interpretation of 1967 ground magnetic
data, confirms the presence of multiple titaniferous-iron oxide-bearing
intrusions at Titac, including the two main intrusions (Titac North and
Titac South)

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|9 | Drilling                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
|- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
|  | CIOUS completed drilling of 32 NQ2 diamond drill holes
      totaling 11,034.4 m (36,202 feet) on the Project Area between February
      2010 and April 2011. Drilling depths were recorded in feet, as is the
      standard in the US. Drilling was completed by licensed drilling contractor
      Idea International Drilling Ltd. (Idea). In 2010 Idea conducted drilling
      operations using four different drill rigs (Atlas Copco CS1000, Atlas
      Copco Diamec U6, Atlas Copco CT14, and a Sandvik DE130) with two rigs
      operating at any given point in time. Drill rigs were skid-mounted (with
      the exception of the Atlas Copco CT14), and maneuvered in the field using
      Caterpillar D5M and D7G tractors. In 2011 one Morooka mounted drill rig
      (Boart Longyear LF70) was utilized. Licensed contractor Warren Johnson
      Excavating was contracted to install all drill trails, drill pads, and
      entrance/exit points. Trails, pads, and entrance/exit points were
      installed using a combination of Caterpillar tractors, Caterpillar
      excavators, and various logging skidders.
|  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
|  | All drill holes were permanently abandoned per Minnesota
      Department of Health standards, by setting a plug at least 300 feet below
      the surface of bedrock and filling the portion of the boring above the
      plug with neat cement.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
|  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
|  | Down-hole surveys have been completed on all contemporary
      drill holes. The Idea survey crew conducted down-hole surveys of each
      respective drill hole following completion of each hole. Down- hole
      surveys were completed using a Gyro-based tool, with survey readings
      collected every 20 feet. Data consists of a dip reading in degrees, and
      easting and northing readings in feet relative to the starting position of
      the survey.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
|  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
|  | Drill hole locations were recorded at the time of
      drilling using a hand held Garmin GPS unit with accuracy to +/- 6 m.
      Because casing was pulled upon completion of each drill hole, a steel
      fence post was used to mark the location of each hole. A location survey
      was completed by the Idea survey crew upon completion of drilling
      operations. Licensed surveyors Northern Lights Surveying and Mapping Inc.
      (Virginia, Minnesota) were contracted by Idea to place 4-5 location pins
      on site. Upon installation of these pins Idea surveyed drill hole
      locations with accuracy to 2/10ths of a foot, recording the easting,
      northing, and elevation of each drill hole.                                                                                                                                                                                                                                                                                                                                                                                                            
|  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
|  | There are also a number of historic drill holes that have
      been drilled on the Project Area. Only the drill holes completed prior to
      approximately 1970 have drill collars that still exist on site. These
      drill collars have been located and surveyed with a differential GPS.
      Since approximately 1970, drill casings have been mandated to be removed
      upon remediation of the drill site, so these drill collars do not exist.
      Evidence, such as drill pad clearings in the forest, has been found to
      support the location of many of these historic holes and their drill
      collar locations are believed to be within 10 m accuracy.                                                                                                                                                                                                                                                                                                                                                                                                                                                        
|  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
|  | Tables 9.1a & b document the technical specifications
      of all contemporary and historic drilling at the Project
  Area.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   

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Table 9.1a: Contemporary and
historic drilling at the Titac property

TITAC PROPERTY CONTEMPORARY (drilled by
        Cardero Iron Ore Company Ltd.)DDH#
      (Survey) mE
      (Survey) mN
      Total Depth (ft)
      Azimuth
      Dip
      Total Depth (m)TTC-001-2010
      568033.6
      5228365
      756
      Vertical
      -90
      230.4TTC-002-2010
      568005.9
      5228444.5
      685
      Vertical
      -90
      208.8TTC-003-2010
      567915.6
      5228321
      1196
      130
      -60
      364.5TTC-004-2010
      567992.4
      5228225.1
      1137
      73
      -60
      346.6TTC-005-2010
      568089.8
      5228109.2
      1707
      0
      -60
      520.3TTC-006-2010
      568020.5
      5228360.1
      867
      25
      -75
      264.3TTC-007-2010
      568317.8
      5228222.7
      1256
      305
      -60
      382.8TTC-008-2010
      568320.2
      5228220.8
      1206
      355
      -60
      367.6TTC-009-2010
      567966.7
      5227486
      1235
      55
      -45
      376.4TTC-010-2010
      567743.4
      5227519.3
      1286
      90
      -60
      392TTC-011-2010
      567965.7
      5227490.9
      894
      115
      -45
      272.5TTC-012-2010
      567786.7
      5227652.2
      1276
      130
      -60
      388.9TTC-013-2010
      567967.1
      5227493
      830
      125
      -45
      253TTC-014-2010
      567933.4
      5227620
      1986
      162
      -60
      605.3TTC-015-2010
      567970
      5227486.2
      855
      165
      -45
      260.6TTC-016-2010N
      567968.9
      5227488.1
      895
      187
      -45
      272.8TTC-017-2010
      567928.4
      5227630.4
      1047
      332
      -85
      319.1TTC-018-2010
      567961.5
      5227486
      865
      219
      -45
      263.7TTC-019-2010
      567976.6
      5227494
      1607
      Vertical
      -90
      489.8TTC-020-2010
      567968.2
      5227482.8
      1015
      6
      -45
      309.4TTC-021-2010
      567873
      5227482.3
      1227
      82
      -75
      374TTC-022-2010
      567964.5
      5227489.5
      1148
      15
      -65
      349.9TTC-023-2010
      567849
      5227555.2
      1157
      128
      -75
      352.7TTC-024-2010
      567970
      5227486.7
      1258
      72
      -65
      383.4TTC-025-2010
      568083.8
      5227592.6
      1258
      220
      -75
      383.4TTC-026-2010
      567965.4
      5227482.8
      1258
      112
      -65
      383.4TTC-027-2010
      568081.9
      5227423.5
      1258
      308
      -75
      383.4TTC-028-2010
      567966.3
      5227483.9
      1207
      201
      -65
      367.9TTC-029-2010
      567964.1
      5227486.6
      1097
      249
      -65
      334.4TTC-030-2010
      567964.2
      5227489.7
      1057
      308
      -50
      322.2TTC-031-2011
      568025.2
      5227537.0
      903
      341
      -45
      275.2TTC-032-2011
      568021.6
      5227533.9
      773
      33
      -51
      235.6


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Table 9.2b: Contemporary and
historic drilling at the Titac property

TITAC PROPERTY HISTORIC (drilled by
        United States Steel Corporation)DDH#
      (Survey) mE
      (Survey) mN
      Total Depth (ft)
      Azimuth
      Dip
      Total Depth (m)26000
      568539
      5228590
      730
      250
      -46
      222.526001
      567927
      5227501
      552
      Vertical
      -90
      168.226002
      568100
      5228342
      901
      Vertical
      90
      274.626003
      567837
      5227580
      466
      Vertical
      90
      14226007
      568250
      5228343
      587
      Vertical
      90
      178.926008
      568158
      5228219
      607
      Vertical
      90
      185


|9.1 | Drilling Results                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
|--- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
|    | There are several OUIs at the Project Area of varying
      sizes. Only the two main intrusions (Titac North and Titac South) have
      been drilled, and only Titac South has been extensively drilled (Figures
      9.1 and 9.2). The Titac North and Titac South OUIs both appear to be
      oriented sub-vertically, and appear to have complex igneous
      stratigraphies. The orientation and complexity of these intrusions have
      posed specific difficulties with regards for drill planning.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
|    | Drilling at Titac North in the late 1960s by USSC
      consists of three vertical holes drilled into the main intrusive
      intrusion, and a fourth angled hole drilled to the northeast of the main
      intrusion (Table 9.1). Strong titanium-iron oxide mineralization was
      intercepted in all three vertical holes drilled by USSC, while the fourth
      angled hole largely missed mineralization. CIOUS drilled a total of eight
      holes at Titac North in 2010. The first two holes (TTC-001-2010 and
      TTC-002-2010; Table 9.1) were vertical and largely missed mineralization,
      while the remaining six holes (TTC-003-2010 through TTC-008- 2010; Table
      9.1) were angled and all intercepted strong titanium-iron oxide
      mineralization to varying degrees of success. Ground cover at Titac North
      is largely swamp land, and an early spring break- up in 2010 hampered
      drilling efforts by CIOUS, and forced drilling efforts to Titac South.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
|    | Two holes were drilled at Titac South by USSC in the late
      1960s, both holes are vertical, and both holes intercepted thick
      intervals of strong titanium-iron oxide mineralization. Twenty-two holes
      in 2010 and two holes in 2011 were drilled at Titac South by CIOUS. Every
      hole at Titac South intercepted thick intervals of strong titanium-iron
      oxide mineralization. Given the sub-vertical orientation, and sheet-like
      or ring-like stratigraphy of the intrusion, the drill plan at Titac South
      featured a central fan or (inverted) funnel-like pattern of inside-out
      drill holes with various azimuths and dips
      (TTC-009,-011,-013,-015,-016,-018,-020,-022,-024,-026,-028,-029,-030-2010;
      Table 9.1). Numerous holes were also drilled outside-in toward the
      center of the intrusion (TTC-010,-012,- 014,-017,-021,-023,-025,-027-2010;
      Table 9.1). Drill hole density is good at Titac South, with a first round
      of holes drilled with a dip of -45 degrees (°)from the fan-site, and a
      second round of holes drilled with a dip of -65° from the fan-site. Holes
      drilled from the outside-in feature a similar pattern of dips. A
      vertical hole (TTC-019-2010) was also drilled at the fan-site to a depth
      of 490 m. Because of the sub-vertical orientation, and complex igneous
      stratigraphy at both Titac North and Titac South, the true thickness of
      specific mineralization intervals is not known, though the size and grade
      of both intrusions can be determined by three-dimensional modeling.
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
|    | Historical assays from the six holes drilled by USSC were
      favorable enough to lead Cardero to acquisition of the Project Area,
      however, re-assaying of historic core from the Project Area has not been
      conducted. Historical assays were not used in the estimation of the
      resource.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         

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Figure 9.1: Titac North drill holes



Figure 9.2: Titac South drill holes

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|10 | Sample Preparation, Analyses, and
      Security
|-- | ------------------------------------------------

|10.1 | Sampling Method and Approach                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
|---- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
|     | All samples collected by CIOUS for analysis are from
      drill core. Drill core sampling is typically continuous through the length
      of each drill hole, except where drill core is obviously not mineralized.
      There are no sample biases, and samples are representative of the
      mineralization found. The rocks are intrusive and competent, typically
      with limited, localized fracturing. Drill core recovery averages 92.3% and
      rock quality is typically good.                                                                                                                                                                                                                                               
|     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
|10.2 | Drill Core and Sample Interval
  Preparation                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
|     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
|     | Drill core is logged lithologically as it is drilled, and
      then stored in original cardboard boxes (10 feet per box) on pallets until
      additional analysis of core can be performed. As time permits, data is
      collected on core regarding rock quality, core recovery, magnetic
      susceptibility, and specific gravity. Sample intervals are then set-up,
      and all drill core is photographed. All drill core from the 2010 and 2011
      drilling programs has been logged and sampled, and all sample results from
      the 2010 and 2011 drill core sampling campaign are complete. Lithology
      logging and collection of other data from drill core is done per standard
      industry practices as follows:
|     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
|     | Lithology log                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
|     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
|     | Lithology intervals are recorded in feet based on run
      blocks inserted at the time of drilling. Specific data is collected on
      rock type, texture, grain-size, lithology contacts, modal mineralogy,
      structures, oxide mineralization, sulfide mineralization, and
      alteration.                                                                                                                                                                                                                                                                                                                                                                                                                                            
|     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
|     | Rock quality/Core recovery                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
|     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
|     | Intervals are recorded in feet based on run blocks
      inserted at the time of drilling. Actual lengths of intervals are measured
      and recorded in inches. The sum of all pieces of core greater than 4
      inches is recorded, and total fractures per interval are recorded. RQD for
      each interval is determined by dividing the sum greater than 4 inches by
      the actual total inches of core recorded, and multiplying by
100.                                                                                                                                                                                                                                                                                          
|     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
|     | Magnetic Susceptibility                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
|     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
|     | Magnetic susceptibility data is collected on all drill
      core using a SAIC Exploranium KT-9 magnetic susceptibility meter. Five
      readings are collected for each core interval so that a reading is
      collected at least every 2 feet.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
|     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
|     | Specific Gravity                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
|     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
|     | Specific gravity measurements are collected approximately
      every 20 feet. Core pieces measuring approximately 4-5 inches are weighed
      first in air (grams), and then in water (grams), using a manual balance
      and custom built work station.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
|     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
|     | Core photography                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
|     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
|     | All drill core is photographed using a Sony Cyber-shot
      digital camera, typically with two core boxes per photo. All pictures are
      labeled as follows: DDH Box # (#-#).                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           

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|     | Sample intervals                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
|---- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
|     | All sample intervals are determined by visual inspection of drill core, generally based on a visual estimation of oxide and sulfide mineralization. Attempts are made to not cross lithology boundaries within sample intervals;
however given the intrusive, locally lithologically heterogeneous nature of drill core this is not always possible. Drill core is pieced together and a line is drawn parallel to the long axis of all drill core to be sampled. Sample intervals range
in length from 0.2 m to approximately 2.5 m, with most sample intervals from 1.5-2.0 m in length. Sample tags are stapled into boxes, and sample identification numbers are written on core for future reference. Sample intervals are recorded, noting
the type of sample (i.e. core, 1⁄4 core original, 1⁄4 core duplicate, prep duplicate, standard, or blank), and the general lithology of the sample.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
|     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
|10.3 | Sample Collection and Preparation                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
|     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
|     | Samples are collected by sawing core in half along the line drawn parallel to the long axis of core with a diamond tipped blade. The core cutting saw is cleaned at the end of each day, or after 400 feet of core has been cut
(whichever is earlier), and the saw is filled with clean water at the time of cleaning. The left half of drill core is kept and remains in the original cardboard boxes, which are securely stored at CIOUS’s field office in Aurora, Minnesota.
The right half of core is collected and packaged in clear poly bags, along with a sample tag designating the sample identification number. Bags are labeled in black permanent marker with the corresponding sample identification number and a zip tie
is used to close each poly bag. The weight of each sample is then recorded (in grams). Poly bags are packaged in white sand bags (typically five samples per sand bag). Each sand bag is labeled with the sample identification numbers that it contains,
and the batch number that the samples belong to. Sand bags are first secured with a standard zip tie, and then a second individually numbered zip tie is placed over the standard zip tie for security. The security number is recorded along with the
sample numbers that it represents. The sand bags are then transferred to a standard shipping pallet (generally 10-15 sand bags per pallet). The pallets are shrink wrapped, and labeled with the sample batch numbers. Generally, each drill hole is
given a unique sample batch number.

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|10.4 | Sample Preparation, Analyses and Security                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
|---- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
|     | Sample preparation of drill core is conducted at the
      CIOUS facility in Aurora, Minnesota by persons under contract with CIOUS
      to carry out the exploration, drilling, and sampling programs.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
|     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
|10.5 | Sample Analysis                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
|     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
|     | Samples are prepared for assay analysis by ALS Laboratory
      Group (ALS) at their Thunder Bay, Ontario facility. The laboratory
      prepares samples for assay using code prep-31, in which samples are
      crushed, and 250 grams of material from each sample is split off and
      pulverized so that better than 85% pass through 75 micron mesh. Samples
      are dried if necessary using code DRY-21. The sample pulp is then shipped
      to the ALS facility in Vancouver, British Columbia, Canada for assay,
      while the coarse sample is put in temporary storage at ALS in Thunder Bay
      (and eventually shipped back to CIOUSs field office in Aurora,
      Minnesota).
|     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
|     | ALS Laboratory Group laboratories are ISO 17025
      certified. The ALS laboratory used for sample preparation is located at
      1160 Commerce Street, Thunder Bay, Ontario, Canada P7E 6EP. The ALS
      laboratory used for sample analysis is located at 2103 Dollarton Hwy,
      North Vancouver, British Columbia, Canada V7H 0A7.                                                                                                                                                                                                                                                                                                                                                             
|     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
|     | A whole rock analysis (code: ME-ICP06) is conducted on
      samples, and base metals are analyzed using code ME-4ACD81. Sample
      analysis method ME-ICP06 returns results for all major oxides from
      0.01-100% as displayed in Table 10.1, and sample analysis method ME-4ACD81
      returns results for base metals as listed in Table 10.2. Numerous samples
      have also been analyzed for rare earth and trace elements by ALS using
      sample method ME-MS81. The elements and respective ranges for sample
      method MA-MS81 are displayed in Table 10.3.                                                                                                                      

Table 10.1: Analytes and
Ranges of ALS Laboratory Group sample analysis method ME-ICP06.

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


Table 10.2: Analytes and Ranges of
ALS Laboratory Group sample analysis method ME-4ACD81.

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


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Table 10.3: Analytes and Ranges of
ALS Laboratory Group sample analysis method ME-MS81.

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


|     | Copper analyses that return values greater than the
      detection limits (>10,000 ppm) of sample method ME-4ACD81 are
      re-analyzed by ALS using sample method Cu-OG62, which has detection limits
      of 0.01-40%.                                                                                                                                                                                                                                                                             
|---- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
|10.6 | Sample Security                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
|     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
|     | Drill core is retrieved from drill sites on a daily basis
      by CIOUS staff, and delivered directly to the CIOUS field office in
      Aurora, Minnesota. Drill core is stored on-site at the field office until
      sampling can be conducted by CIOUS personnel. The CIOUS field office is
      locked at night and when personnel are not present at the facility and the
      local Aurora police force regularly patrol the area. There are no issues
      regarding drill core security.  
|     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
|     | Upon collection of samples they are packaged as described
      above and shipped via chartered and bonded independent carrier Valley
      Carthage Transport and Manitoulin Transport for customs brokerage to ALS
      Laboratory Group Laboratories in Thunder Bay, Ontario, Canada. There have
      been no reported incidents regarding the individually numbered security
      zip ties placed on each sand bag, and thus there are no issues regarding
      the security of sample shipment.
|     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
|     | There were no issues regarding drill core or sample
      security.                                                                                                                                                                                                                                                                                                                                                                                                                                     
|     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
|10.7 | Quality Assurance and Quality Control
    Programs                                                                                                                                                                                                                                                                                                                                                                                                                                                      
|     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
|     | CIOUS has instituted extensive quality assurance/quality
      control (QA/QC) procedures to ensure the integrity of sample analyses.
      The QA/QC procedures followed for all drill core sampling conducted by
      CIOUS at the Project are outlined in Figure
10.1.                                                                                                                                                                                                                            

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Figure 10.1:Quality Control/Quality Assurance
procedures instituted by Cardero for all drill core sampled from the
Longnose property

Field duplicates (FDUP) in this case
refer to 1⁄4 core duplicates of the same sampling interval. A preparation
duplicate (CDUP) consists of a poly bag containing only a sample tag with
instructions for laboratory personnel to prepare the sample from the preceding
standard drill core analysis by taking a split after the coarse crushing
stage.

Three different reference materials
were used in the sampling program at Titac. TTC-1 and LNC-1, which are
in-house reference materials created by Cardero; and SX67-05 which is a
certified reference materials manufactured for Brammer Standard Company, Inc.
(14603 Benfer Road, Houston, Texas 77069, United States of America) by
accredited laboratory Dillinger Hutte Laboratory (GAZ; Association for the
Accreditation and Certification GmbH, Attestation no. 91021).

Blank material is collected locally in
Minnesota from bedrock outcroppings of the Pokegama quartzite near Virginia,
Minnesota. Pokegama quartzite is a suitable blank reference because it is
dominantly composed of SiO2.

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|10.8 | SRK Comments                                                                                                                                                                                             
|---- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|     |                                                                                                                                                                                                          
|     | In the opinion of SRK the sampling preparation, security
      and analytical procedures used by CIOUS are consistent with generally
      accepted industry best practices and are therefore
  adequate.

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|11   | Data Verification                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
|---- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
|11.1 | Quality Control Results                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
|     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
|     | Quality control samples (duplicates, blanks and
      standards) are used to monitor laboratory sample preparation, potential
      for contamination and analytical accuracy.                                                                                                                                                                                                                                                                                                                                                                                                                                              
|     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
|     | A total of 308 reference materials and 146 Pokegama
      quartzite blank samples were submitted blindly to the laboratory during
      the core sampling campaign at Titac in 2010 and 2011. A total of 316
      quarter core duplicate pairs were collected and submitted to the
      laboratory and 305 preparation duplicate pairs were prepared by the
      laboratory. Only the quarter core duplicates were blind to the laboratory.
      All analytical data including quality control samples were checked and
      verified by Carderos senior geochemist, Tansy OConnor-Parsons and
      reviewed by SRK.
|     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
|     | Coarse blank samples (Figure 11.1) show a slightly higher
      than background value for TiO2, indicating that the blank is
      not devoid of titanium. SRK normally compares the blank data to five times
      the detection limit, in this case a value of 0.05 % TiO2however this blank has an average TiO2value 10 times the
      detection limit. When the individual values are compared to a low baseline
      value of 0.1% TiO2the blank sample results indicate low-level
      carryover contamination during the preparation through to analytical
      stage.                                           



Figure 11.1: Blank analytical results over time for Pokegama
Quartzite Blank samples submitted with Titac deposit samples

Scatter plots, percent relative
difference plots and percentile rank charts for quarter-core duplicate titanium
data are presented in Figures 11.2, 11.3 and 11.4 respectively. Good correlation
is seen between quarter-core duplicate samples with 94% of duplicate pairs
having a half absolute relative difference of less than 10%.

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Figure 11.2:Scatterplot graph of TiO2data
for quarter core field duplicates for the TitacProject



Figure 11.3:Half Relative Deviation Plot of TiO2data for quarter core field duplicates for theTitac Project

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Figure 11.4:Ranked Half Absolute Relative Deviation
Plot of TiO2data for quarter core fieldduplicates for the
Titac Project

Scatter plots, percent relative
difference plots and percentile rank charts for preparation duplicate titanium
data are presented in Figures 11.5, 11.6 and 11.7 respectively. Excellent
correlation is seen between preparation duplicate samples with 97.7% of
duplicate pairs having a half absolute relative difference of less than 10%.



Figure 11.5:Scatterplot graph of TiO2data
  for preparation duplicates for the Titac Project

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Figure 11.6:Half Relative Deviation Plot of TiO2data for preparation duplicates for the TitacProject



Figure 11.7:Ranked Half Absolute Relative Deviation
Plot of TiO2data for preparationduplicates for the Titac
Project

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Two internal reference materials (LNC-1
and TTC-1) and one commercial standard reference material (SX67-05) were
utilized by CIOUS. Reference material results are plotted against their known
TiO2concentration with tolerance levels within 10% (Figures 11.8,
11.9 and 11.10) .

A number of results for LNC-1 reported
TiO2values similar to the average TiO2 value for internal reference
material TTC-1. The corresponding Fe2O3values reported
for these samples were also representative of the expected Fe2O3values for TTC-1. In these cases, the reference materials have been mislabelled. One result for
LNC-1 is clearly more in line with a blank sample, again a case of mislabelling
of control samples. TTC-1 shows a slightly high bias and relatively large
scatter. A slight negative bias for some SX6705 samples were noted at the
beginning of the program, however re-analysis of the reference material and
surrounding samples resulted in comparable results.



Figure 11.8:Internal reference material LNC-1 performance
  for TiO2

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Figure 11.9:Internal reference material TTC-1
performance for TiO2



Figure 11.10:Standard reference material SX67-05
performance for TiO2

To monitor the analytical accuracy of
  the laboratory, umpire/check assays were submitted to a second laboratory (Acme
  Analytical Laboratories in Vancouver, BC) where the sample pulps were analysed
  by the 4A04 package (lithium metaborate fusion/ICP-ES finish). All 303 samples
  from a single drill hole (TTC-019) were submitted for the umpire assay, as the
  drill hole intersected all levels of ferro-titanium mineralization. The results
  for TiO2and Fe2O3are presented in Figure
  11.11. The data correlate very well for both analytes, however there is
  a slight low bias at the concentrations of > 27% TiO2for the data
from the ALS Minerals laboratory. This is not considered to be significant, as
the data is within 10% analytical precision.

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Figure 11.8: Scatterplots presenting analytical umpire
(check) assays versus original assayresults for Fe2O3(left) and TiO2(right)
  data

|     | SRK has reviewed the results of all QA/QC samples.
      Duplicate and umpire analysis performed very well and blank samples
      performed adequately. The results of analytical standards are less ideal.
      Both internal standard results showed a large amount of scatter and
      standard TTC-1 showed a slight high bias. In addition, CIOUS did not
      complete full round robin testing on the standards, making them difficult
      to properly use as a reference. CIOUS should more carefully scrutinize
      analytical standards selection and standard results for future programs.
      If internal reference materials are to be used, these should be submitted
      to various laboratories to establish an average value and standard
      deviation for these materials.
|---- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
|     | In the opinion of SRK the results of the analytical QA/QC
      program used by CIOUS provide sufficient support that the analytical data
      is viable to support the exploration analysis and the Mineral Resource.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
|     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
|11.2 | Veerifications by Cardero                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
|     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
|     | Cardero completed several processes to verify the
      exploration data that has been captured at the Project.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
|     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
|     | Firstly, all exploration data was entered into a database
      which provided a level of data checking to ensure that errors are
      minimized. This includes standardized naming conventions and limits on
      field entries.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
|     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
|     | Secondly, all paper records logging records were retained
      by Cardero and spot checks were made by Cardero head office staff to
      ensure that the database accurately reflected the data captured.
      Data from
        the site database is backed up weekly to Carderos Vancouver office
    server.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
|     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
|11.3 | Veerifications by SRK                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
|     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
|     | SRK completed a series of verifications to ensure that
      the exploration data is reliable enough for the creation of the Mineral
      Resource. These verifications included the site visits review of field
      procedures, reviewing analytical quality control data, independent
      sampling and independent verification of the assay results.                                                                                                                                                                                                                                                                                                                                                                                                                                               

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|11.3.1 | Site Visit                                                                            
|------ | --------------------------------------------------------------------------------------
|       |                                                                                       
|       | During the site visit completed on March 12 and 13 2010,
      SRK was able to verify:

| |  | Exploration planning;                                
| | - | -----------------------------------------------------
| |  | Selection of drill hole sites;                       
| |  | Mobilization of drill rigs;                          
| |  | Drilling processes and drill rig
      core handling;
| |  | Down-hole surveying;                                 
| |  | Collar site marking and
      surveying;             
| |  | Core logging;                                        
| |  | Core sampling;                                       
| |  | Sample QA/QC insertion;                              
| |  | Sample shipping and security; and                    
| |  | Data capture and backup.                             

|       | In the opinion of SRK the site procedures used by CIOUS
      are consistent with generally accepted industry best practices and are
      therefore adequate.
|------ | --------------------------------------------------------------------------------------------------------------------------------------------------------------
|       |                                                                                                                                                               
|11.3.2 | Verifications of Analytical Quality Control
      Data                                                                                                        
|       |                                                                                                                                                               
|       | Table 11.1 summarizes CIOUSs insertion rate for
      analytical QA/QC samples.                                                                              

Table 11.1: Summary of Analytical Quality Control Data
Produced By Cardero on the Project, 2010/11

Quality Control Samples
      Drilling and Sampling Programs
      Percent of Samples (%)
      CommentSample Count
    4943Field Blanks
    146
    3.0%
    Locally derived quartzite
      materialStandards
    308
    6.2%TTC-1
    154
    3.1%
    Internal Cardero reference
      materialLNC-1
    138
    2.8%
    Internal Cardero reference
      materialSX67-05
    16
    0.3%
    Certified Commercial Standard,
      BrammerField Duplicates
    316
    6.4%
    Quarter CorePreparation Duplicates
    305
    6.2%
    Split of course crushTotal QC Samples
    5421
    109.7%


|11.3.3 | Independent Verification Sampling                                                                                                                                                                                                                                                                                                                                         
|------ | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|       |                                                                                                                                                                                                                                                                                                                                                                           
|       | During the SRK site visits, two independent verification
      samples were collected from the Titac deposit and sent to ALS for
      processing. The results are shown in Table 11-2. Even though only
    two samples were collected, the samples
showed very good correlation between the original Cardero TiO2and
Fe2O3assays, and the independent duplicate results.

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Table 11.2: Assay Results for Verification Samples Collected
SRK on the Titac Project

HoleID
      From(m)
      To(m)
      OriginalTiO2(%)
      SRKDuplicateTiO2(%)
      OriginalFe2O3(%)
      SRKDuplicateFe2O3(%)TTC-003-2010
    35.36
    36.88
    11.4
    12.05
    38.5
    38.6TTC-003-2010
    36.88
    38.41
    13.25
    14.55
    44.4
    43.4


|11.3.4 | Independent Assay Verification                                                                                                                                                                                                                                                 
|------ | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|       |                                                                                                                                                                                                                                                                                
|       | SRK independently verified a hundred percent of the assay
      results by downloading the assay certificates directly from the laboratory
      and comparing the compiled results in an Access database. SRK found no
      errors in the TiO2and Fe2O3analytical
      data.

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|12 | Mineral Processing and Metallurgical
      Testing                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
|-- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
|   | Relatively little metallurgical test work has been
      completed on the Titac deposits. What has been completed can be divided
      into historic work completed before Carderos involvement in the property
      and current work completed more recently by Cardero.                                                                                                                                                                                                                                                                                                                                
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
|   | Historically, significant amounts of historical
      beneficiation work was completed on other OUI deposits such as Longnose
      deposit, another OUI body 40k north of Titac. This work was largely
      conducted by the Coleraine Minerals Research Lab (CMRL) which is part of
      the University of Minnesota Duluths (UMDs) Natural Resources Research
      Institute (NRRI), located in Coleraine, Minnesota, USA. The work pre-dates
      the NI 43-101 standards however the work was completed to high standards
      and will be useful in designing the future beneficiation work.
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
|   | A description of the historic metallurgical work is
      contained within Section 5.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      

|12.1 | Recent Metallurgical
      Testwork                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
|---- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
|     | Since Carderos involvement in the project, little
      metallurgical analysis has been completed by Cardero. However, in December
      2011, Davis Tube tests were completed in order to determine the proportion
      of magnetic material and the value of Fe within the magnetic concentrate.
      At this time, only preliminary results of these tests have been received.                                                                                                                                                                                                                                                                                                                                                                                                                                                   
|     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
|     | Approximately 347 samples from 2010 and 2011 Titac drill
      holes were selected for Davies Tube processing. Davies Tube tests utilize
      an electromagnet to separate material into magnetic and non-
      magnetic/para-magnetic material. Samples were selected to cover a wide
      range of grades as well as being spatially representative. Analytical pulp
      rejects were utilized for the tests which were completed at G&T
      Metallurgical (G&T) in Kamloops BC.                                                                                                                                                                                                                                                                                                                                              
|     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
|     | At G&T each sample was assayed for Fe% (direct Fe%
      analysis as opposed to Fe2O3that was completed in
      the main assay work). Then 10 g or 30 g of the material was selected for
      the tests. This material was pulp reject material (pulverized to 80%
      passing 200 mesh) and was not further re- crushed in any way by G&T.
      The material was separated into a magnetic and non-magnetic fraction by
      passing over a magnet set at 3000 gauss. The magnetic fraction was then
      weighed and the magnetic concentrate re-assayed for Fe%.                                                                                                                                                                                                                                                             
|     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
|     | A total of 301 of these samples were from the Titac
      mineralization domains, with the remainder falling outside the modelled
      domains.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
|     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
|     | In a deposit with magnetite as the dominant Fe bearing
      mineral, this test provides data to calculate a regression of the
      proportion of magnetite expected at a range of Fe grades and the
      conversion of the Fe2O3or Fe% analysis into a
      magnetite estimate. However, due to the fact that Fe partitions into
      ilmenite and a small but unknown amount of ilmenite would have partitioned
      into the magnetic concentrate, further work must be performed to properly
      quantify the magnetite content of these samples. A mineralogical study of
      a subset of these samples and concentrates would assist with determining
      the amount of ilmenite in the concentrate and TiO2assays of
      the concentrate would allow for determination of the titaniferous
      magnetite as well.
|     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
|     | The Davis Tube tests were not utilized in the definition
      of the Mineral Resource as accurately quantifying magnetite is not
      possible until further mineralogical work is completed.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        

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|13 | Mineral Resource
Estimates
|-- | --------------------------

|13.1 | Introduction                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
|---- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
|     | The Mineral Resource Statement presented herein
      represents the first Mineral Resource evaluation prepared for the Project
      in accordance with the Canadian Securities Administrators NI
    43-101.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
|     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
|     | The Mineral Resource model prepared by SRK considers 23
      core boreholes drilled by CIOUS during 2010 and 2011. The resource
      estimation work was completed by Darrell Farrow, Pr. Sci. Nat. under the
      supervision of Mike Johnson, P.Geo. who is responsible for the resource.
      By virtue of their education, membership to a recognized professional
      association and relevant work experience, Darrell Farrow and Mike Johnson
      are independent Qualified Persons as this term is defined by NI 43-101.
      The effective date of the resource statement is January 19,
2012.                                                                                                                                                                                                                                                           
|     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
|     | This section describes the resource estimation
      methodology and summarizes the key assumptions considered by SRK. In the
      opinion of SRK, the resource evaluation reported herein is a reasonable
      representation of the global TiO2and Fe2O3mineral resources found in the Titac South deposit of the Project at
      the current level of sampling. The mineral resources have been estimated
      in conformity with generally accepted CIM Estimation of Mineral Resource
      and Mineral Reserves Best Practices guidelines and are reported in
      accordance with the Canadian Securities Administrators NI 43-101. Mineral
      resources are not mineral reserves and do not have demonstrated economic
      viability. There is no certainty that all or any part of the mineral
      resource will be converted into mineral reserve.
|     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
|     | The database used to estimate the Project mineral
      resources was audited by SRK. SRK is of the opinion that the current
      drilling information is sufficiently reliable to interpret with reasonable
      confidence the boundaries for ilmenite and magnetite mineralization and
      that the assay data are sufficiently reliable to support mineral resource
      estimation.                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
|     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
|     | Gemcom Gems version 6.3.1 was used to construct the
      geological solids, prepare assay data for geostatistical analysis,
      construct the block model, estimate metal grades and tabulate mineral
      resources. The Geostatistical Software Library (GSLib) family of
      software were used for geostatistical analysis. Gems was used for the
      variography analysis.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
|     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
|13.2 | Resource Estimation Procedures                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
|     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
|     | The resource evaluation methodology involved the
      following procedures:                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               

| |  | Database compilation and
      verification;                                                                              
| | - | --------------------------------------------------------------------------------------------------------------------------
| |  | Construction of wireframe models
      for the boundaries of the oxide mineralization in Titac South;                     
| |  | Definition of resource domains;                                                                                           
| |  | Data conditioning (compositing
      and capping) for geostatistical analysis and variography;                            
| |  | Block modelling and grade
      interpolation;                                                                            
| |  | Resource classification and
      validation;                                                                             
| |  | Assessment of reasonable
      prospects for economic extraction and selection of appropriate cut- off
      grades; and
| |  | Preparation of the Mineral
      Resource Statement.                                                                      

|13.3 | Resource Database                                                                                                                                                                        
|---- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|     |                                                                                                                                                                                          
|     | SRK audited and reviewed data provided by Cardero to
      create a Gems database from which the Mineral Resource estimation was
      based. The database includes the following
tables:

| |  | Drill hole collar information
      such as location and length;
| | - | ----------------------------------------------------------------
| |  | Down hole survey information such
      as direction and dip;   

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| |  | Lithology information including
      rock group codes and interpreted geology;
| | - | -------------------------------------------------------------------------------
| |  | Down hole magnetic susceptibility
      data;                                  
| |  | Down hole specific gravity
      measurements ; and,                           
| |  | Chemical analytical (assay)
      records.                                     

The data encompassed 32 drill holes,
1754 down hole survey readings, 4943 TiO2and Fe2O3assays, and 1746 specific gravity measurements of which 24 drill holes,
1322 down hole survey readings, 3929 TiO2 and Fe2O3 assays and 1326 specific
gravity measurements pertain to the Titac South deposit (Table 13.1) .

Basic statistics of for the drill hole
assay and specific gravity data for Titac South are presented in Tables 13.2 and
13.3.

Table 13.1: Summary of Titac drill hole data

Titac North
      Titac South
      TotalDrill Holes
    8
    24
    32Down Hole Survey
    432
    1322
    1754Assays
    1014
    3929
    4943Specific Gravity
    420
    1326
    1746


Table 13.2: Statistical Summary of Database Assay Results for
Titac South

TiO2
      Fe2O3
      LengthCount
      3929Minimum
      0.47
      2.45
      0.2Maximum
      36.80
      64.40
      3.6Mean
      13.60
      27.49
      1.6Standard Deviation
      6.67
      9.48
      0.3


Table 13.3: Statistical Summary of Database Specific Gravity
Results for Titac South

SGCount
    1326Minimum
    2.27Maximum
    4.82Mean
    3.43Standard Deviation
    0.39


|13.4 | Solid Body Modelling                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
|---- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
|     | Solid models were created to provide spatial limits for
      each of the mineralization domains within the Titac South Deposit.
      Drilling on Titac North was deemed to be insufficient to create a reliable
      solids model.                                                                                                                                                                                                                                                                                                                                                   
|     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
|     | Domains were created by interpretation of the drill hole
      lithology data from the 2010 and 2011 drill holes. The domains were
      broadly defined based upon the designation of drill core intervals as
      peridotite or pyroxenite dominated oxide bearing ultramafic rocks. A
      marginal zone of mixed peridotite, pyroxenite and country rock was also
      modeled. The pyroxenite and peridotite domains predominantly contain pyroxenite and
peridotite material respectively, however shorter intervals of other rock types
do occur within these modeled domains.

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Gemcoms GemsTM 6.3.1
software was used to create the wireframes and the boundaries were limited to
the overburden surface. Topographic and overburden surfaces were modeled from
drill hole data. These surfaces were used to code the appropriate portions of
the block model as air or overburden.

Figure 13.1 and 13.2 show the
interpreted domains in plan and three dimensional view respectively.



Figure 13.1 Titac South Plan View of modeled domains

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Figure 13.2 Titac South 3-D model domains

|13.5 | Specific Gravity                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
|---- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
|     | The data supplied by Cardero for Titac South included a
      total of 1326 specific gravity measurements on core samples, 855 of which
      fall within the modelled solids. Specific gravity was measured on core
      samples by CIOUS using a laboratory scale and recording the mass of drill
      hole core pieces in air and water. Drill hole core was not sealed prior to
      immersion, however porosity is not likely to be an issue with this type of
      rock. No strong correlation between specific gravity measurements and
      TiO2or Fe2O3assay results was noted.
|     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
|13.6 | Compositing                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
|     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
|     | A total of 2837 diamond drill hole assay intervals fall
      within the modelled solids for Titac South. Drill hole assay sample
      lengths are summarized in Figure 13.3 which is a histogram of sample
      lengths. Approximately 75 % of samples are less than 1.8 m in length and
      therefore a compositing interval of 1.8 m was selected.                                                                                                                                                                                                                                    
|     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
|     | The assays were imported into Gems and composited to 1.8
      m length weighted intervals within the modeled domains.                                                                                                                                                                                                                                                                                                                                                                                                                                                                       

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|     | Figure 13.3 Histogram of Sample Lengths                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
|---- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
|13.7 | Capping                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
|     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
|     | Block grade estimates may be unduly affected by high
      grade outliers. Before compositing, grade capping analysis was conducted
      on the domain-coded sample assay data in order to limit the influence of
      extreme assay values during estimation. The assays from the modeled
      pyroxenite, peridotie and mixed domains were separately examined using
      histograms, and cumulative frequency plots. SRK determined that capping
      was unnecessary for both TiO2and Fe2O3in all three domains.
|     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
|13.8 | Statistical Analysis and
  Variography                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   

|13.8.1 | Sample and Composite Statistics                                                                                                                                                                                                                                                                                                                              
|------ | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|       |                                                                                                                                                                                                                                                                                                                                                              
|       | Composite statistics for TiO2and Fe203as well as sample statistics for specific gravity are
      described below.                                                                                                                                                                                                                                           
|       |                                                                                                                                                                                                                                                                                                                                                              
|       | TiO2Composites
      Statistics                                                                                                                                                                                                                                                                                                                              
|       |                                                                                                                                                                                                                                                                                                                                                              
|       | Figures 13.4, 13.5 and 13.6 show the histograms of the
      TiO2composites within the pyroxenite, peridotie and mixed
      domains respectively, as well as the basic statistics of each. The average
      peridotite TiO2value is 17.63%, while the average in the
      pyroxenite is 16.41%. The average TiO2value for the mixed
      domain is 9.64%.

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Figure 13.4:Histogram of composite TiO2Assay samples within the Pyroxenite Domain.



Figure 13.5:Histogram of composite TiO2Assay
  samples within the Peridotite Domain.

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Figure 13.6:Histogram of composite TiO2Assay samples within the Mixed Domain Fe2O3Composites Statistics

Histograms of the Fe2O3composites within each domain, as well as the basic statistics of each are
shown in Figures 13.7, 13.8 and 13.9. The average peridotite
Fe2O3value is 36.26%, while the average in the pyroxenite
is 30.58% . The average Fe2O3value for the mixed domain
is 23.69% .

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Figure 13.7:Histogram of composite
Fe2O3Assay samples within the Pyroxenite Domain



Figure 13.8:Histogram of composite Fe2O3Assay samples within the Peridotite Domain

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Figure 13.9:Histogram of composite
Fe2O3Assay samples within the Mixed Domain

|**13.8.2** | Variography                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
|---------- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|           |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
|           | Experimental semi-variograms were generated for TiO2from composite grade data for the pyroxenite oxide bearing
      ultramafic rocks. The nugget effect was established from a down hole
      linear semi- variogram. Modeled directions of spatial continuity were
      identified with a principle azimuth of 120 °and principle dip of 65°. Two
      spherical structures were modeled with rotation defined by the Gems
      azimuth, dip, azimuth convention within the block model coordinate space.
      The continuity ellipsoid was displayed as a search ellipsoid in Gems to
      validate the ellipsoid orientation.
      Due to limited data for the peridotite
        and mixed domains, experimental semi-variograms could not be generated for
        TiO2and Fe2O3from composite grade data
      for these domains.
      Experimental semi-variograms could not be generated for
        Fe2O3from composite grade data for the pyroxenite
    domain.
|           |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
|           | The semi-variogram model used for TiO2and
      Fe2O2grade estimation within the pyroxenite,
      peridotite and mixed domains (Figure 13.10) is summarized in Table 13.5.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        

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Figure 13.10: Modelled directional and down hole
semi-variograms for the Pyroxenite Domain

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|13.9 | Block Model and Grade
      Estimation                                                                                                                                                                                                                                                                                                                                                                                                                                                   
|---- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
|     | A block model was constructed to cover the entire extent
      of the modeled mineralized domains for Titac South. The block model
      includes separate sub-models for TiO2and Fe2O3grade estimates as well as estimated specific gravity
      and validation estimates. A block percentage model was used to accurately
      determine volume and tonnage values based on the modelled wireframes. The
      geometrical parameters of the block model are summarized in Table 13.4
|     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
|     | Table 13.4: Block model location and setup                                                                                                                                                                                                                                                                                                                                                                                                                                               

Description
      Easting (X)
      Northing (Y)
      Elevation (Z)Block Model Origin NAD 83
    567500
    5227000
    500Block Dimensions (metres)
    10
    10
    10Number of Blocks
    100
    100
    40Rotation (degree)
    
    0°


|13.9.1 | Grade Interpolation                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
|------ | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|       |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
|       | Ordinary Kriging (OK) of composite values was used for
      the estimation of block grades. For TiO2and Fe2O3, a two pass series of expanding ellipsoids was used
      for sample selection and estimation with the primary and secondary axes of
      the search ellipsoid defined by the semi-variogram ranges. Successive
      passes only calculate grades into blocks that have not been interpolated
      by the previous passes. The semi-variogram and continuity ellipsoids
      generated for TiO2for the pyroxenite domain were used to
      estimate Fe2O3grades for the pyroxenite domain and
      TiO2and Fe2O3grades for both the
      peridotite and mixed domains.
|       |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
|       | Composite data used for estimation was restricted to
      samples located within the respective domains. Estimation criteria for the
      pyroxenite, peridotite and mixed domains are summarized in Table 13.6. All
      interpolated blocks were classified as Inferred Mineral
Resource.                                                                                                                                                                                                                                                                                                                                                                                                
|       |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
|13.9.2 | Specific Gravity Interpolation                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
|       |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
|       | Block density data was interpolated from specific gravity
      point measurements using the inverse distance squared (ID2) method. A two
      pass series of expanding ellipsoids was used for sample selection and
      estimation. Specific gravity data used in the interpolation was restricted
      to samples located within the respective domains. Specific gravity
      interpolation criteria for all Titac South modelled domains are summarized
      in Table 13.7.                                                                                                                                                                                                         
|       |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
|       | Country rock blocks were assigned an average density
      value of 2.93 g/cm3and overburden blocks were assigned an
      average density value of 2.0 g/cm3.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                

|**13.10** | Model Validation                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
|--------- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|          |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
|          | The block model was validated visually by the inspection
      of successive section lines in order to confirm that the block model
      correctly reflects the distribution of high-grade and low-grade samples.
      An inverse distance squared estimate (ID2) was prepared for the blocks
      using the same search criteria and compared against the OK estimate. The
      average composite sample grades for all blocks containing composite
      samples were compared to the OK and ID2 estimates using scatter plots. The
      scatter plots for TiO2and Fe2O3within
      each of the pyroxenite, peridotite and mixed domains are shown in Figures
      13.11, 13.13 and 13.13 respectively.
|          |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
|          | Good correlation between OK, ID2 and average composite
      sample grades was observed for both TiO2and Fe2O3grades in the pyroxenite and peridotite domains.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    

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In the mixed zone, good correlation
between OK and ID2 was observed for both TiO2 and Fe2O3grades as well as between OK and average composite sample grades for
Fe2O3. However, greater scatter and slightly more
smoothing was observed when comparing OK and average sample grades for TiO2
within the mixed zone (Figure 13.13).

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Table 13.5:Modelledsemi-variogramsfor Titac SouthPyroxeniteDomain

Domain
      Metal
      NuggetC**0**
      Sill
        1
      Sill
        2
      Gems
      Range 1
      Range 2PrincipalAzimuth
      PrincipalDip
      IntermediateAzimuth
      X-Rot
      Y-Rot
      Z-Rot
      X-Rot
      Y-Rot
      Z-RotPyroxenite
      TiO2
      5.68
      6.85
      14.89
      120
      65
      132.603
      29
      25
      20
      58
      51
      39


Table 13.6:Searchellipseparametersfor Titac SouthDomains

Commodity
      Estimator
      SearchPass
      SearchType
      Rotation
      Search Ellipse Size
      Number ofComposites
      Max.Samples
        perDDHPrincipalAzimuth
      PrincipalDip
      IntermediateAzimuth
      X (m)
      Y (m)
      Z (m)
      Min.
      Max.TiO2
      OK
      1
      Ellipsoidal
      120°
      65°
      132.6°
      60
      50
      40
      6
      16
      4OK
      2
      Ellipsoidal
      120°
      65°
      132.6°
      250
      150
      150
      6
      16
      4Fe2O3
      OK
      1
      Ellipsoidal
      120°
      65°
      132.6°
      60
      50
      40
      6
      16
      4OK
      2
      Ellipsoidal
      120°
      65°
      132.6°
      250
      150
      150
      6
      16
      4


Table 13.7:Searchellipseparametersfor Titac SouthDomains

Commodity
      Estimator
      SearchPass
      SearchType
      Rotation
      Search Ellipse
        Size
      Number ofComposites
      Max.Samplesper DDHPrincipalAzimuth
      PrincipalDip
      IntermediateAzimuth
      X (m)
      Y (m)
      Z (m)
      Min.
      Max.SG
      ID2
      1
      Ellipsoidal
      120°
      65°
      132.6°
      60
      50
      40
      6
      16
      4ID2
      2
      Ellipsoidal
      120°
      65°
      132.6°
      250
      150
      150
      6
      16
      4


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Figure 13.11:Scatter plots showing correlation
between OK, ID2 and average composite TiO2and
Fe2O3sample grades for Pyroxenite Domain



Figure 13.12:Scatter plots showing correlation
between OK, ID2 and average composite TiO2and Fe2O3sample grades for Peridotite Domain

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Figure 13.13:Scatter plots showing correlation
between OK, ID2 and average composite TiO2and
Fe2O3sample grades for Mixed Domain

|13.11 | Mineral Resource Classification                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
|----- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|      |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
|      | Mineral resource classification is typically a subjective
      concept, industry best practices suggest that resource classification
      should consider both the confidence in the geological continuity of the
      mineralized structures, the quality and quantity of exploration data
      supporting the estimates and the geostatistical confidence in the tonnage
      and grade estimates. Appropriate classification criteria should aim at
      integrating both concepts to delineate regular areas at similar resource
      classification.                                                                                                                                                                                                                                                                                                   
|      |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
|      | SRK is satisfied that the geological modelling honours
      the current geological information and knowledge. Although the drilling is
      good it is insufficient for a confident interpretation of the geological
      boundaries and mineralization. The location of the samples and the assay
      data are sufficiently reliable to support resource evaluation. The
      sampling information was acquired primarily by diamond core drilling of
      angled holes radiating from the centre of the Titac South deposit outwards
      with a few drill holes angled from the outside into the deposit. Due to
      the pipe like shape of the deposit, the drilling configuration and number
      of drill holes is not considered sufficient to delineate an Indicated
      Resource and all estimated blocks have been classified as
  Inferred.
|      |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
|13.12 | Mineral Resource Statement                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
|      |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
|      | CIM Definition Standards for Mineral Resources and
      Mineral Reserves (December 2005) defines a Mineral Resource as:                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
|      |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
|      | (A) concentration or occurrence of diamonds, natural
      solid inorganic material, or natural solid fossilized organic material
      including base and precious metals, coal, and industrial minerals in or on
      the Earths crust in such form and quantity and of such a grade or quality
      that it has reasonable prospects for economic extraction. The location,
      quantity, grade, geological characteristics
and continuity of a Mineral Resource are
known, estimated or interpreted from specific geological evidence and
knowledge.                                                                                                                                                                                                                                                                                                    

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The reasonable prospects for economic
extraction requirement generally implies that the quantity and grade estimates
meet certain economic thresholds and that the mineral resources are reported at
an appropriate cut-off grade taking into account extraction scenarios and
processing recoveries. In order to meet this requirement, SRK considers that
major portions of the Titac South deposit are amenable for open pit
extraction.

In order to determine the quantities of
material offering reasonable prospects for economic extraction by an open pit,
SRK used a pit optimizer and reasonable mining assumptions to evaluate the
proportions of the block model that could be reasonably expected to be mined
from an open pit.

For this exercise, SRK assumed that all
TiO2 was contained within ilmenite, and that the Fe2O3estimates provided no value in the pit optimizer. In this way, any double
counting of material was avoided.

The optimization parameters were
selected based on experience and benchmarking against similar projects
(Error! Reference source not found.8). The reader is cautioned that the
results from the pit optimization are used solely for the purpose of testing the
reasonable prospects for economic extraction by an open pit and do not
represent an attempt to estimate mineral reserves. There are no mineral reserves
on the Project. The results are used as a guide to assist in the preparation of
a Mineral Resource Statement and to select an appropriate resource reporting
cut-off grade.

Table 13.8: Assumptions Considered for Conceptual Open Pit
Optimization.

Parameter
      Value
      UnitTiO2 : Ilmenite Ratio
    0.5264 : 1
    n/aIlmenite Price
    170
    $US per tonneMining Cost
    2.50
    US$ per tonne minedProcessing
    8
    US$ per tonne of feedGeneral and Administrative
    1
    US$ per tonne of feedMining Dilution
    0
    percentMining Loss
    0
    percentOverall Pit Slope
    50
    degreesIlmenite Process Recovery
    70
    percentMagnetite Process Recovery
    0
    percent


With industrial mineral such as
ilmenite, product pricing is subject to many more modifying factors than
precious or base metals. SRK has utilized a consensus of market forecasts to
choose this ilmenite price. Site specific product pricing is unrealistic at this
stage of the Project. SRK feels that pricing risks are offset by not planning
for the potential value of magnetite concentrate which would be an expected
by-product at such a deposit. As well, pricing as low at $105 per tonne of
Ilmenite had marginal effect on the blocks contained within the conceptual pit
shell.

SRK considers that the blocks located
within the conceptual pit envelope show reasonable prospects for economic
extraction and can be reported as a Mineral Resource. When running the
optimizer, SRK found that the mineralized domains were marginally constrained at
depth and the Mineral Resource was adjusted to reflect blocks contained within
the conceptual pit shell.

Table 13.9 summarizes the Mineral
Resource.

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Table 13.9: Mineral Resource Statement*, Titac Project,
Minnesota, USA, SRK Consulting (Canada) Inc, effective date, January 19,
2012

Category
      Estimated
        Quantity
      Estimated
        GradeTiO2
      Adjusted
        Fe2O3***Mt
      %
      %Open Pit**Inferred
      45.1
      15.0
      14.74


| | *   | Mineral resources are reported in relation to a
      conceptual pit shell. Mineral resources are not mineral reserves and do
      not have demonstrated economic viability. All figures are rounded to
      reflect the relative accuracy of the estimate. All composites have been
      capped where appropriate.
| | --- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | **  | Open pit mineral resources are reported at a cut-off
      grade of 8% TiO2. Cut-off grades are based on a price of US$170
      per tonne of ilmenite back calculated to TiO2and recoveries of
      70 percent, without considering revenues from other metals.                                                     
| | *** | Reported Fe2O3has been lowered to
      reflect the amount of Fe estimated to be contained in ilmenite based on
      the assumption that all Ti has been assigned to ilmenite. At this time,
      accurately quantifying the amount of magnetite contained within this
      estimate is not possible.              

As stated above, the Mineral Resource
has been quantified in terms of TiO2and Fe2O3,
the analytical components captured for assays of titanium and iron. In any
potential mining scenario, the Project would produce ilmenite
(FeTiO3) and potentially titaniferous magnetite
(TiFe2O4) and magnetite (Fe3O4) as a
by-product. The Fe2O3 values have been reduced to reflect Fe found within the
ilmenite associated with the TiO2, however accurately quantifying
magnetite is not possible at this time as further mineralogical work will be
needed.

Based on the assumption that all Ti is
  found within ilmenite, the contained ilmenite metal in the Mineral Resource
  is summarized in Table 13.10.

Table 13.10: Summary of Titac Project ilmenite content within
the Mineral Resource

Category
      Quantity
      Ilmenite
        Grade
      Contained
        Ilmenite(FeTiO3)Mt
      %
      Mt.Inferred
      45.1
      28.5
      12.9


|13.13 | Grade Sensitivity Analysis                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
|----- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|      |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
|      | The mineral resources of the Project are sensitive to the
      selection of the reporting cut-off grade. To illustrate this sensitivity,
      the block model quantities and grade estimates within the conceptual pit
      used to constrain the mineral resources are presented
in Table 13.11 at different cut-off
grades. The reader is cautioned that the figures presented in this table should
not be misconstrued with a Mineral Resource Statement. The figures are only
presented to show the sensitivity of the block model estimates to the selection
of cut-off grade. Figure 13.14 presents this sensitivity as grade tonnage
curves.

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Table 13.11: Global Block Model Quantities and Grade
Estimates*, Titac Project at Various cut-off Grades

Cut-off Grade TiO2(%)
      Quantity (Mt)
      Grade TiO2(%)0
    48.1
    14.505
    48.0
    14.536
    47.8
    14.577
    47.0
    14.708
    45.1
    15.009
    42.0
    15.4810
    39.5
    15.8611
    36.8
    16.2512
    34.2
    16.6113
    31.1
    17.0214
    27.8
    17.4315
    23.2
    18.0120
    4.4
    21.7825
    0.2
    26.24


* The reader is cautioned that the
figures in this table should not be misconstrued with a Mineral Resource
Statement. The figures are only presented to show the sensitivity of the
block model estimates to the selection of cut-off grade.



Figure 13.14: Grade Tonnage Curves for the Titac Project

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|**13.14** | Mineral Resource Risks                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
|--------- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|          |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
|          | Ilmenite is an industrial mineral and there are risks and
      uncertainties associated with this ilmenite resource, many of which are
      common to industrial mineral deposits. Industrial mineral have special
      risks that are not typically associated with precious or base metal mines.
      Special concerns include mineralogy of material, deleterious elements
      (such as silica, calcium, magnesium and manganese), and special market
      factors such as market size or proprietary technology. Because of these
      and other issues, industrial mineral deposits carry additional risk
      compared to more common metal products.

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|14 | Adjacent Properties                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
|-- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
|   | The Project is situated at the western edge of the Duluth
      geological complex, bordering on the archean Granite-Greenstone Terrains
      of the Canadian Shield. This area is a prolific mining area, including
      several massive Taconite (Iron ore) mines of the Mesabi Range.                                                                                                                                                                                                                                                                                                                     
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
|   | The Duluth Complex contains a series of Cu-Ni deposits in
      close proximity to the Project. These Cu- Ni deposits include Tecks
      Mesaba deposits and Polymets NorthMet deposit. These deposits lie near
      the basil contact between the Duluth Complex and the underlying older
      Precambrian rocks.
      There are also numerous OUI bodies similar to Titac
        within 50 km of the Project Area. CIOUSs other OUI ilmenite project,
        Longnose which is similar but larger and higher grade than the Project,
        lies approximately 40 km north of the Project
    Area.

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|15 | Other Relevant Data and
  Information                                                                          
|-- | ---------------------------------------------------------------------------------------------------------------
|   |                                                                                                                
|   | There is no additional data or information not contained
      in this report which is relevant to the
Project.

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|16 | Interpretation and Conclusions                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
|-- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
|   | The Titac OUIs are geologically interpreted to be
      late-stage, intrusions that cut early Duluth Complex intrusives, and are
      associated with magmatism generated by the 1.1 billion year old
      Midcontinent Rift system.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
|   | Re-interpretation of a 1967 ground magnetic survey also
      shows that the Titac intrusion may be a cluster of OUIs. The drilling
      program conducted in 2010 and 2011 by CIOUS confirmed strong
      titanium-iron-oxide mineralization at the Project Area, and determined
      that the Project Area contains at least two intrusions with large zones of
      titanium-iron-oxide mineralization (Titac North and Titac South). The
      Titac intrusions are stratigraphically complex with funnel- or pipe-like
      geometries, and seemingly interlayered peridotite, pyroxenite, massive
      oxide, and semi-massive oxide. Titac South is at least 490 m thick, and
      also has a pipe-like geometry. The Titac OUI or OUIs are hosted by a
      combination of troctolitic rocks of the Western Margin intrusion and
      anorthositic rocks of the Anorthositic series (Titac).                                                                                                                                                                                                                                               
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
|   | Ilmenite and to a lesser extend titaniferous magnetite is
      used as a source material for titanium used as pigments and as a metal
      alloy. Rutile is the ideal source material for titanium as it contains
      nearly twice as much Ti as ilmenite; however ilmenite is by far the more
      common source.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
|   | Ilmenite is an industrial mineral and there are risks and
      uncertainties associated with this ilmenite resource, many of which are
      common to industrial mineral deposits. Industrial mineral have special
      risks that are not typically associated with precious or base metal mines.
      Special concerns include mineralogy of material, deleterious elements
      (such as silica, calcium, magnesium and manganese), and special market
      factors such as market size or proprietary technology. Because of these
      and other issues, industrial mineral deposits carry additional risk
      compared to more common metal products.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
|   | Historic metallurgical tests of the Titac material are
      very limited. Small scale testing indicates that a viable Ilmenite
      concentrate could be created from processing of Titac material, although
      higher than ideal deleterious element values, such as magnesium, may
      reduce the potential ilmenite product price. The ilmenite may be sold as a
      concentrate to an existing ilmenite processor as the deposit is amicable
      to shipping due to its proximity to rail and a short haul to bulk ports on
      the western shore of Lake Superior. As well, local beneficiation could be
      considered, particularly when other nearby OUI bodies are considered for
      increased scale. The main hurdle to overcome with future exploitation of
      the Titac deposit revolves around metallurgical optimization to create the
      highest grade concentrate while reducing potential deleterious element
      contamination of the concentrate. Further economic analysis of this
      project is anticipated and should include resolution of the mineralogical,
      metallurgical and processing issues.
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
|   | Based upon a relatively simple processing flow sheet for
      ilmenite concentrate, a recent increase in demand for Ilmenite and the
      projects close proximity to other bulk mines and inexpensive shipping
      routes, SRK believes that the Project meets the criteria for having
      reasonable prospects of economic extraction.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
|   | The mineral resources for Titac South presented in this
      report represent the first time disclosure of Mineral Resource for the
      Project . Drilling on the Titac North deposit is insufficient for
      delineation of the deposit and evaluation of a resource for Titac North
      has not been undertaken.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   

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The Mineral Resource for Titac South at a cut-off grade
      of 8% TiO2includes 45.1 million tonnes at an average grade of
      15.0% TiO2. Based on the assumption that all Ti is found
      within ilmenite, the contained ilmenite in the Mineral Resource includes
      12.8 million tonnes at an average grade of 28.5% ilmenite. While not
      quantified here, the potential for extraction of iron from magnetite
      exists and would provide an upside to the
project. Vanadium may also be of economic interest, but it has not been analyzed
by SRK.

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|17 | Recommendations                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
|-- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
|   | The Project Area is at an early exploration stage and
      merits additional work. The drilling program conducted in 2010 and 2011 by
      CIOUS has confirmed strong titanium-iron-oxide mineralization at the
      Project Area, and determined that the Project Area contains at least two
      OUIs with large zones of titanium-iron-oxide mineralization (Titac North
      and Titac South). The Titac South intrusion was extensively drilled by
      CIOUS in 2010 and 2011, and has been fairly well defined by this drilling.
      A modest in-fill drilling program is recommended at Titac South to farther
      define contacts with country rock, and to fill-in local gaps with-in the
      intrusion. Ore mineral speciation and metallurgical/beneficiation studies,
      as well as a preliminary economic assessment should also be conducted SRK
      recommends the following work and
expenditures:

| |  | An in-fill drilling program consisting of six diamond
      drill holes and ~1,800 m of core is recommended.                                                                                                                                                                                        
| | - | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |   |                                                                                                                                                                                                                                                                                                     
| |  | A petrographic and mineral chemistry study of typical
      oxide and sulfide mineralization present at Titac should be conducted to
      identify the specific oxide and sulfide minerals present, and their
      elemental make-up.                                                             
| |   |                                                                                                                                                                                                                                                                                                     
| |  | Metallurgical test work in conjunction with the
      mineralogical studies, to assist with better understanding of ilmenite an
      magnetite recovery, project economic analysis: 100 kg composite from
      sample coarse rejects should be collected that represents average
      TiO2grades.
| |   |                                                                                                                                                                                                                                                                                                     
| |  | A preliminary economic assessment should be conducted                                                                                                                                                                                                                                               

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

Table 17.1: Estimated Cost for the
Exploration Program Proposed for the Project.

Recommendation
      Estimated Cost (US$)Titac South in-fill drilling (6 holes/1,800 m @ $180/m*)
    324,000Petrographic and mineral chemistry study
    20,000Metallurgical testing
    50,000Preliminary economic assessment study
    100,000TOTAL
    494,000


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

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|18 | References                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
|-- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
|   | Bonnichsen, B., 1972, Southern part of the Duluth Complex
      in Sims, P.K., and Morey, G.B., eds., Geology of Minnesota: A centennial
      volume, St. Paul, Minnesota Geological Survey, p. 361-387.                                                                                                                                                                                                                                                                                                    
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
|   | Broderick, T.M., 1917, The relation of the titaniferous
      magnetites of northeastern Minnesota to the Duluth Gabbro, Economic
      Geology, v. 12, p. 663-696.                                                                                                                                                                                                                                                                                                                                          
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
|   | Coleraine Minerals Research Laboratory. April 26, 1996.
      Preliminary, unpublished report by . B. Niles, Research Coordinator.
      CMRL/TR-96-29. University of Minnesota  Duluth, Natural Resources
      Research Institute, 5013 Miller Trunk Highway, Duluth, Minnesota, 55811.                                                                                                                                                                                                                   
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
|   | Coleraine Minerals Research Institute,Pilot Plant
      Beneficiation Tests of a Bulk Sample of Ilmenite Ore Provided by American
      Shield Company, December 1994. CMRL/TR-94-15. University of Minnesota 
      Duluth, Natural Resources Research Institute, 5013 Miller Trunk Highway,
      Duluth, Minnesota, 55811.                                                                                                                                                                             
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
|   | Hauck, S.A., Severson, M.J., Zanko, L., Barnes, S.J.,
      Morton, P., Alminas, H., Foord, E.E., and Dahlberg, E.H., 1997, An
      overview of the geology and oxide, sulfide, and platinum-group element
      mineralization along the western and northern contacts of the Duluth
      Complex, in Ojakangas, R.W., Dickas, A.B., and Green, J.C., eds., Middle
      Proterozoic to Cambrian Rifting, Central North America: Boulder, Colorado,
      Geological Society of America Special Paper 312.
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
|   | Mainwaring, P.R., and Naldrett, A.J., 1977, Country rock
      assimilation and genesis of Cu-Ni sulfides in the Water Hen Intrusion,
      Duluth Complex, Minnesota, Economic Geology, v. 72, 1269-1284.                                                                                                                                                                                                                                                                                                   
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
|   | Miller, J.D., Jr., Green, J.C., Severson, M.J., Chandler,
      V.W., Hauck, S.A., Peterson, D.M., and Wahl, T.E., 2002, Geology and
      mineral potential of the Duluth Complex and related rocks of northeastern
      Minnesota: Minnesota Geological Survey report of Investigations 58, 207 p.                                                                                                                                                                                                        
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
|   | Muhich, T.G., 1993, Movement of titanium across the
      Duluth Complex-Biwabik Iron Formation contact at Dunka Pit, Mesabi Iron
      Range, northeastern Minnesota [M.S. thesis], Duluth, University of
      Minnesota, 154 p.                                                                                                                                                                                                                                                                           
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
|   | Niles, H.B., 1971 Assay and Test Results from drill hole
      number 26002, A Vanadiferous, Titanifeorus Magnetite in the Duluth Gabbro
      complex, Research Laboratory Technical Repot, 30.015-099(2), 12 p.                                                                                                                                                                                                                                                                                            
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
|   | Paces, J.B., and Miller, J.D., 1993, Precise U-Pb ages of
      Duluth Complex and related mafic intrusions, northeastern Minnesota,
      U.S.A., geochronological insights to physical, petrogenetic,
      paleomagnetic, and tectono-magmatic processes associated eith the 1.1 Ga
      Midcontinent Rift System, Journal of Geophysical Research, V. 98, pp.
      13997-14013.                                                                                                                        
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
|   | Ross, B.A., 1985, A petrologic study of the Bardon Peak
      peridotite, Duluth Complex [M.S. thesis], Duluth, University of Minnesota,
      140 p.                                                                                                                                                                                                                                                                                                                                                        
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
|   | Schiffries, C.M, 1982, The petrogenesis of a
      platiniferous dunite pipe in the Bushveld Complex: Infiltration
      metasomatism by a chloride solution, Economic Geology, v. 77, p.
      1439-1453.                                                                                                                                                                                                                                                                                                   
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
|   | Severson, M.J., 1988, Geology and structure of a portion
      of the Partridge River Intrusion: A progress report, Duluth, University of
      Minnesota, Natural Resources Research Institute, Technical Report,
      NRRI/GMIN-TR-88-08, 78 p.                                                                                                                                                                                                                                                           

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|Titac Project NI 43-101        | Page
      88

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

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

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

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

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

Weather.com, December 20, 2010, http://www.weather.com/outlook/health/fitness/wxclimatology/monthly/USMN0370

Winchell, H.V., 1897, Reputed nickel
mines in Minnesota, Engineering Mining Journal, v. 64, p. 578.

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|19 | Date and Signature Page                                                                                                                               
|-- | ------------------------------------------------------------------------------------------------------------------------------------------------------
|   |                                                                                                                                                       
|   | This technical report was written by the following
      Qualified Persons. The effective date of this technical report is
      January 19th, 2012.

Qualified Person
      Signature
      DateDarrell J. Farrow, Pr.Sci.Nat.
    original signed
    January 27, 2012Michael D. Johnson, P.Geo
    original signed
    January 27, 2012


Reviewed by



Original signedDr. Wayne Barnett, Pr.Sci.NatProject Reviewer


All data used as source material plus the text, tables,
figures, and attachments of this document have been reviewed and prepared in
accordance with generally accepted professional engineering and environmental
practices.

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      Titac-NI43-101Rpt (4).docx
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---

CERTIFICATE OF QUALIFIED PERSON

To Accompany the report entitled: Technical Report on the Titac Ilmenite Project, Minnesota, USA, January 27, 2012(Technical Report)

I, Michael D. Johnson, residing at 2021
  Berkshire Crescent, Coquitlam, BC, V3E 3N5, do hereby certify that:

|1)  | I am a Senior Geologist with the firm of SRK Consulting
      (Canada) Inc. (SRK) with an office at Suite 2200, 1066 West Hastings
      Street, Vancouver, BC, V6E 3X2;                                                                                                                                                                                                                                                                                                                                                 
|--- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
|2)  | I am a graduate of the Queens University, Kingston,
      Ontario in 1996, where I obtained a B.Sc. (H) in Geological Sciences. I
      have practiced my profession continuously since graduation in April, 1996.
      I have been employed as a geologist, exploration manager, mine geologist
      and open pit mine manager. I have extensive experience in resource
      estimation within many deposit types. I have worked with ultramafic
      intrusions and related mineral deposits for more than 10 years;
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
|3)  | I am a Professional Geoscientist registered with the
      Association of Professional Engineers and Geoscientists of BC
      (registration # 34923);                                                                                                                                                                                                                                                                                                                                                                     
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
|4)  | I have personally inspected the property that is the
      subject of the Technical Report in March 2010;                                                                                                                                                                                                                                                                                                                                                                                                                  
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
|5)  | I have read the definition of qualified person set out
      in National Instrument 43-101 and certify that by virtue of my education,
      affiliation to a professional association and past relevant work
      experience, I fulfill the requirements to be a qualified person for the
      purposes of National Instrument 43-101;                                                                                                                                                                              
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
|6)  | I am responsible for the preparation of Sections 12 and
      13 of the Technical Report;                                                                                                                                                                                                                                                                                                                                                                                                                                  
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
|7)  | I am independent of the issuer as defined in Section 1.5
      of National Instrument 43-101;                                                                                                                                                                                                                                                                                                                                                                                                                              
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
|8)  | I have had no prior involvement with the property that is
      the subject of the Technical Report.                                                                                                                                                                                                                                                                                                                                                                                                                       
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
|9)  | I have read National Instrument 43-101 and the sections
      of the Technical Report for which I am responsible have been prepared in
      compliance therewith;                                                                                                                                                                                                                                                                                                                                                         
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
|10) | As of the effective date of the Technical Report, to the
      best of my knowledge, information and belief, the sections of the Report
      for which I am responsible contain all scientific and technical
      information that is required to be disclosed to make the portions of the
      Technical Report for which I am responsible not
      misleading;                                                                                                                                                       

|January 27, 2012 | [signed and sealed]     
|---------------- | --------------------------
|Vancouver        | Michael D. Johnson, P.Geo.
|                 | Senior Geologist, SRK     

---

CERTIFICATE OF QUALIFIED PERSON

To accompany the report entitled: Technical Report on the Titac
  Ilmenite Project, Minnesota, USA, January 27, 2012

I, Darrell Farrow, residing at 40  4055 Indian River Drive,
  North Vancouver, Canada, do hereby certify that:

| | 1)  | I am an associate with the firm of SRK Consulting
      (Canada) Inc. (SRK) with an office at 22nd Floor, 1066 West Hastings
      Street, Vancouver, BC, Canada;                                                                                                                                                                                                                                                                                                                                                    
| | --- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | 2)  | I am a graduate of the University of Pretoria, Pretoria,
      South Africa (M.Sc. Geology 1989) and the University of Cape Town, Cape
      Town, South Africa (B.Sc.(Hons) 1982). I have practiced my profession
      continuously since graduation and have been employed as a research
      geochemist for four years, as a geologist at two mining operations over a
      period of ten years, as a manager of an exploration laboratory for three
      years, and as a consulting geologist for eleven years;
| | 3)  | I am a Professional Natural Scientist in the field of
      practice of Geological Science, registered as a member of the South
      African Council for Natural Scientific Professions, South Africa, Reg. No.
      400163/07;                                                                                                                                                                                                                                                                                      
| | 4)  | I have not personally inspected the property that is the
      subject of the Technical Report but have relied on a site visit conducted
      by Mike Johnson P.Geo., co-author of this technical report in March
      2010;                                                                                                                                                                                                                                                                                         
| | 5)  | I have read the definition of qualified person set out
      in National Instrument 43-101 and certify that by virtue of my education,
      affiliation to a professional association and past relevant work
      experience, I fulfill the requirements to be a qualified person for the
      purposes of National Instrument 43-101 and the sections to which I have
      contributed in this technical report have been prepared in compliance with
      National Instrument 43-101 and Form 43-101F1;     
| | 6)  | I as a qualified person am independent of the issuer as
      defined in Section 1.5 of National Instrument 43- 101;                                                                                                                                                                                                                                                                                                                                                                                                   
| | 7)  | I am a co-author of this report and responsible for all
      sections except sections 12 and 13;                                                                                                                                                                                                                                                                                                                                                                                                                      
| | 8)  | I have had no prior involvement with the property that is
      the subject of the Technical Report;                                                                                                                                                                                                                                                                                                                                                                                                                   
| | 9)  | I have read National Instrument 43-101 and confirm that
      the sections of the Technical Report for which I am responsible have been
      prepared in compliance therewith;                                                                                                                                                                                                                                                                                                                                        
| | 10) | As of the effective date of the Technical Report, to the
      best of my knowledge, information and belief, the sections of the
      Technical Report for which I am responsible contain all scientific and
      technical information that is required to be disclosed to make the
      portions of the Technical Report for which I am responsible not
      misleading.                                                                                                                                         

|                  | [signed and sealed]             
|----------------- | ----------------------------------
|Vancouver         | Darrell Farrow, M.Sc., Pr.Sci.Nat.
|January, 27, 2012 |                                   

---