Mr. Stuart Ross reports
CARDERO COMPLETES ACQUISITION OF THE ZONIA COPPER DEPOSIT, ARIZONA, USA
Cardero Resource Corp. has completed its acquisition of an undivided 100-per-cent interest in the Zonia copper deposit. Under the terms of the option agreement dated Aug. 27, 2015, as amended between the company and Redstone Resources Corp., the company was granted the right to acquire up to a 100-per-cent interest in the property in consideration of, among other things, the aggregate cash payment of $2,425,000 (U.S.) and issuance of an aggregate of 16.5 million common shares over a three-year period.
Pursuant to an amendment dated Oct. 3, 2018, Redstone Resources was granted an option to convert $500,000 (U.S.) of the remaining cash payments to common shares of the company. Redstone Resources exercised that option and a total of 6,179,099 common shares were issued in lieu of $500,000 (U.S.) cash (please see the company's news release dated Oct. 26, 2018). As a result, the total consideration paid to Redstone Resources has been adjusted to $1,925,000 (U.S.) cash and 22,679,099 common shares (please see the attached table).
The company issued five million common shares on Oct. 31, 2018, the delivery of which completes all share issuances associated with the acquisition.
CONSIDERATION PAID TO REDSTONE WITH
RESPECT TO THE ZONIA ACQUISITION
Date Cash (US$) CDU shares
On signing 25,000 (paid) -
Aug. 30, 2015 26,350 (paid) -
Oct. 27, 2015 150,000 (paid) 1,000,000 (issued)
Jan. 31, 2016 75,000 (paid) 1,500,000 (issued)
July 31, 2016 75,000 (paid) -
Jan. 31, 2017 450,000 (paid) 2,500,000 (issued)
July 31, 2017 - 2,500,000 (issued)
Jan. 8, 2018 500,000 (paid) 4,000,000 (issued)
Aug. 17, 2018 50,000 (paid) -
Oct. 26, 2018 - 6,179,099 (issued)
Oct. 31, 2018 573,650* 5,000,000 (issued)
Total 1,925,000 22,679,099
(*) The final cash payment of $573,650 (U.S.) is subject
to a separate agreement and is deemed to have been paid in
full and on time as per the terms of the option agreement.
Redstone Resources will begin transfer of the property to
a wholly owned subsidiary of Cardero, a process that is
expected to be complete within 12 weeks. Under the terms
of the instalment plan, the company will make five equal
instalments of $126,060 (U.S.) commencing on Nov. 6, 2018,
and ending March 31, 2018, for a total payment of
"Completing the acquisition of Zonia is a significant milestone for Cardero, which will allow us advance the Zonia project under Cardero's 100-per-cent ownership. The company has planned and permitted an 18-hole drill program that will test an anomaly northeast of the existing orebody. The drill program is described in our news release dated April 12, 2018," commented Stuart Ross, chief executive officer and president of Cardero Resource.
Zonia copper oxide deposit
The Zonia copper oxide project has been held under private ownership for almost 100 years and has undergone comprehensive exploration, metallurgical studies and mine-development planning. The majority of the mineralized area was prestripped during previous open-pit mining operations at Zonia in 1966, as 17 million tons were mined with seven million tons stacked on heap-leach pads, producing cement copper up until 1975. The property has been drill tested with almost 700 drill holes (60,000 metres). This high-density drilling covers 30 per cent of the property and defines the current resource estimate, reducing technical risk on the deposit.
The Zonia copper deposit has a northeasterly strike length of about 2,400 metres (8,000 feet) and horizontal width varies from 60 m (200 feet) to 460 m (1,500 feet). The deposit consists of multiple mineralized zones that dip at various angles to the northwest. The zones are generally in the order of 200 feet (60 m) wide and commonly occur in subparallel groups of three or more. Most of the deposit has been drilled to depths of 120 m (400 feet) or less. Deposit highlights include:
- Measured and indicated resources of 76.8 million short tons grading 0.33 per cent copper containing 510 million pounds of copper (0.2-per-cent-copper cut-off grade);
- Inferred resources of 27.2 million short tons grading 0.28 per cent copper containing 154.6 million pounds of copper (0.2-per-cent-copper cut-off grade);
- Low strip ratio of 1:1 waste to mineralized material in base case.
A preliminary economic assessment was completed in March, 2018. The base case uses a $2-per-pound designed pit shell with a grade cut-off of 0.17 per cent total copper. At a copper price of $3 per pound the economics are:
- After-tax net present value of 8 per cent and internal rate of return of $192-million and 29 per cent, respectively, with a 2.89-year payback of initial capital;
- Initial capital of $198-million;
- Cumulative net cash flow after taxes of $331-million.
The preliminary economic assessment was prepared by Global Resource Engineering Ltd. of Denver, Colo., in accordance with the Canadian Securities Administrators (CSA) National Instrument 43-101. Global Resource Engineering reported on the scoping-level capital and operating costs, and project economics associated with the potential development of the Zonia copper oxide project. Estimated resources at Zonia were reported in November, 2017, in the company's news release NR17-08.
Cardero also announced receipt of data for a 28-line-kilometre induced polarization and resistivity geophysical survey over the Zonia and contiguous Silver Queen properties utilizing 200-metre-spaced dipoles. Results of the survey outline an area of overlapping chargeability and copper-molybdenum anomalies at the northeast end of the current drill-defined resource estimate that could extend resources significantly. This anomaly is described in detail in the company's news release dated April 12, 2018.
The independent qualified persons, as defined by National Instrument 43-101, for the technical preliminary economic assessment details are Terre Lane and Dr. Todd Harvey of GRE, as well as Rex Bryan, SME-RM No. 411340 of Tetra Tech Inc., who have reviewed and verified that the technical information contained in the technical report is accurate and have approved of the written disclosure.
About Cardero Resource Corp.
Cardero Resource, headquartered in Vancouver, is a resource company focused on building a minerals exploration and development company. Cardero has the exclusive option to acquire up to a 100-per-cent interest in the Zonia copper oxide project, located in Arizona. Zonia is a near-surface copper-oxide resource and a brownfield site, having already been mined in the late 1960s and 1970s.
The company also has two option agreements covering five nickel-cobalt properties in southeastern British Columbia -- the Kootenay project -- totalling approximately 8,000 hectares.
We seek Safe Harbor.
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