Doolgunna Project - Development Activities

During 2010, Sandfire commenced Scoping Studies and preliminary work leading to a Definitive Feasibility Study for the DeGrussa Project which is expected to commence during the fourth Quarter of 2010.

This will provide a strong foundation for mine development commencing in the second Quarter of 2011.

Key activities currently underway include:

• Metallurgical testwork – which is proceeding successfully, aimed at optimising recoveries and concentrate grades;

• Environmental studies and consultation with Government – which so far indicates that there are no barriers to development with formal submissions for environmental approval to be prepared in the current Quarter;

• Underground mine designs – which are currently being updated to incorporate the Phase II resource increase announced in July and the Conductor 5 deposit;

• Geotechnical investigations – which indicate the in-situ stress regime to be benign and rock strength to be generally good;

• Open pit mine design – which will take account of extraction of the direct shipping material and stockpiling material as future concentrator feed;

• Native title negotiations – which have proceeded cordially with final form agreements expected to be finalised in the near term; and

• Planning for early infrastructure works – which is proceeding well and, subject to statutory approvals, will allow mining and construction to proceed unimpeded.