Doolgunna Project - Resource Development

In mid-2009, Sandfire discovered high-grade VMS copper-gold mineralisation at DeGrussa, located in the north-eastern portion of its Doolgunna Project tenements, with subsequent drilling resulting in the discovery of the underlying and adjacent Conductor 1, Conductor 4 and Conductor 5 deposits.

Sandfire commenced a major program of diamond core drilling at the Doolgunna Project on 4 July 2009. Since then, a total of over 100,000 metres of diamond drilling has been completed on a 40m by 40m surface drill hole pattern, resulting in the completion of three successive independent JORC compliant Mineral Resource statements.

The current (Phase III) JORC compliant Mineral Resource for the DeGrussa Project is an Indicated and Inferred Resource of 10.67Mt @ 5.6% copper, 1.9g/t gold and 15g/t silver containing 600,000 tonnes of copper, 660,000oz of gold and 5.1Moz of silver.

View the full Phase III JORC resource estimate.

Within the Indicated Resource of 250,000 tonnes grading 17.6% Cu, 2.6g/t Au and 21g/t Ag for the DeGrussa Supergene Chalcocite zone, which lies directly above the main DeGrussa deposit, preliminary open pit optimisations and design scheduling has indicated a component of direct shipping material comprising:

DeGrussa Direct Shipping Material: 151,000 tonnes @ 25.6% Cu, 2.6g/t Au, 21g/t Ag

This material comprises predominantly chalcocite (with minor chalcopyrite) copper sulphide mineralisation suitable for early extraction by open pit before mining of the primary sulphide deposits commences, with the potential to yield early cash flow from the Project from 39,000 tonnes of contained copper.

The open pit is planned to extend to a depth of approximately 140m below surface and, in addition to the direct shipping material, provide approximately 500,000 tonnes of massive sulphide copper mineralisation for early mill feed.

This material, which comprises both primary chalcopyrite and lower grade chalcocitic mineralisation, will be stockpiled as future feed for the commencement of processing. This will facilitate a rapid ramp-up of the mill to full design capacity as underground production is developed.

It is envisaged that the direct shipping material will be extracted in the early stages of development of the DeGrussa Project and has the potential to realise valuable early cash flow while the primary deposits are developed and surface infrastructure and processing facilities are constructed.