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The Company cautions that the accuracy of resource and reserve estimates is, in part, a function of the quality and quantity of available data and of engineering and geological interpretation and judgment. Given the data available at the time the SRK report was prepared, the estimates presented are considered reasonable. However, they should be accepted with the understanding that additional data and analysis available subsequent to the date of the estimates may necessitate revision. These revisions may be material. SRK is unaware of any environmental, permitting, legal, title, taxation, socio-economic, marketing, and political or other relevant issues that may materially affect the mineral resources. Mineral resources which are not mineral reserves do not have demonstrated economic viability.

Mineral Resource Estimation Methodology

Resource Database

The resource database upon which the mineral resource estimate is based predominantly comprises diamond and reverse circulation drillhole data generated by Cardero from the 2012 Phase I drilling program at Sheini. This data has been supplemented by surface geological mapping and subsequent cross-sectional geological interpretations constructed on the basis of both mapping and drillhole data. The drillhole database comprises 67 diamond drillholes (9,478 metres) and 127 reverse circulation drillholes (1,923 metres). Diamond drillholes are spaced on section lines between 200 m and 800 m apart. Reverse circulation drillholes are concentrated in areas of known detrital mineralisation and are typically spaced on section lines 200 to 400 m apart. The assay database comprises 4,399 samples.

Geological Interpretation

Iron mineralization at Sheini occurs as primary ironstone (banded and granular types with local hardcap development) and as detrital iron deposits (located on plains, peripheral to the ironstone deposits). Primary iron mineralisation identified at Sheini, being classed as a "Rapitan-type iron formation", predominantly comprises bladed haematite with lesser iron hydroxides (goethite and limonite) confined to interbedded banded iron formation and granular iron formation at the base of the Late Precambrian - Early Phanerozoic Buem Formation. The ironstone package and adjacent footwall and hanging wall lithologies have been subjected to ductile deformation resulting in a series of broadly N-S trending asymmetric inclined fold structures, offset by a series of NNE-SSW trending, and later E-W to ENE-WSW trending, brittle faults. The iron mineralisation is sedimentary in origin, and extends to a total of approximately 8.6 kilometres along strike, up to 1.2 kilometres across strike and to depths of up to 300 metres from surface.

Modelling

Geological modelling was conducted in 3D Geomodeller software, using logged ironstone as an explicit control on model geometry. Primary ironstone was modelled within three spatially distinct domains - north zone, central zone and south zone, all of which lie within the Sheini Central prospecting licence. In addition to primary ironstone mineralisation, re-deposited detrital material forms extensive flat-lying platforms adjacent to N-S trending ridges throughout the project area. Figure 1 shows the distribution of the ironstone and detrital units modelled.

To view Figure 1, please visit the following link: http://media3.marketwire.com/docs/CDU_Figure1_846080.pdf.