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Cardero Drill Results Update

Bob Moriarty
June 19, 2003

I was broken-hearted when I saw the Cardero drill results last night. I got a call last night at 12:30 in the morning from the other coast. I just knew it was bad news, who would call you at 12:30 at night with good news? It was Henk van Alphen of Cardero (advertiser) CDU to talk about the drill results from La Providencia. Bottom line they sucked. He and I and the geologist and the drill team were all expecting multi-kilo per ton silver assays and got a couple of piddling ounces per ton.

The drill results do not agree with the chip samples. Either the drill results are wrong or the chip samples were wrong. They got the intervals of mineralization correct but the grades were way off. Where they should have been getting multi-kilo grades of silver, they were getting no higher than 4 ounces of silver per ton. I believe they did a poor job of drilling.

Henk didn't try to worm his way out of anything and he didn't blame anyone other than himself. He said, "I got cocky and we were trying to cherry pick the drill holes. It didn't work and the drill results are not good."

I accept that. I think they did get cocky as I did and the drill results were not what either they or I expected. You can pretty much know that this morning when the stock opened, it opened down and a lot of value disappeared. For anyone who has invested based on what I have been saying all along, I'm sorry. I own Cardero at $1.04 a share US and Ascot at $.197 US and I, personally, am not selling any shares, nor have I sold any in the last month.

Their lead geologist said they were doing a bad job of drilling and were washing silver down the hole. At the time he was being ignored. You may believe they are not ignoring him now. Henk intends to twin a hole and redrill to test the results again. That will take three weeks to get the results.

When you buy Cardero or any other stock, in the end all you are buying is management. I don't know of any other company where the president would have either the balls or the good sense to call me at 12:30 in the morning to give me bad news. I don't like these drill results, nor should you. If they truly reflect the silver grades at La Providencia it would be a strong indication of a large but low grade silver deposit. The entire story of Cardero and La Providencia is that it's a large but high grade system that can be profitable at $4.50 an ounce silver and it's either one or the other. I believe in the company and right now I don't have any evidence but my faith in Henk van Alphen and the original chip samples to prove I'm right.

Meanwhile, back at the ranch, don't let the panic of others force you into selling what I believe to be a good stock. If you are 100% convinced the drill results were accurate, that is not a world class deposit. If you accept that they probably did screw up and are man enough to admit it, hang on, the stock is going to be a lot better deal in a couple of days. And when it bounces back, it will be an opportunity.

They haven't drilled 1% of the project and these results are not the end of the story. Cardero does have $3.5 million Cdn in the bank, and more than enough resources to continue drilling. As Miss Scarlet said in "Gone with the Wind" tomorrow is another day.

Bob Moriarty
Jun 19, 2003

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