Steel Guru : Cardero sale pact with Hongda for Pampa de Pongo iron ore project in Peru

Cardero Resource Corp has provided a progress report on the Pampa de Pongo sale agreement with Zibo Hongda Mining Co Ltd, a subsidiary of Nanjinzhao Group Co Ltd Hongda has provided the Company full assurances it intends to complete the purchase of Pampa de Pongo and is diligently working to satisfy the conditions necessary to secure the bank guarantee for the remainder of the purchase price.

Hongda is also continuing its aggressive engineering drill program at the site, which is expected to last through September 2009.

Hongda has informed the company that, while it has made significant strides towards completing its purchase of Pampa de Pongo, it will be unable meet the August 19th 2009 deadline to provide an irrevocable letter of guarantee from a senior Chinese bank guaranteeing the payment of the balance of the purchase price. Hongda cites increased Chinese Central Government regulations and controls on foreign exchange, specifically, a new requirement for governmental approvals for overseas investments being secured prior to the granting of any bank guarantees for such investments.

Hongda also reported that it has encountered unforeseen delays in the incorporation of its Peruvian subsidiary company, to which title of the Pampa de Pongo project will be transferred. However, the Chinese governmental approval process has recently been completed, and the incorporation of the new subsidiary has now been finalized.

All other terms of the Pampa de Pongo sale agreement remain unchanged, with the balance of the purchase price of USD 88 million still being due on the earlier of 10 days after Hongda has received the necessary Chinese governmental approvals to proceed with the purchase and December 17th 2009.

Mr Hank van Alphen president of Cardero said that "Hongda's ongoing work continues to provide strong assurance that they are actively moving toward securing the letter of guarantee and the completion of their purchase of the Pampa de Pongo deposit. Hongda having experienced some administrative difficulties with their approval process over the past months, their communication with Cardero is frequent and I am confident of their commitment to meet the December 17th deadline for payment of the balance."
Hongda is actively pursuing its engineering drill program on the Pampa de Pongo deposit, which provides data for ongoing mine engineering studies. This program is anticipated to continue until the end of September, 2009, when the current drilling permit expires. Hongda has advised Cardero that it is currently in discussion with several international consulting firms to advance a full feasibility study on the project. Selection of the engineering firm is expected to be completed soon, with work beginning immediately thereafter.

Hongda currently has four diamond drill rigs are on site, with a fifth expected when available. To date, five drillholes have been completed, with four additional holes currently in progress. Drilling is focused on the Central Zone and South Zone. Hongda has not sampled or assayed any of the drillcore, relying instead on data from a portable XRF analyzer. However, all drill holes completed within the limits of the existing resource shell have been visually inspected by Cardero geologists and have intersected magnetite mineralization as expected. Mineralogy interpreted by visual inspection includes magnetite and chalcopyrite.

Cardero's focus through the coming months is be to realize the considerable value it believes is locked in the Company's significant iron ore assets in the Marcona District of southern Peru in addition to advancing exploration of its gold and copper projects in Argentina and Mexico.