SANDFIRE RESOURCES LIMITED — Annual Report 2012

Sep 16, 2012

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Financial Report

For the year ended 30 June 2012

ASX Code: SFR

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FINANCIAL REPORT FOR THE YEAR ENDED 30 JUNE 2012 CONTENTS

Corporate Information	1
Directors’ Report	3
Auditor’s Independence Declaration	16
Consolidated Statement of Comprehensive Income	29
Consolidated Statement of Financial Position	30
Consolidated Statement of Changes in Equity	31
Consolidated Statement of Cash Flows	32
Notes to the Financial Statements	33
Directors’ Declaration	72
Independent Auditor’s Report	73

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FINANCIAL REPORT FOR THE YEAR ENDED 30 JUNE 2012 CORPORATE INFORMATION

ABN 55 105 154 185

Directors

Derek La Ferla Non-Executive Chairman Karl M Simich Managing Director and Chief Executive Officer W John Evans Executive Technical Director Soocheol Shin Non-Executive Director Robert N Scott Non-Executive Director Company Secretary and Chief Financial Officer

Matthew L Fitzgerald

Registered Office and Principal Place of Business

Level 1, 31 Ventnor Avenue West Perth WA 6005 Tel: +61 8 6430 3800 Fax: +61 8 6430 3849 Email: admin@sandfire.com.au Web: www.sandfire.com.au Share registry Security Transfer Registrars Pty Ltd 770 Canning Highway Applecross WA 6153 Tel: +61 8 9315 2333 Fax: +61 8 9315 2233 Email: registrar@securitytransfer.com.au

Auditors

Ernst & Young Ernst & Young Building 11 Mounts Bay Road Perth WA 6000

Home Exchange

Australian Securities Exchange Limited Exchange Plaza 2 The Esplanade Perth WA 6000 ASX Code: Ordinary fully paid shares: SFR

Competent Person’s Statement – Mineral Resources

The information in this report that relates to Mineral Resources (except the Indicated Resource of Supergene Chalcocite) is based on information compiled by Diederik Speijers who is a Fellow of the Australasian Institute of Mining and Metallurgy. Mr Speijers is a permanent employee of McDonald Speijers and has sufficient experience which is relevant to the style of mineralisation and type of deposit under consideration and to the activity which he is undertaking to qualify as a Competent Person as defined in the 2004 Edition of the Australasian Code of Reporting of Exploration Results, Mineral Resources and Ore Reserves. Mr Speijers consents to the inclusion in the report of the matters based on his information in the form and context in which it appears.

Competent Person’s Statement – Mineral Resources

The information in this report that relates to the Indicated Resource of Supergene Chalcocite is based on information compiled by David Slater who is a Fellow of the Australasian Institute of Mining and Metallurgy. Mr Slater is a permanent employee of Coffey Mining and has sufficient experience which is relevant to the style of mineralisation and type of deposit under consideration and to the activity which he is undertaking to qualify as a Competent Person as defined in the 2004 Edition of the Australasian Code of Reporting of Exploration Results, Mineral Resources and Ore Reserves. Mr Slater consents to the inclusion in the report of the matters based on his information in the form and context in which it appears.

Competent Person’s Statement – Underground Ore Reserves

The information in this report that relates to Underground Ore Reserves is based on information compiled by Shane McLeay of Entech Pty Ltd, who is a Member of the Australasian Institute of Mining and Metallurgy. Mr McLeay has sufficient experience which is relevant to the style of mineralisation and type of deposit under consideration and to the activity which he is undertaking to qualify as a Competent Person as defined in the 2004 Edition of the Australasian Code of Reporting of Exploration Results, Mineral Resources and Ore Reserves. Mr McLeay consents to the inclusion in the report of the matters based on his information in the form and context in which it appears.

Competent Person’s Statement – Open Pit Ore Reserves

The information in this report that relates to Open Pit Ore Reserves is based on information compiled by Quinton de Klerk of Cube Consulting, who is a Fellow of the Australasian Institute of Mining and Metallurgy. Mr de Klerk has sufficient experience which is relevant to the activity which he is undertaking to qualify as a Competent Person as defined in the 2004 Edition of the Australasian Code of Reporting of Exploration Results, Mineral Resources and Ore Reserves. Mr de Klerk consents to the inclusion in the report of the matters based on his information in the form and context in which it appears.

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FINANCIAL REPORT FOR THE YEAR ENDED 30 JUNE 2012

CORPORATE INFORMATION

Forward-Looking Statements

Certain statements made during or in connection with this statement contain or comprise certain forward-looking statements regarding Sandfire’s Mineral Resources and Reserves, exploration operations, project development operations, production rates, life of mine, projected cash flow, capital expenditure, operating costs and other economic performance and financial condition as well as general market outlook. Although Sandfire believes that the expectations reflected in such forward-looking statements are reasonable, such expectations are only predictions and are subject to inherent risks and uncertainties which could cause actual values, results, performance or achievements to differ materially from those expressed, implied or projected in any forward looking statements and no assurance can be given that such expectations will prove to have been correct. Accordingly, results could differ materially from those set out in the forward-looking statements as a result of, among other factors, changes in economic and market conditions, delays or changes in project development, success of business and operating initiatives, changes in the regulatory environment and other government actions, fluctuations in metals prices and exchange rates and business and operational risk management. Except for statutory liability which cannot be excluded, each of Sandfire, its officers, employees and advisors expressly disclaim any responsibility for the accuracy or completeness of the material contained in this statement and excludes all liability whatsoever (including in negligence) for any loss or damage which may be suffered by any person as a consequence of any information in this statement or any error or omission. Sandfire undertakes no obligation to update publicly or release any revisions to these forward-looking statements to reflect events or circumstances after today's date or to reflect the occurrence of unanticipated events other than required by the Corporations Act and ASX Listing Rules. Accordingly you should not place undue reliance on any forward looking statement.

Exploration and Resource Targets

Any discussion in relation to the potential quantity and grade of Exploration Targets for the DeGrussa Project is only conceptual in nature. While Sandfire is confident that it will report additional JORC compliant resources for the DeGrussa Project, there has been insufficient exploration to define mineral resources in addition to the current JORC compliant resource inventory and it is uncertain if further exploration will result in the determination of additional JORC compliant Mineral Resources.

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FINANCIAL REPORT FOR THE YEAR ENDED 30 JUNE 2012 DIRECTORS’ REPORT

The directors present their report on the consolidated entity (referred to as the Group) consisting of the Parent entity, Sandfire Resources NL (Sandfire or the Company), and the entities it controlled at the end of, or during, the year ended 30 June 2012 (the reporting period) and the auditor’s report thereon.

1 Directors

The names and details of the Company’s directors in office during the financial year and until the date of this report are as follows:

Name	Period of Directorship
Mr Derek La Ferla	Appointed 17 May 2010
Independent Non-Executive Chairman
Mr Karl M Simich	Appointed Director 27 September 2007
Managing Director & Chief Executive Officer	Managing Director and Chief Executive Officer since 1 July		2009
Mr W John Evans	Appointed 2 October 2007
Executive Technical Director
Mr Robert N Scott	Appointed 30 July 2010
Independent Non-Executive Director
Mr Soocheol Shin	Appointed 28 February 2012
Non-Executive Director
Former
Name	Period of Directorship
Mr Jonghun Jong	Appointed 24 July 2008, resigned 28 February 2012
Non-Executive Director
The qualifications, experience, other directorships and special responsibilities of the directors			in office at the date of
this report are:
Derek La Ferla	Independent Non-Executive Chairman
Qualifications	B. Arts, B.Juris, B.Law, Fellow of AICD
Experience and expertise	Mr La Ferla has been a corporate lawyer for over 25 years and is a partner with
	international law firm, Norton Rose Australia. He is one of two national team leaders
	for the firm’s Corporate Advisory Group (which includes mining and resources). Mr
	La Ferla also has considerable experience as a company director and (in addition to
	his role as non executive chairman of Sandfire Resources NL) is the chairman of
	Cashmere Iron Limited and OTOC Limited. He has also		previously served on the
	Norton Rose Australia national board (while the firm was Deacons) and listed
	investment company, Katana Capital Limited. He is a		fellow of the Australian
	Institute of Company Directors.
Special responsibilities	Chairman of the Remuneration and Nomination Committee.
	Member of the Audit and Risk Committee.
Karl M Simich	Managing Director and Chief Executive	Officer
Qualifications	B.Comm, FCA, F.Fin
Experience and expertise	Mr Simich has had considerable international business experience in the
	management and administration of publicly listed companies, specialising in
	resource finance and corporate management. Mr Simich is a Fellow of the Institute
	of Chartered Accountants and a Fellow of the Financial Services Institute of
	Australasia and has completed post-graduate studies in business and finance.
Former directorships in last three years	Non-executive Chairman of Blue Capital Ltd (March 2009 to October 2009).
	Non-executive Director of Indago Resources Ltd (August 2009 to October 2009).
W John Evans	Executive Technical Director
Qualifications	B.Sc
Experience and other directorships	Mr Evans graduated from the University of Auckland New Zealand in 1970 with
	B.Sc. Major in geology. Mr Evans is a fellow of the Australasian Institute of Mining
	and Metallurgy. Between 1970 and 1987, he was employed by various divisions of
	CRA Limited, including being in charge	of all field operations for iron ore in the
	Pilbara, Western Australia and gold and base metals in		the Murchison, Western
	Australia. He was the Managing Director of Marymia Exploration NL for 12 years
	until 2002 and has been a geological consultant to numerous companies during and
	since.

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FINANCIAL REPORT FOR THE YEAR ENDED 30 JUNE 2012 DIRECTORS’ REPORT

1 Directors (continued)

Robert N Scott	Independent Non-Executive Director
Qualifications	FCA
Experience and expertise	Mr Scott has extensive experience as a taxation advisor, specialising in the mining
	sector and has over 35 years experience	with major accounting firms as a corporate
	advisor. Mr Scott holds a Fellowship	of the Australian Institute of Chartered
	Accountants and the Taxation Institute of		Australia. He is also a member of the
	Institute of Company Directors.
Other current directorships	Non-executive Director of Amadeus Energy		Ltd (since October 1996).
	Non-executive Director of Homeloans Ltd	(since November 2000).
	Non-executive Director of CGA Mining Ltd (since January 2009).
Former directorships in last three years	Non-executive Director of Neptune Marine Services Ltd (May 2007 to March 2012).
	Chairman of bioMD Ltd (July 2006 to June 2011).
	Chairman of Australian Renewable Fuels Ltd (December 2002 to June 2011).
Special responsibilities	Chairman of the Audit and Risk Committee.
	Member of the Remuneration and Nomination Committee.
Soocheol Shin	Non-Executive Director
Qualifications	B.A. Public Administration
Experience and expertise	Mr Shin is the Managing Director of POSCO Australia			Pty Ltd (a wholly-owned
	subsidiary of the Korean steelmaker POSCO), which holds 15.6 percent of the
	Company’s issued capital. Mr Shin joined POSCO in 1989 and has held a variety of
	positions throughout his career, including		Project Manager, POSCO Australia Pty
	Ltd; Team Leader, Coal Procurement Group; Team Leader, Steel Making Raw
	Materials Procurement Group and Group Leader, Raw Materials Transportation
	Group. He was appointed Managing Director of POSCO Australia in February 2012.
Other current directorships	Non-executive Director of Jupiter Mines Ltd		(since March 2012).
Special responsibilities	Member of the Remuneration and Nomination Committee.
	Member of the Audit and Risk Committee.

Interests in the shares and options of the Company

As at the date of this report, the interests of the directors in the shares and options of Sandfire Resources NL were:

Number of ordinary shares	Number of options over ordinary shares
	Expiring 12 July 2013 Expiring 27 November 2014
Derek La Ferla 21,668 Karl M Simich 3,909,735 W John Evans 725,215 Robert N Scott 5,000 Soocheol Shin -	- - 2,400,000 600,000 1,190,000 330,000 - - - -

2 Company Secretary

Matthew L Fitzgerald

Company Secretary and Chief Financial Officer

Qualifications B.Comm, CA Experience and expertise Mr Fitzgerald was appointed to the position of Company Secretary on 22 February 2010. He began his career in the Assurance and Advisory division of KPMG, before joining ASX-listed Kimberley Diamond Company NL in 2003, where he held the position of Chief Financial Officer and director until July 2008.

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FINANCIAL REPORT FOR THE YEAR ENDED 30 JUNE 2012 DIRECTORS’ REPORT

3 Directors’ meetings

The number of meetings of directors (including meetings of committees of directors) held during the year and the number of meetings attended by each director were as follows:

Board Meetings A B	Board Committee Meetings
	Audit and Risk Remuneration and Nomination A B A B
Derek La Ferla 5 5 Karl M Simich 5 5 W John Evans 5 5 Robert N Scott 5 5 Soocheol Shin (a) 1 1 Jonghun Jong (b) 4 4	3 3 2 2 - - - - - - - - 3 3 2 2 1 1 - - 2 2 2 2

A Number of meetings attended.

B Number of meetings held during the time the director held office or was a member of the relevant committee during the year.

(a) Mr Shin was appointed 28 February 2012.

• (b) Mr Jong resigned 28 February 2012.

Committee membership

As at the date of this report, the Board had an Audit and Risk Committee and a Remuneration and Nomination Committee. Members acting on the committees of the Board as at the date of this report are:

	Audit	Remuneration
	and Risk	and Nomination
Chairman	Robert N Scott	Derek La Ferla
Members	Derek La Ferla	Robert Scott
	Soocheol Shin	Soocheol Shin

4 Dividends

The directors have not recommended the declaration of a dividend. No dividends were paid or declared by the Group during the current or previous financial year.

5 Principal activities and review of operations

The principal activities of the Group during the financial year were:

• Exploration and evaluation of mineral tenements in Australia and overseas;

• Development and construction of the DeGrussa Copper-Gold Project in Western Australia; and

• Production and sale of Direct Shipping Ore (DSO) and gold laterite ore from the Group’s DeGrussa Copper-Gold Open Pit operation.

5.1 Project review, strategies and future prospects

5.1.1 DEGRUSSA COPPER-GOLD PROJECT, Western Australia (100%)

The DeGrussa Copper-Gold Project is located within Sandfire’s 100%-owned Doolgunna Project, a 400 square kilometre tenement package in WA’s Bryah Basin mineral province, approximately 900km north-east of Perth. Construction and development of the DeGrussa Project, which comprises an open pit and longer term underground mine feeding a 1.5 million tonnes per annum (Mtpa) concentrator, commenced in April 2011 and is scheduled for completion during September 2012, paving the way for Sandfire to become a leading Australian copper producer.

Construction and development

Significant progress was achieved towards the completion of construction and development activities at the DeGrussa Project during the year to 30 June 2012, with the overall project 86 per cent complete by financial year end.

The open pit is on schedule, with a total of 8.8 million bcm (bank cubic metres) of material mined from Stage I and Stage II to the end of the reporting period, while the “Evans Decline” progressed 1,460m from the portal. Total underground development reached 4.7km.

Significant progress was also achieved with construction of the 1.5Mtpa DeGrussa concentrator, with direct site construction over 73 per cent completed by the end of the reporting period and commissioning of selected areas of the concentrator commencing in August 2012.

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FINANCIAL REPORT FOR THE YEAR ENDED 30 JUNE 2012 DIRECTORS’ REPORT

5 Principal activities and review of operations (continued)

5.1 Project review, strategies and future prospects (continued)

Sandfire remains on target to achieve its key project milestones of:

• Plant commissioning – from September 2012;

• First concentrate production – Q4 CY 2012;

• First underground stoping ore on the ROM stockpile – Q4 CY 2012; and

• First concentrate shipment – Q4 CY 2012.

Key highlights

The status of key infrastructure items as at 30 June 2012 are outlined below:

• The engineering, procurement and construction (EPC) contractor, Abesque, mobilised to site during the December 2011 quarter for the start of plant construction, following completion of all major bulk earthworks for the plant site, including pads, settlement and water ponds.

• All structural concrete and key civil works were completed at the concentrator, including delivery and installation of all major equipment items. Structural steel erection, piping and electrical work was also underway. Construction of the process plant was well advanced, with major concrete foundations for the SAG mill, ball mill and crushed ore bin completed.

• The Power Station was connected during April 2012, supplying power for the underground mine, mining contractor facilities, exploration core yard and the village. Installation of the 11kV power supply to the process plant was also completed to allow commissioning of the plant electrical substations.

• Electrical energisation of the crushing area occurred with temporary power during June 2012, allowing installation of the programme logic and functional testing to commence. Installation checks and pre-commissioning had commenced.

• Mechanical installation of the milling and flotation areas was well advanced, with the SAG and ball mill drive train alignments in progress and the first rotation of the mills completed in late August 2012.

• Construction of the Tailings Storage Facility (TSF) was completed and the Department of Environment & Conservation issued the TSF licence to operate.

• Construction of the Paste Plant commenced and was well advanced, with most civil works and some tank construction completed. The Paste Plant is due for commissioning in late Q4 CY 2012.

• The DeGrussa Aerodrome was completed and commissioned, and is now fully operational with up to 71-seat aircraft now regularly transporting the fly-in, fly-out workforce.

• The installation of the 200-room construction camp and 400-room permanent mine village was completed, bringing the total rooms to 600. Installation of landscaping and other facilities for the permanent mine village was also completed.

• The Next G mobile phone service was fully commissioned and fibre optic communications linked to Telstra’s network were installed and are fully operational across site.

• Installation of all other infrastructure was progressing well, with all office buildings in place and operational by year-end. Construction of the sealed access road to the Great Northern Highway was also completed.

• The contracts for underground diamond drilling and laboratory management were awarded, with both contractors mobilising to site during January 2012.

• The Port Hedland Port Authority confirmed its intention to lease a parcel of land to Sandfire in close proximity to common user berths 1 and 2 to accommodate exports of DeGrussa product. A lease agreement has been finalised, with a preliminary design for a container storage facility and baseline environmental surveys completed.

Open Pit & Underground Mining

Following commencement of the open pit pre-strip and box-cut development during April 2011, mining continued in the DeGrussa open pit and in the underground mine during the reporting period, with excellent progress achieved.

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FINANCIAL REPORT FOR THE YEAR ENDED 30 JUNE 2012 DIRECTORS’ REPORT

5 Principal activities and review of operations (continued)

5.1 Project review, strategies and future prospects (continued)

A summary of production from the open pit and underground mine is provided below:

		June 2012 Quarter	March 2012 Quarter	Project to Date
Open pit material mined	bcm	2,120,000	1,862,000	8,752,000
DSO copper mined	tonnes	13,000	5,000	17,000
	Cu %	25.7	34.2	28.0
	Au g/t	5.3	3.2	4.8
Oxide copper mined (>1% Cu)	tonnes	103,000	196,000	578,000
	Cu %	1.3	2.8	1.9
	Au g/t	2.1	1.5	1.0
Oxide copper mined (<1% Cu)	tonnes	263,000	179,000	1,208,000
	Cu %	0.7	0.2	0.7
	Au g/t	0.1	0.1	0.1
Oxide gold mined (>1.5g/t Au)	tonnes	21,000	1,000	118,000
	Au g/t	2.3	4.7	2.9
Oxide gold mined (<1.5 g/t Au)	tonnes	85,000	-	157,000
	Au g/t	1.4	-	1.1
Massive sulphides	tonnes	27,000	1,000	28,000
	Cu %	4.9	3.9	4.9
	Au g/t	1.1	1.7	1.1
Underground decline development	m	205	330	1,460
Underground lateral development	m	1,932	1,365	4,748
Shipped	tonnes	6,500	-	6,500
	Cu %	34.4	-	34.4
	Au g/t	4.3	-	4.3

The first DSO was mined from Stage I of the open pit during February 2012 and 17,000 tonnes of chalcocite DSO grading 28.0% Cu and 4.8g/t gold has been mined to the end of the reporting period. In addition, a significant portion of the Oxide Copper Ore Reserve has already been mined and stockpiled ( see Oxide Copper Reserve below ).

The open pit is on schedule, with a total of 7.0Mbcm of material mined from Stage I and 1.8Mbcm mined from Stage II to the end of the reporting period. The planned open pit was over 65 per cent complete and at a depth of 85 metres below surface as at 30 June 2012. Chalcocite below the DSO cut-off grade and massive sulphide, yet to be mined from the open pit, will be stockpiled and processed during the commissioning and initial production phases of the 1.5mtpa on-site concentrator commencing in Q3 CY 2012.

At the base of the planned Stage II open pit is 0.14Mt of massive sulphide ore at a grade of 3.8% Cu, which was originally included within the Underground Ore Reserve, but instead will be mined during the Stage II open pit. The massive sulphide is scheduled to be processed in mid-CY 2013.

As a result of this massive sulphide ore now being mined as part of the open pit and the maiden Oxide Copper Ore Reserve, the overall Open Pit Ore Reserve for the DeGrussa Project, stated as at 31 March 2012, totals 1.63Mt @ 4.9% Cu and 1.2g/t Au, for 79,000 tonnes of contained copper and 64,000 ounces of contained gold.

Underground mine development progressed on schedule, with the Evans Decline advancing to 1,460m from the portal and 234m below surface. A total of 4,748m of lateral and vertical underground development was completed to the end of the reporting period.

As at the end of the reporting period, 28,000 tonnes of massive sulphide ore grading 4.9% Cu was mined from underground and stockpiled on the ROM pad ready for processing.

Development in the Evans Decline reached the base of the second stoping horizon at 2325m RL at the end of the reporting period. The stoping panels are 50m high. The first stoping panel is between 2425 and 2375m RL. The three levels for this line of stopes in Conductor 1 were well advanced with production drilling due to commence in Q3 CY 2012. First stope firing is on schedule for early Q4 CY 2012.

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FINANCIAL REPORT FOR THE YEAR ENDED 30 JUNE 2012 DIRECTORS’ REPORT

5 Principal activities and review of operations (continued)

5.1 Project review, strategies and future prospects (continued)

Sales Agreements

During the reporting period Sandfire secured product sales contracts covering 100 per cent of the DSO to be produced from the DeGrussa Project, on commercial terms in line with normal concentrate agreements. These agreements build on the strong relationships and strategic partnerships Sandfire already has in place globally.

The first sales agreement was signed on 4 November 2011 with international trading company MRI Trading AG (MRI) to purchase 50 per cent of DSO production, up to a maximum of 75,000 dry metric tonnes (dmt), for a 1-year period. MRI purchases DSO on a CIF (Cost, Insurance and Freight) basis with the remaining commercial terms of the contract being confidential.

A second agreement was signed with Yunnan Copper Corporation Ltd on 15 December 2011 for the remaining 50 per cent of DSO production. This contract is for the purchase of a minimum of 70,000dmt of DSO between April 2012 and March 2013. Yunnan Copper will purchase the DSO on a CIF basis with the remaining commercial terms of the contract being confidential. The first shipments under these contracts occurred during the second quarter of CY 2012.

Subsequent to year end, on 20 July 2012, Sandfire concluded its first sales agreement for copper concentrate production from the DeGrussa Project commencing January 2013. The contract, with an international trading house, follows a highly successful off-take marketing process for DeGrussa concentrate, during which firm offers were received from a wide range of smelters and traders short-listed to receive the final invitation to bid.

Sandfire is aiming to finalise product sales agreements with 3-5 concentrate customers for up to 3-year initial terms to cover the bulk of its concentrate production, while allowing for delivery of a portion of its production into the spot market with these or other customers. The Group’s marketing process has targeted a mix of traders and smelters. Sandfire expects to conclude the remaining contracts over the coming months, ahead of the anticipated commencement of concentrate sales.

Shipments

On 21 May 2012, the first shipment of high-grade DSO from the Groups’ DeGrussa open pit was loaded on the Flinterland at the Port of Geraldton and departed for customers in China. The shipment comprised 6,500 dry tonnes (7,000 wet tonnes) of DSO grading 34% Cu. This shipment marked Sandfire’s transition to producer status from its open pit operations, with regular DSO shipments expected over the remainder of CY 2012 as the open pit progresses. Further shipments have continued subsequent to year end. The high-grade DSO mined from the open pit is being sold under the sales contracts secured with MRI and Yunnan Copper as outlined above.

Feasibility Studies, Metallurgy, Ore reserves and Mineral resources

Metallurgical work continued during the year focusing on the oxide resources within the DeGrussa open pit. Investigations into a suitable processing route for the oxide copper ore commenced in 2011, culminating in successful bench-scale processing to produce a saleable concentrate. This has enabled conversion of the higher grade portion of the previously announced Measured and Indicated open pit Oxide Copper Mineral Resources to Ore Reserves.

Subsequent to year end, Sandfire announced a maiden Proved and Probable Ore Reserve estimate for the Oxide Copper from the open pit, totaling 1.04Mt @ 2.3% Cu, for 23,000t of contained copper. Following completion of the Ore Reserve estimate, Sandfire has commenced design studies and statutory approvals for an oxide copper circuit at DeGrussa, which is expected to provide a low-cost, high-margin addition to its production profile. First production from the Oxide Copper Ore Reserve is planned to begin in mid-CY 2013, in addition to the annualised production profile in the first three years of operations of 77,000tpa of copper and 36,000ozpa of gold.

A significant portion of the Oxide Copper Ore Reserve has already been mined and stockpiled as part of the DeGrussa open pit operations. As at the end of the June 2012 quarter, 0.58Mt of copper oxide ore grading 1.9% Cu and 1.0g/t Au had been mined from the open pit and stockpiled in close proximity to the planned Oxide Copper Processing Plant.

Based on the metallurgical testwork conducted to date, the proposed oxide copper processing plant will include crushing, wet scrubbing and screening to three size fractions, followed by gravity separation at a scoped processing rate of 350-400,000tpa. This will produce an intermediate concentrate suitable for further batch treatment in the 1.5Mtpa DeGrussa concentrator with the addition of sulphidising agents allowing conventional flotation.

Testwork completed to date indicates that approximately 40 per cent of the material will be removed by the oxide plant, resulting in a 50 per cent increase in grade ahead of delivery to the DeGrussa concentrator. Testwork is continuing aimed at further refinement of the processing route and enhancement of the metallurgical performance of the proposed oxide plant. The objective of this testwork is to deliver further conversion of in situ Mineral Resources (including current lower grade stockpiles) to Ore Reserves.

Sandfire considers that the DeGrussa concentrator will have sufficient capacity to process the sulphidised intermediate oxide material in addition to the 1.5Mtpa of underground massive sulphide ore during the early years of operations.

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FINANCIAL REPORT FOR THE YEAR ENDED 30 JUNE 2012 DIRECTORS’ REPORT

5 Principal activities and review of operations (continued)

5.1 Project review, strategies and future prospects (continued)

Subject to final engineering studies, it is estimated that construction of the oxide copper processing plant, infrastructure and integrating modifications to the DeGrussa concentrator required to integrate the new processing circuit will incur a capital cost in the order of $15-$17 million. Scoping level estimates indicate an operating cost of around $10-$12 per tonne of Oxide Copper Ore Reserves and completed initial testwork indicates an overall metallurgical recovery to saleable concentrate of 73 per cent of the contained copper for this material.

Table 1: DeGrussa Copper-Gold Project - Open Pit Ore Reserve stated as at 31 March 2012*

Reserve	Treatment	Deposit	Tonnes	Copper	Gold	Contained	Contained
Classification	Destination	Material	(Mt)	(%)	(g/t)	Copper (t)	Gold (oz)
Proved	Ore Sale	Laterite Gold	0.10	-	3.0	-	9,000
Proved	Oxide Processing/	Oxide Copper	0.52	2.0	0.7	10,000	11,000
	Concentrator
Probable	Oxide Processing/	Oxide Copper	0.52	2.5	0.4	13,000	7,000
	Concentrator
Probable	Direct Sale Ore	Chalcocite	0.15	25.9	2.5	38,000	12,000
Probable	Massive Sulphide	Chalcocite	0.09	5.1	2.5	5,000	7,000
	Concentrator	Conductor 1 MS	0.14	3.8	1.9	5,000	9,000
		DeGrussa MS	0.11	7.5	2.4	8,000	8,000
Total Open Pit	Ore Reserve		1.63	4.9	1.2	79,000	64,000

• Ore Reserves contained in this table have been updated from the Ore Reserve Statement disclosed by the Company on 29 March 2011. Mining activities, including stockpiling, and sale of product have continued since 31 March 2012.

Table 2: DeGrussa Copper-Gold Project – Ore Reserve Statement stated as at 31 March 2012*

	Reserve		Tonnes	Copper	Gold	Contained	Contained
Deposit	Category	Mining Method	(Mt)	(%)	(g/t)	Copper (t)	Gold (oz)
Laterite Gold	Proved	Open Pit	0.10	-	3.0	-	9,000
Copper Oxide	Proved	Open Pit	0.52	2.0	0.7	10,000	11,000
Copper Oxide	Probable	Open Pit	0.52	2.5	0.4	13,000	7,000
DeGrussa	Probable	Open Pit - DSO	0.15	25.9	2.5	38,000	12,000
DeGrussa/C1/	Probable	Open Pit	0.34	5.3	2.2	18,000	25,000
Chalcocite
DeGrussa	Probable	Underground	1.50	6.6	1.9	99,000	90,000
Conductor 1	Probable	Underground	5.70	4.9	1.8	281,000	333,000
Conductor 4	Probable	Underground	0.76	4.4	1.2	33,000	30,000
Total	Proved		0.62	1.7	1.0	10,000	20,000
Total	Probable		8.97	5.4	1.7	482,000	497,000
Total	Proved & Probable		9.59	5.1	1.7	492,000	517,000

• Ore Reserves contained in this table have been updated from the Ore Reserve Statement disclosed by the Company on 29 March 2011. Mining activities, including stockpiling, and sale of product have continued since 31 March 2012.

• 1 A cut-off grade of 8.5% Cu is applied on the Chalcocite to provide a targeted 26% Cu direct sale product. All other material within the defined deposit boundaries has been included in the reporting of Ore Reserves with any sub-economic grade material being treated as internal dilutents. These Ore Reserves include an overall assumption of 2.5% mining dilution at nil grade for all grade categories along with an assumed 2.5% mining loss of ore tonnes when mined. Calculations rounded to the nearest 10,000 tonnes; 0.1% Cu grade, 0.1 g/t Au grade; 1,000 tonnes Cu metal and 1,000 ounces Au metal. Errors of rounding may occur. The in-situ Ore Reserves occur within an open pit design containing 14Mt of total material, resulting in a waste to ore strip ratio of 12:1. Low grade laterite gold stockpiles are not included in reserve.

• 2 1.0% Cu lower cut-off grade has been applied to the copper oxide open pit in-situ Ore Reserves. The reported copper oxide stockpiles only include existing stockpiles with an estimated average grade above 1.0 % Cu.

• 3 Mining recovery factor of 95% applied to diluted stoping blocks, with cut-off grade of 1.5% Cu and minimum stope size of 2,000t. Calculations rounded to the nearest 1,000t, 0.1%, 0.1g/t and 1,000 ounces; errors of rounding may occur; assumes commodity prices of US$7,673/t for copper and US$1,300/oz for gold with a USD/AUD exchange rate of $0.86; assumes 91% metallurgical recovery rate.

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• 9 -

FINANCIAL REPORT FOR THE YEAR ENDED 30 JUNE 2012 DIRECTORS’ REPORT

5 Principal activities and review of operations (continued)

5.1 Project review, strategies and future prospects (continued)

Table 3a: Total in situ Mineral Resources stated as at 31 March 2012

	Resource	Tonnes	Copper	Gold	Contained	Contained	Competent
Zone - in situ	Category	(mt)	(%)	(g/t)	Copper (t)	Gold (oz)	Person
Au Laterite	Measured	0.04	-	1.2	-	2,000	1
Copper Oxides	Measured	0.23	0.8	0.1	2,000	1,000	1
	Indicated	1.06	1.6	0.5	17,000	16,000	1
Supergene Chalcocite	Indicated	0.23	17.9	2.6	42,000	19,000	2
	Inferred	0.19	4.4	1.2	8,000	7,000	1
Primary Massive	Indicated	7.84	5.8	2.0	456,000	502,000	1
Sulphides	Inferred	2.31	4.4	2.0	102,000	146,000	1
	Total	11.91	5.3	1.8	627,000	693,000

Table 3b: Total Stockpiles stated as at 31 March 2012

	Resource	Tonnes	Copper	Gold	Contained	Contained
Stockpile	Category	(mt)	(%)	(g/t)	Copper (t)	Gold (oz)
Laterite Gold	Measured	0.17	0.2	2.2	-	12,000
Copper Oxide	Measured	1.42	1.1	0.3	16,000	16,000
Supergene Chalcocite	Measured	0.01	34.2	2.7	2,000	-
Total	Measured	1.59	4.4	1.2	18,000	28,000

Notes to Table 3a and 3b:

Resources are stated inclusive of Ore Reserves.

Refer to the Competent Person’s Statements – Mineral Resources:

1 Competent Person for these zones of resource was Diederik Speijers of McDonald Speijers.

2 Competent Person for these zones of resource was David Slater of Coffey Mining.

Exploration and evaluation

Sandfire has an annual exploration target of $20 million, predominantly for the Doolgunna Project, aimed at exploring for potential repeats of the DeGrussa Volcanogenic Massive Sulphide (VMS) mineralised system.

Sandfire conducted a comprehensive near-mine and regional exploration program during the reporting period aimed at identifying repeats of the DeGrussa VMS copper-gold deposits.

The Company has adopted a systematic and scientific approach to exploration of the Doolgunna Project. Key elements of this have included:

• Extensive regional drilling to define prospective VMS sequences

• Re-logging and spectral scanning to define alteration systems

• Systematic drilling of regional targets, with over 150,000m of diamond, RC, RAB and aircore drilling completed during the reporting period.

Sandfire has developed a robust structural model to assist with near-mine exploration while also applying innovative new techniques to establish baseline data over known deposits. A combination of mapping, geochemistry, structural geology, geophysics and extensive regional drilling has confirmed that the VMS mineralising environment at DeGrussa extends over a strike length of more than 30km, within a 1.2km wide corridor. The DeGrussa deposit itself has a strike length of just 1.2km.

As part of ongoing regional drilling to test priority copper and gold anomalies within the Doolgunna Project, drilling at the DGAC1042 gold anomaly, located 11km south-west of DeGrussa, continued during the reporting period and returned significant widths and grades of gold mineralisation.

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• 10 -

FINANCIAL REPORT FOR THE YEAR ENDED 30 JUNE 2012 DIRECTORS’ REPORT

5 Principal activities and review of operations (continued)

5.1 Project review, strategies and future prospects (continued)

5.1.2 BORROLOOLA PROJECT, Northern Territory (100%)

The Borroloola Project comprises a total area of 10,000+ square kilometres of tenements and tenements under application in the Northern Territory. The tenements are located near McArthur River, the second largest SEDEX base metal deposit in the world with a primary resource of approximately 230 million tonnes at a grade of +13% combined lead and zinc. Sandfire’s tenements cover a strike length of approximately 100km of the Emu Fault Zone, which is the controlling structure of the McArthur River deposit.

The Borroloola tenements are also prospective for sedimentary manganese mineralisation, similar to the world-class Groote Eylandt manganese deposits in the Gulf of Carpentaria, uranium and iron ore.

The Group completed a review of the Borroloola Project and the results of the last dry season exploration campaign during the reporting period.

This work has highlighted a priority target area along the Emu Fault Corridor that Sandfire considers to be prospective for SEDEX lead-zinc mineralisation. Deep diamond core drilling of this locality will be the focus of the Group’s 2012 field season, which is due to commence during the third quarter of CY 2012.

5.1.3 KENNEDY HIGHWAY PROJECT, Queensland

The Group holds an interest in five exploration licences in the Eastern Succession of the Mount Isa Block, south of Cloncurry. One granted licence is held in a joint venture with Global Resources Corporation Ltd, whereby Sandfire can earn up to an 80 per cent interest by funding exploration. The other four tenement applications are 100%-owned by Sandfire.

The Kennedy Highway Project covers a number of magnetic and gravity targets prospective for Broken Hill type mineralisation. The project includes three prominent magnetic and gravity anomalies related to large magnetite-rich deposits considered to be prospective for copper and gold mineralisation.

During the reporting period, a drill rig was mobilised to site and drilling commenced within the Joint Venture tenement on 18 June 2012. The drilling program will comprise two holes each of 1,200m which will utilise rotary mud drilling from surface to basement and then diamond drilling thereafter. The two holes will test separate targets, for lead-zinc and copper-gold mineralisation.

5.1.4 BLAND CREEK PROJECT, New South Wales

The Group holds an interest in three exploration licences in the Lachlan Fold Belt of New South Wales, located approximately 50km south-east of West Wyalong. One granted license, EL 5792, is held under a farm-in agreement with Straits Resources Ltd.

The exploration licences cover intrusive centres of Ordovician Volcanic rocks, prospective for porphyry-related gold and copper mineralisation.

Under the terms of the farm-in agreement with Straits Resources Ltd, Sandfire has the right to earn up to 80 per cent of the project area by sole funding $8 million over six years with the following terms:

• Sandfire may earn a 65 per cent interest by sole funding $4 million on exploration in respect to the tenement within a period of three and a half years;

• After earning the minimum interest, Sandfire may elect to continue to sole fund (a further $4 million) and gain exclusive control by earning a further 15 per cent interest.

Drilling is planned to commence as soon as ground conditions allow.

5.1.5 SOUTH AMERICA

The Group has initiated project generation in South America, focused on Chile and Peru targeting large scale mineralisation systems prospective for copper.

In the Lima Province of Peru, the Group has applied for ten continuous tenements totaling 55 square kilometres through a wholly owned and incorporated Peruvian registered company. The applications cover areas of potential large scale alteration systems identified on Aster spectral imagery and occur within a known belt of mineralisation, south of the large Toromocho porphyry copper system. The Group’s applications are prospective for porphyry copper and hydrothermal polymetallic systems.

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• 11 -

FINANCIAL REPORT FOR THE YEAR ENDED 30 JUNE 2012 DIRECTORS’ REPORT

5 Principal activities and review of operations (continued)

5.2 Review of financial results

The Group recorded a loss of $23.9 million for the year ended 30 June 2012 (2011: loss of $27.1 million). The DeGrussa Mine segment contributed profit before net financing income and income tax of $14.8 million (2011: $nil), while the Group’s other operations contributed a loss of $48.3 million (2011: loss of $61.5 million). Significant items impacting the result of the Group are outlined in more detail below.

DeGrussa Open pit operation and sales of direct shipping ore (DSO)

The Group commenced waste stripping in Stage I of the open pit in May 2011, representing the start of a planned two year mining campaign to access Direct Shipping Ore (DSO) chalcocite and primary sulphides, along with direct costed secondary materials of gold laterite and oxide copper. Stage I waste stripping expenditure up to first DSO is deferred on balance sheet to be amortised as a cost to DSO and sulphide inventory as mined. Further production phase stripping is expensed as incurred except for additional stripping completed to allow ore access in future periods, which is deferred to ore mined during those periods.

Following the development of the DeGrussa open pit, May 2012 saw Sandfire make its first sale of high margin direct DSO, followed by the sale of laterite gold ore. The first DSO sale earned revenue of $19.2 million from 6,500 dry tonnes shipped at 34% copper, prior to freight, treatment and refining costs.

In total, 17,000 tonnes of DSO was mined from February to June 2012, with 10,500 tonnes stockpiled at the end of the year at the mine and the Geraldton Port. Further DSO sales are scheduled as Stage I of the open pit is progressed through to the end of calendar year 2012.

The open pit contains an estimated 79,000 tonnes of contained copper and 64,000 ounces of contained gold from DSO, primary sulphides, oxide copper and gold laterite material.

The Group currently utilises market spot arrangements for sales proceeds. The Group reviews its hedging policies against financial modeling, banking requirements and risk appetite. The Group’s outlook for copper prices remains strong, with DeGrussa continuing to show robust economics and projected operating margins.

The Group also commenced waste stripping in Stage II of the open pit in January 2012 to access further gold laterite, copper oxide and primary sulphide material, over a mining campaign scheduled to conclude in mid calendar year 2013. Stage II waste stripping expenditure up to first sulphide extraction is deferred on balance sheet to be amortised as a direct cost to sulphide inventory as mined, with secondary materials of gold laterite and copper oxide material costed to inventory. Studies have commenced towards the construction of a processing route for the extracted copper oxide material.

DeGrussa underground mine

Construction of the underground portal and decline commenced in April 2011 and by June 2012 4.7km of development had been completed including, in February 2012, the extraction of first underground sulphide ore to the Run of Mine (ROM) pad in preparation for plant commissioning from September 2012.

The underground mine provides a current seven year mine life at 1.5 million tonnes per annum predominantly from the underground sulphide material (inclusive of ore reserves and mineral resources), which will continue to generate significant value for shareholders while delivering royalty payments to the state of Western Australia and indigenous groups.

Exploration and evaluation

Significant exploration and evaluation activities continued in and around the DeGrussa mine with the objective of discovering further ore bodies and lenses to establish a copper-gold VMS camp. Further expenditure has been incurred on the Group’s other project tenements and on a number of joint venture earn-in arrangements. For the year ended 30 June 2012, $26.4 million (2011: $39.3 million) exploration and evaluation expenditure was expensed in line with the Group’s accounting policy.

Associates

The Group’s investment in White Star Resources Ltd (ASX: WSR), an Australian listed company with interests in Chile, has been reduced by its share of losses as well as impairment charges due to a reduction in share price. This has resulted in $2.1 million being recognised as an expense with respect to the Group’s investment in WSR for the year ended 30 June 2012.

Loss per share

The Group’s loss per share, at 15.85 cents, predominantly represents expenditure in relation to exploration and corporate activities, offset by the initial profits flowing from the first sale of high grade DSO material from the open pit. The Group’s loss per share is not indicative of shareholder value while the Group is in its current phase of mine and capital development. Rather, total shareholder return in terms of share price performance is considered a more appropriate measure of company performance at this phase of the Group’s development.

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• 12 -

FINANCIAL REPORT FOR THE YEAR ENDED 30 JUNE 2012 DIRECTORS’ REPORT

5 Principal activities and review of operations (continued)

5.2 Review of financial results (continued)

FINANCIAL POSITION

Total assets for the Group have increased from $172.6 million to $529.6 million during the current reporting period.

Cash balance

Cash on hand was $100.4 million at the end of the year. Of that balance $28 million was held in restricted debt service and cost overrun accounts in accordance with the Group’s finance facility.

DeGrussa project development and construction

Significant investment has been made in project development and construction in line with the Definitive Feasibility Study (DFS) completed during 2011, with mine properties increasing by $139.8 million to $163.7 million, including expenditure on underground mine development of $87.6 million to establish access to the sulphide orebodies and development and production phase waste stripping in the open pit of $50.8 million to access DSO and sulphide ore.

Property, plant and equipment increased by $164.7 million to $202.2 million as at 30 June 2012, predominantly driven by expenditure on process plant construction and associated mine infrastructure of $154 million.

With increased infrastructure and mine development activities, the Group has also recognised an additional $13.9 million with respect to future rehabilitation, restoration and dismantling activities in relation to its project development and construction.

Finance facilities

The Company executed a fully secured $390 million project finance facility in September 2011 to fund the development and construction of the DeGrussa Mine, including $380 million in project construction and working capital funding and $10 million for environmental bonding. This complemented the equity funding secured in late 2011 for drilling, feasibility studies and the order of long lead capital items. Following the successful completion of conditions precedent, the first drawdown under the finance facility was completed in November 2011, followed by a series of further drawdowns up to year end in line with project requirements.

At 30 June 2012, $350 million had been drawn under the facility and used to fund project development and construction or held in treasury for further projected cash payments, with $95 million disclosed within current liabilities prior to offset for capitalised finance establishment costs, representing the March and June 2013 scheduled repayments. During August 2012 and subsequent to year end, a further $30 million was drawn for working capital funding to assist with inventory buildup, sales timing and plant commissioning costs. The environmental bond facility was drawn to $4.2 million at balance date.

First scheduled repayment of the project facility for $50 million is due at the end of March 2013, with rolling repayment funds to be deposited in the debt service reserve account in the quarter prior to scheduled repayment. Further quarterly repayments continue until the facility end date of 31 December 2015.

Deferred tax assets

Losses for the period have driven an increase in deferred tax assets to $40.6 million at period end, expected to be utilised from profitable operations for the 2013 financial year and beyond. The recognition of deferred tax income assets on unused tax losses has resulted in an income tax benefit for the current year of $8.7 million.

Trade and other payables

Trade and other payables have increased to $49.6 million at period end, and are elevated by the rate of capital expenditure during the financial year as well as retention monies held against significant contractors to be paid following satisfactory project completion.

Issued capital

Issued capital has increased to $213 million with the issue of shares on exercise of unlisted share options. The Company did not issue any new ordinary shares during the reporting period, maintaining equity value for existing shareholders through debt funding of the Group’s DeGrussa Copper-Gold project development.

5.3 Corporate

Board and management

On 28 February 2012, the Company announced the appointment of Mr Soocheol Shin as non-executive director, following the resignation of Mr Jonghun Jong as non-executive director.

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• 13 -

FINANCIAL REPORT FOR THE YEAR ENDED 30 JUNE 2012 DIRECTORS’ REPORT

5 Principal activities and review of operations (continued)

5.3 Corporate (continued)

Investment in White Star Resources Limited

On 8 July 2011, the Company announced that it had subscribed for a 17.4% stake in junior explorer White Star Resources Ltd (ASX: WSR), formerly Whinnen Resources Ltd (ASX: WWW), a South American-focused copper-gold explorer. The Company was issued 26.5 million shares at $0.07 per share, for a total cost of $1.855 million, as part of the $7.28 million share placement undertaken by White Star to sophisticated investors. In addition, the Company was issued with 17 million White Star shares and 14.5 million options with an exercise price of $0.20 per share and an expiry date of 30 April 2014 as part of Technical Services Agreement between the companies.

During the year, White Star completed the acquisition of Mystic Sands Pty Ltd, a privately owned company which holds an extensive portfolio of high-quality copper-gold and gold projects in the Atacama region of Chile and commenced exploration activities at its Nany-Varas gold project and established its exploration team and infrastructure in Chile.

6 Significant changes in the state of affairs

In the opinion of the directors there were no other significant changes in the state of affairs of the Group that occurred during the financial year under review, other than those described in this financial report under ‘Principal activities and review of operations’.

7 Significant events after the balance date

Finance facilities

The Group completed the final drawdown under the Project Loan Facility, totalling $30 million, during August 2012, for working capital purposes.

Issued capital

Subsequent to year end the Group announced the issue of 320,000 fully paid ordinary shares from the exercise of 320,000 unlisted options with an exercise price of $1.40 and an expiry date of 6 July 2012.

The Group also announced the issue of the following unlisted options to senior management of the Group, pursuant to the Sandfire Resources NL Incentive Option Plan approved by shareholders at the annual general meeting held on 29 November 2011.

Number	Exercise price	Expiry date
250,000	$9.00	28 February 2016
166,667	$10.30	28 February 2016
83,333	$11.70	28 February 2016

8 Likely developments and expected results

The Group will continue to pursue and further the exploration, evaluation, development and production from its tenements. Further comments on likely developments and expected results of certain operations of the Group are included in this financial report under ‘Principal activities and review of operations’.

9 Environmental regulation and performance

The Group holds environmental licenses and is subject to significant environmental regulation in respect of its activities in both Australia and overseas. The Board is responsible for monitoring environmental exposures and compliance with these regulations and is committed to achieving a high standard of environmental performance. The Board believes that the Group has adequate systems in place for the management of its environmental requirements.

The Group is registered under the National Greenhouse and Energy Reporting Act (the NGER Act) which introduces a single national reporting framework for the reporting and dissemination of information about the greenhouse gas emissions, greenhouse gas projects, and energy use and production of corporations. As a result, the Group is required to report energy consumption and greenhouse gas emissions for its Australian facilities for the 12 month period ending 30 June 2012 and future periods. The Group has established data collection systems and processes to meet the new requirements. Due to its stage of development, the reporting under the NGER Act did not have any identified effect on the Group’s operations for the financial year 30 June 2012.

In addition, the Group’s Australian operations will be required to comply with the Australian Federal Government’s Carbon Reduction Scheme which has been enacted as at the date of this report and is to be phased in from 1 July 2012. It is unlikely the Group will have a direct liability under the scheme.

There have been no significant known breaches of the Group’s license conditions or any environmental regulations to which it is subject.

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• 14 -

FINANCIAL REPORT FOR THE YEAR ENDED 30 JUNE 2012 DIRECTORS’ REPORT

10 Share options

10.1 Unissued shares under option

As at the date of this report unissued ordinary shares of the Company under option are:

Expiry Date	Exercise Price	Number
12 July 2013	$0.60	1,010,000
12 July 2013	$0.80	980,000
12 July 2013	$1.00	1,600,000
27 November 2014	$4.66	330,000
27 November 2014	$5.44	330,000
27 November 2014	$6.22	330,000
15 June 2015	$3.80	266,666
15 June 2015	$4.40	333,333
15 June 2015	$5.00	333,335
28 February 2016	$9.00	1,499,995
28 February 2016	$10.30	1,416,665
28 February 2016	$11.70	1,333,340

10.2 Share options issued

The following options over ordinary shares were issued by the Company during or since the end of the financial year:

Expiry Date	Exercise Price	Number
28 February 2016	$9.00	416,666
28 February 2016	$10.30	333,333
28 February 2016	$11.70	250,001

10.3 Shares issued as a result of the exercise of options

The following number of ordinary shares were issued by the Company as a result of the exercise of options during or since the end of the financial year:

Expiry Date	Exercise Price	Number
8 August 2011	$0.40	350,000
30 September 2011	$0.50	600,000
6 July 2012	$1.40	596,000
30 September 2012	$3.00	200,000
12 July 2013	$0.80	360,000
15 June 2015	$3.80	66,666

11 Indemnification and insurance of directors and officers

Indemnification

The Company indemnifies each of its directors and officers, including the company secretary, to the maximum extent permitted by the Corporations Act 2001 from liability to third parties, except where the liability arises out of conduct involving lack of good faith, and in defending legal and administrative proceedings and applications for such proceedings.

The Company must use its best endeavours to insure a director or officer against any liability, which does not arise out of a conduct constituting a wilful breach of duty or a contravention of the Corporations Act 2001. The Company must also use its best endeavour to insure a director or officer against liability for costs and expenses incurred in defending proceedings whether civil or criminal.

The Company has not entered into any agreement with its current auditors indemnifying them against any claims by third parties arising from their report on the financial report. The directors of the Company are not aware of any proceedings or claim brought against Sandfire Resources NL as at the date of this report.

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• 15 -

FINANCIAL REPORT FOR THE YEAR ENDED 30 JUNE 2012

DIRECTORS’ REPORT

11 Indemnification and insurance of directors and officers (continued)

Insurance premiums

The Company has paid insurance premiums in respect of directors’ and officers’ liability and legal expenses insurance contracts for current and former directors, executive officers and secretaires. The directors have not included details of the premium paid in respect of the directors’ and officers’ liability and legal expenses’ insurance contracts, as such disclosure is prohibited under the terms of the contract.

12 Rounding

The amounts contained in this report and in the financial report have been rounded to the nearest $1,000 (where rounding is applicable and where noted ($’000)) under the option available to the Company under ASIC CO 98/0100. The Company is an entity to which the Class Order applies.

13 Auditor independence and non-audit services

The directors received the following declaration from the auditor of Sandfire Resources NL.

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Non-audit services

The following non-audit services were provided by the Company’s auditor, Ernst & Young. The directors are satisfied that the provision of non-audit services is compatible with the general standard of independence for auditors imposed by the Corporations Act 2001 . The nature and scope of each type of non-audit service provided means that auditor independence was not compromised.

Ernst & Young received or are due to receive the following amounts for the provision of non-audit services:

Taxation services – Research & Development Tax Concession	$
	31,533

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• 16 -

FINANCIAL REPORT FOR THE YEAR ENDED 30 JUNE 2012

DIRECTORS’ REPORT

14 Remuneration report (audited)

This remuneration report for the year ended 30 June 2012 outlines the remuneration arrangements of the Company and the Group in accordance with the requirements of the Corporations Act 2001 (the Act) and its regulations. This information has been audited as required by section 308(3C) of the Act.

14.1 Introduction

The remuneration report details the remuneration arrangements for the Group’s key management personnel (KMP) who are defined as those persons having authority and responsibility for planning, directing and controlling the major activities of the Company and the Group, directly or indirectly, including any director (whether executive or otherwise) of the Company and other designated senior executives.

For the purposes of this report, the term ‘executive’ includes the Chief Executive Officer (CEO), executive directors and other senior executives of the Company and the Group.

Details of KMP including remunerated executives of the Company and the Group are set out below.

Non-executive directors (NEDs)

Name	Position	Period as KMP
Derek La Ferla	Chairman (non-executive)	All financial year
Robert N Scott	Director (non-executive)	All financial year
Soocheal Shin	Director (non-executive)	Appointed 28 February 2012
Jonghun Jong	Director (non-executive)	Resigned 28 February 2012
Executive directors
Name	Position	Period as KMP
Karl M Simich	Managing Director and Chief Executive Officer	All financial year
W John Evans	Executive Technical Director	All financial year
Other senior executives
Name	Position	Period as KMP
Martin Reed	Project Manager - DeGrussa	All financial year
Matthew L Fitzgerald	Chief Financial Officer and Company Secretary	All financial year

There were no changes to KMP after the reporting date and before the date the financial report was authorised for issue.

14.2 Remuneration at a glance

Remuneration strategy

The Company is committed to the alignment of remuneration, particularly that of executives, to shareholder return. To this end, Sandfire’s remuneration strategy is designed to attract, motivate and retain employees, contractors and nonexecutive directors (NEDs) by identifying and rewarding high performers and recognising the contribution of each employee to the continued growth and success of the Company.

Key objectives of the Company’s remuneration framework are to ensure that remuneration practices:

• Are aligned to the Company’s business strategy;

• Offer competitive remuneration benchmarked against the external market;

• Provide strong linkage between individual and Company performance and rewards; and

• Achieve the broader outcome of creation of value for shareholders by aligning the interests of executives, including employees and contractors, with shareholders.

The remuneration structure of the Company appropriately incentivised management to achieve the following during the financial year ended 30 June 2012:

• Maintain safety standards;

• Deliver key project objectives as detailed within the 2011 Definitive Feasibility Study (DFS);

• Complete mobilisation of key contractors;

• Obtain finance for the DeGrussa Copper-Gold Project (DeGrussa Project) from major banks;

• Advance construction of site infrastructure;

• Advance construction of the 1.5 million tonnes per annum Process Plant located at the DeGrussa Project;

• Mining of 8.8 million bank cubic metres (Mbcm) from the Company’s DeGrussa Open Pit operation;

• Advance the Company’s underground mine development (the Evans Decline) to 1,460 metres from the portal and 234 metres below surface. A total of 4,748 metres of development was completed by 30 June 2012;

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• 17 -

FINANCIAL REPORT FOR THE YEAR ENDED 30 JUNE 2012 DIRECTORS’ REPORT

14 Remuneration report (audited) (continued)

14.2 Remuneration at a glance (continued)

• Execution of sales contracts covering 100 per cent of the Company’s direct shipping ore (DSO) to be produced from the DeGrussa Project;

• Mine and ship the Company’s first DSO;

• Deliver a maiden DeGrussa Project open pit oxide copper ore reserve;

• Extend the prospective corridor at the Company’s Doolgunna exploration project to over 30km; and

• Maintain the Group’s market capitalisation over the financial year amid weaker global equity investment sentiment. The market capitalisation of the Company as at 30 June 2012 was $1,083,000,000 (2011: $1,053,000,000).

14.3 Board oversight of remuneration

Remuneration and Nomination Committee

The Remuneration and Nomination Committee comprises three NEDs. Members acting on the Remuneration and Nomination Committee during the financial year are listed below:

	Name	Period
Chairman	Derek La Ferla	All financial year
Members	Robert Scott	All financial year
	Soocheol Shin	Appointed 28 February 2012
	Jonghun Jong	Resigned 28 February 2012

The Remuneration and Nomination Committee is responsible for making recommendations to the Board on the remuneration arrangements for NEDs and executives. The committee meets regularly through the year, and assesses the appropriateness of the nature and amount of remuneration of NEDs and executives by reference to relevant market conditions, with the overall objective of ensuring maximum stakeholder benefit from the retention of high performing directors and executives. In determining the level and composition of executive remuneration, the Remuneration and Nomination Committee engages external advisors to provide independent advice where considered appropriate.

Further information on the committee’s role, responsibilities and membership can be seen at www.sandfire.com.au.

Remuneration approval process

The Board approves the remuneration arrangements of the CEO and executives and awards made under the shortterm and long-term incentive plans, following recommendations from the Remuneration and Nomination Committee. The Board also sets the maximum aggregate remuneration of NEDs, which is subject to shareholder approval, and sets individual NED fee levels.

Use of remuneration consultants

To ensure the Remuneration and Nomination Committee is fully informed when making remuneration decisions, it seeks external remuneration advice.

New legislation was introduced in 2011 that impacts how companies can seek advice which includes a remuneration recommendation in relation to KMP remuneration. The Board’s appointed remuneration advisor is McDonald & Company (Australasia) (McDonald & Co).

The engagement by the Remuneration and Nomination Committee was based on an agreed set of protocols to ensure that remuneration recommendations are free from bias and undue influence by members of the KMP to whom the recommendations may relate.

During the 2012 financial year, McDonald & Co provided the Company with:

• Insights on remuneration trends, regulatory developments and shareholder views; and

• Market data in relation to CEO, executive remuneration and industry compensation.

The Company paid McDonald & Co $9,500 for the provision of remuneration services during the financial year ended 30 June 2012.

Remuneration report approval at the 2011 AGM

The remuneration report for the 2011 financial year received positive shareholder support at the annual general meeting held on 28 November 2011, with a vote of 91% in favour.

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FINANCIAL REPORT FOR THE YEAR ENDED 30 JUNE 2012 DIRECTORS’ REPORT

14 Remuneration report (audited) (continued)

14.4 Non-executive director remuneration arrangements

Remuneration policy

The Board seeks to set aggregate remuneration at a level that provides the Company with the ability to attract and retain directors of the highest calibre, whilst incurring a cost that is acceptable to shareholders. The amount of aggregate remuneration sought to be approved by shareholders and the fee structure is reviewed annually against fees paid to NEDs of comparable companies. The Board considers recommendations from the Remuneration and Nomination Committee and advice from external advisors when undertaking the annual review process.

The Company’s constitution and the ASX listing rules specify that the NED fee pool shall be determined from time to time by a general meeting. Non-executive directors’ fees are presently limited to a total aggregate fee pool of $500,000 per annum, excluding the fair value of any options granted.

Structure

The remuneration of NEDs consists of directors’ fees and committee fees. NEDs do not receive retirement and or termination benefits, unless approved by shareholders in general meeting. The Company’s current remuneration practices do not allow NEDs to participate in any incentive programs.

With the exception of the Chairman, each NED receives a base fee of $85,000 for being a director of the Company. An additional fee of $20,000 is also paid if the director is a chair of a board committee. The payment of additional fees for serving as a chair of a board committee recognises the additional time commitment required by NEDs who serve in this role.

The base fee for the Chairman of the Company has been set to $170,000 per annum, which represents a fixed fee with no additional fees for service on board committees.

The remuneration of NEDs for the year ended 30 June 2012 and 30 June 2011 is detailed in table 1 and table 2 respectively of this report.

14.5 Executive remuneration arrangements

Remuneration levels and mix

Sandfire’s executive remuneration strategy is designed to attract, motivate and retain high performing individuals and align the interest of executives and shareholders. The Company aims to reward executives with a level and mix of remuneration commensurate with their position and responsibilities with the Company and aligned with market practice.

Structure

During the 2012 financial year, the executive remuneration framework consisted of the following components:

• Fixed remuneration; and

• Variable remuneration.

The table below illustrates the structure of Sandfire Resources NL’s executive remuneration arrangements:

Remuneration
component	Vehicle	Purpose	Link toperformance
Fixed	Comprises base salary and	Set with reference to role and	No link to Company
remuneration	superannuation contributions if	responsibilities, market and	performance.
	applicable.	experience.
Short-term	Paid in cash.	Rewards executives for the	Linked to Company performance
Bonus Plan		achievement of key short and	via the achievement of individual
		medium term objectives.	key objectives, which assist the
			Company in meeting its overall
			performance targets and market
			hurdles.
Long-term	Awards can be made in the form of	Rewards executive directors for	Linked to Company performance
Indexed Bonus	equity or cash at the Company’s	their continued service and	with respect to share price
Plan	discretion. Awards for the 2012	contribution to achievement of	appreciation during the vesting
	financial year were settled in cash.	Company outcomes, with respect to	period.
		share price appreciation.
Long-term	Awards are made in the form of	Rewards executives for their	Linked to Company performance
Employee	options over unissued shares in the	continued service and contribution	with respect to share price
Incentive Option	Company.	to achievement of Company	appreciation during the vesting
Plan		outcomes, with respect to share	period.
		price appreciation.

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FINANCIAL REPORT FOR THE YEAR ENDED 30 JUNE 2012 DIRECTORS’ REPORT

14 Remuneration report (audited) (continued)

14.5 Executive remuneration arrangements (continued)

Fixed remuneration

Fixed remuneration includes base pay including superannuation contributions. Executive contracts of employment do not include any guaranteed base pay increases and are reviewed annually by the Remuneration and Nomination Committee. The process considers:

• A detailed review of the Company’s performance;

• Individual performance against key job objectives as specified in the executive’s employment or consulting contract;

• Comparative external remuneration data, including market benchmarks using remuneration data sourced from industry surveys; and

• Independent external advice.

In reviewing comparative remuneration data sourced from industry surveys, the Remuneration and Nomination Committee’s policy is to position total fixed remuneration above the median of its defined market to ensure a competitive offering.

The fixed component of executives’ remuneration for the year ended 30 June 2012 and 30 June 2011 is detailed in table 1 and table 2 respectively of this report.

Variable remuneration - Short-term Bonus Plan

The Company operates an annual short-term bonus plan that is available to selected employees and contractors, including KMP. Awards under the plan are made in cash and are subject to annual individual performance appraisals on a calendar year basis.

The total potential short-term bonus available under the plan is set at a level so as to provide sufficient incentive to executives to achieve key objectives as specified within their employment and service contracts. Actual short-term payments awarded to each executive depend on the extent to which key objectives are met. The targets consist of a number of indicators covering financial, non-financial, corporate and individual measures of performance, chosen as they represent the key drivers for the short-term success of the business and provide a framework for delivering longterm value.

The maximum total gross benefit under the short-term bonus plan is limited to 30% of the annual gross fixed remuneration or services contract of the executive for that calendar year. The minimum gross benefit under the shortterm bonus plan, assuming that no executives meet their respective objectives for that year, is nil.

In line with their responsibilities the Remuneration and Nomination Committee, after consideration of performance against key objectives, determine the amount, if any, of the short-term incentive to be paid to each executive. This process usually occurs within three months after the calendar year end date. Payments made are delivered as a cash bonus.

Short-term Bonus Plan for the 2012 financial year

For the 2012 financial year the Company made $603,165 (2011: $144,111) in short-term bonus payments to executives, representing the maximum of 30% of the annual gross fixed remuneration or services contract of each executive.

The short-term bonus plan component of executives’ remuneration for the year ended 30 June 2012 and 30 June 2011 is detailed in table 1 and table 2 respectively of this report.

Variable remuneration - Long-term Indexed Bonus Plan (Executive Directors)

During the 2011 financial year, the Company’s Remuneration and Nomination Committee approved the Long-term Indexed Bonus Plan (long-term bonus plan) to align the objectives of executive directors with that of the Company.

The Company granted 1,000,000 rights to executive directors in July 2010 and granted a further 2,000,000 rights to executive directors in August 2011.

The Company sets an initial indexed notional value (INV) for rights issued under the bonus plan. Rights issued under the plan are long term in nature and have multiple vesting dates, with current rights vesting from 15 June 2011 to 15 December 2016.

On the first vesting date, the holder of the awards receives, at the Company’s sole discretion, either cash, or subject to any shareholder approval required under the Corporations Act 2001 and the ASX Listing Rules, ordinary shares in the Company for the difference between the 5-day volume weighted average ASX price of underlying Company shares prior to the vesting date (test price), and the INV set when the rights were initially granted. At each subsequent test date, the award is retested, whereby the holder receives the difference between the 5-day volume weighted average ASX price of underlying Company shares prior to the test date and the higher of the initial INV or the highest test price that occurred prior to that date.

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FINANCIAL REPORT FOR THE YEAR ENDED 30 JUNE 2012 DIRECTORS’ REPORT

14 Remuneration report (audited) (continued)

14.5 Executive remuneration arrangements (continued)

Termination and change of control provisions

Participant initiated termination

Where a participant ceases to be an employee or contractor of the Company prior to vesting of their award, all outstanding rights will expire and cease to carry any rights or benefits.

Company initiated termination

Where the engagement or employment is terminated by the Company for reasons other than serious misconduct, the rights will continue to vest for 180 days following the end of the required notice period, with the final vesting date to be the date on which the 180 day notice period expires.

Change of control

In the event of a change of control of the Company, the vesting period will be brought forward to the date of the change of control and awards will automatically vest.

Listed below are the terms and conditions of rights issued by the Company during the current financial year.

		Indexed
		notional	Initial vesting		Contractual
Grant date	Number	value	date	Test dates	life
Long-term bonus plan grant to	666,666	$9.00	15 June 2013	15 June and 15 December	5 years
executive directors of the Company				from 2013 to 2016
on 8 August 2011, expiring 15	666,667	$10.30	15 June 2014	15 June and 15 December	5 years
December 2016.				from 2014 to 2016
	666,667	$11.70	15 June 2015	15 June and 15 December	5 years
				from 2015 to 2016

The Company also modified the terms and conditions of existing rights granted under the long-term bonus plan during the year ended 30 June 2011. Listed below are the modified terms and conditions of the rights, initially granted on 2 July 2010, modified on 8 August 2011.

		AIndexed
Grant date B	Number	notional value	Initial vesting date	Test dates	Contractual life
Long-term bonus plan grant to	333,332	$3.80	15 June 2011	15 June and 15 December	4 years
executive directors of the Company				from 2011 to 2015
on 2 July 2010, modified on 8 August	333,334	$4.40	15 June 2012	15 June and 15 December	4 years
2011, expiring 15 December 2015.				from 2012 to 2015
	333,334	$5.00	15 June 2013	15 June and 15 December	4 years
				from 2013 to 2015

A The indexed notional value of rights issued under the plan represent a premium in excess of to the five day volume weighted average ASX price of underlying Company shares up to and including 15 June 2010, being the date the rights were initially approved by the Company’s Remuneration and Nomination Committee. The premium for each tranche of the grant was 20%; 40% and 60% in excess of that price, calculated as $3.16.

B The ASX price of underlying Company shares on 8 August 2011, being the date of the modification, was $7.27.

In accordance with the terms and conditions of the plan, the Company paid $846,331 (2011: $1,093,246) in cashsettled awards for the year ended 30 June 2012, representing vesting of long-term rights. The Company also recognised $2,001,679 (2011: $866,503) during the current financial year relating to the fair value liability of rights issued under the long-term bonus plan, valued in accordance with the pricing model as described in note 22 of the financial report.

For details on the valuation of rights, including models and assumptions used, refer to note 22 of the financial report.

The above components are included as part total executives’ remuneration in Table 1 of this report, disclosed as a component of share-based payments.

Further details in respect of the award are provided in Table 3b of this report.

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FINANCIAL REPORT FOR THE YEAR ENDED 30 JUNE 2012 DIRECTORS’ REPORT

14 Remuneration report (audited) (continued)

14.5 Executive remuneration arrangements (continued)

Variable remuneration - Long-term Incentive Option Plan

The long-term Incentive Option Plan (IOP) provides for selected employees and contractors, including KMP, to be offered the opportunity to subscribe for options over ordinary fully paid shares for no consideration and to promote continuity of employment and provide additional incentive to KMP to increase shareholder wealth. Each option carries the right to subscribe for one fully paid ordinary share.

Options under the plan are provided to KMP based on their level of seniority and position within the Company. Options may only be issued to directors subject to approval by shareholders in general meeting.

Under the IOP the Board of directors has the right to issue options on terms and conditions they determine appropriate and in exercising that discretion may give regard to the following:

• the Eligible Participant’s length of service to the Company;

• the contribution made by the Eligible Participant to the Company; and

• the potential contribution of the Eligible Participant to the Company.

The directors may also impose certain conditions, including performance-related and service based conditions, on the right of the participant to exercise any option granted. The directors imposed service based conditions on options issued during the previous financial year. The directors did not impose any performance-related conditions on options issued during the previous financial year.

There are no voting or dividend rights attached to the options and options issued under the plan are to be issued for no consideration. Voting rights will be attached to the ordinary issued shares when the options have been exercised.

KMPs are not permitted to limit or offset their expose to market risk in relation to securities issued.

Long-term Incentive Option for the 2012 financial year

No options were issued to key management persons, including executives, under the IOP during the current financial year. The value of options disclosed within Table 1 of the remuneration report relate to options granted to KMP during the previous financial year, vesting during the 2012 financial year.

Further details in respect of the issue and vesting of options to KMP are provided in Table 3a of this report.

14.6 Company performance and the link to remuneration

The Company’s principal activity during the course of the financial year consisted of exploration, evaluation and development, and as a result the Board has given more significance to service criteria instead of market related criteria in setting the Company’s incentive plans. Accordingly, at this stage the Board does not consider the Company’s earnings or earning measures to be an appropriate key performance indicator. The issue of performance rights and options as part of the remuneration package of directors including KMP is an established practice for listed exploration, evaluation and development companies and has the benefit of conserving cash whilst appropriately incentivising and rewarding senior executives to increase shareholder value. In considering the relationship between the Company’s remuneration policy and the consequences for the Company’s shareholder wealth, changes in share price are analysed.

The following table outlines the Company’s respective earnings and share price from the period 1 July 2007 to 30 June 2012.

Net loss ($) Closing ASX share price Market capitalization ($)	30 Jun 08 30 Jun 09 30 Jun 10 30 Jun 11 30 Jun 12
	(5,416,000) (5,148,000) (29,546,000) (27,051,000) (23,883,000) $0.280 $1.10 $3.24 $7.05 $7.16 23,109,000 91,129,000 421,232,000 1,053,164,000 1,082,861,000

In the opinion of the Board, the Company’s earnings, as listed above, have limited relevance for assessing the Company’s performance during the exploration, evaluation and development phase and have limited consequence on shareholder wealth when compared to the positive consequences of exploration discoveries and well executed development objectives.

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FINANCIAL REPORT FOR THE YEAR ENDED 30 JUNE 2012 DIRECTORS’ REPORT

14 Remuneration report (audited) (continued)

14.7 Executive contractual arrangements

Remuneration arrangements for KMP are formalised in employment agreements or service contracts.

Chief Executive Officer

The services of the CEO, Mr Simich, are contracted under a rolling service contract.

Under the terms of the present contract:

• The CEO receives fixed remuneration of $1,000,000 per annum, with effect from 1 January 2011. Fixed remuneration for the financial year ended 30 June 2012 was $1,000,000.

• The CEO is eligible to participate in the Company’s variable short-term and long-term incentive plans on terms determined by the Board, subject to shareholder approval if applicable.

The CEO’s termination provisions are as follows:

		Payment in lieu of
	Notice period	notice
Company-initiated termination	12 months	12 months
Termination for serious misconduct	None	None
Contractor-initiated termination	6 months	6 months

Other KMP

All other KMP have standard rolling employment contracts. Standard KMP termination provisions are as follows:

		Payment in lieu of
	Notice period	notice
Employer-initiated termination	3 to 6 months	3 to 6 months
Termination for serious misconduct	None	None
Employee-initiated termination	3 to 6 months	3 to 6 months

14.8 Future developments

To coincide with the Company moving into the production phase, the Board has, with effect from 1 July 2012, introduced a Safety and Production Bonus Plan based on the performance of the DeGrussa Copper-Gold mine against a number of safety, production and cost parameters. The bonus plan allows participants to be rewarded:

• Up to 10% of individual yearly fixed remuneration on the achievement of targeted quarterly parameters; and

• Up to an additional 10% of individual yearly fixed remuneration on the achievement of stretched quarterly parameters.

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FINANCIAL REPORT FOR THE YEAR ENDED 30 JUNE 2012 DIRECTORS’ REPORT

14 Remuneration report (audited) (continued)

14.9 Remuneration of key management personnel

Table 1: Remuneration for the year ended 30 June 2012

Note Non-executive directors Derek La Ferla Robert N Scott Soocheol Shin E Jonghun Jong E Total non-executive directors Executive directors Karl M Simich W John Evans Other key management personnel Martin Reed Matthew L Fitzgerald Total executive KMP Totals	Short-term benefits Post employment Total Share-based payments (SBP) Total Value of SBP Performance related Salary & fees Cash bonus A Other Super- annuation Options B Share appreciation rights $ $ $ $ $ $ $ $ % %
	155,963 - - 14,037 170,000 - - 170,000 - - 100,665 - - 4,335 105,000 - - 105,000 - - 28,333 - - - 28,333 - - 28,333 - - 56,667 - - - 56,667 - - 56,667 - -
	341,628 - - 18,372 360,000 - - 360,000 - -
	1,000,000 300,000 - - 1,300,000 - C2,212,685 3,512,685 62.99 8.54 330,275 48,165 - 34,060 412,500 - D635,325 1,047,825 60.63 5.01 446,121 141,000 - 20,229 607,350 - - 607,350 - 23.22 383,296 114,000 - 16,753 514,049 303,034 - 817,083 37.09 13.95
	2,159,692 603,165 - 71,042 2,833,899 303,034 2,848,010 5,984,943 52.65 10.15
	2,501,320 603,165 - 89,414 3,193,899 303,034 2,848,010 6,344,943 49.66 9.57

A Amounts included in remuneration represent the amount that vested in the financial year based on achievement of key objectives in accordance with the Company’s annual Short-term Bonus Plan (Bonus Plan) as detailed in note 14.5 of the remuneration report. No amounts were forfeited and no amounts vest in future financial years in respect of the Bonus Plan for the 2012 financial year.

B The fair value of options is calculated at the date of grant using the Black-Scholes option pricing model and recognised over the period in which the minimum service conditions are fulfilled (the vesting period). No share options were granted to key management persons, including executives, as remuneration during the financial year. The value disclosed is the portion of the fair value of the options issued during the previous financial year but recognised in the current reporting period. The amount included as remuneration is not related to or indicative of the benefit (if any) that individual KMP may in fact receive. For details on the valuation of the options, including models and assumptions used, refer to note 22 of the financial report.

C During the current year the executive received $677,064 in cash payments resulting from the vesting of long term rights.

D During the current year the executive received $169,267 in cash payments resulting from the vesting of long term rights. E Soocheol Shin was appointed 28 February 2012; Jonghun Jong resigned 28 February 2012.

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FINANCIAL REPORT FOR THE YEAR ENDED 30 JUNE 2012 DIRECTORS’ REPORT

14 Remuneration report (audited) (continued)

14.9 Remuneration of key management personnel (continued)

Table 2: Remuneration for the year ended 30 June 2011

Note Non-executive directors Derek La Ferla D Robert N Scott E Jonghun Jong Total non-executive directors Executive directors Karl M Simich W John Evans Other key management personnel Martin Reed Matthew L Fitzgerald Total executive KMP Totals	Short-term benefits Post employment Total Share-based payments (SBP) Total Value of SBP Performance related Salary & fees Cash bonus A Other Super- annuation Options B Share appreciation rights C $ $ $ $ $ $ $ $ % %
	133,028 - 60,000 11,972 205,000 - - 205,000 - - 82,014 - - 3,819 85,833 - - 85,833 - - 72,500 - - - 72,500 - - 72,500 - -
	287,542 - 60,000 15,791 363,333 - - 363,333 - -
	800,000 50,000 - - 850,000 - 2,127,799 2,977,799 71.46 1.68 321,102 26,758 - 31,307 379,167 - 636,951 1,016,118 62.68 2.63 449,588 37,353 - - 486,941 667,915 336,000 1,490,856 67.34 2.51 362,012 30,000 - 7,988 400,000 800,506 259,000 1,459,506 72.59 2.06
	1,932,702 144,111 - 39,295 2,116,108 1,468,421 3,359,750 6,944,279 69.53 2.08
	2,220,244 144,111 60,000 55,086 2,479,441 1,468,421 3,359,750 7,307,612 66.07 1.97

A Amounts included in remuneration represent the amount that vested in the financial year based on achievement of key objectives in accordance with the Company’s annual Short-term Bonus Plan (Bonus Plan). No amounts were forfeited and no amounts vest in future financial years in respect of the Bonus Plan for the 2011 financial year.

B The fair value of options is calculated at the date of grant using the Black-Scholes option pricing model and recognised over the period in which the minimum service conditions are fulfilled (the vesting period). The value disclosed is the portion of the fair value of the options recognised during the current reporting period. The amount included as remuneration is not related to or indicative of the benefit (if any) that individual KMP may in fact receive. For details on the valuation of the options, including models and assumptions used, refer to note 22 of the financial report.

C Amounts shown include the vesting expense of cash-settled awards under the short-term Indexed Bonus Plan and long-term Indexed Bonus Plan for the financial year ended 30 June 2011.

D Total fixed remuneration for Derek La Ferla includes $60,000 representing fees paid for advisory services in excess of his duties as a Non-Executive Chairman.

E Robert N Scott was appointed on 30 July 2010.

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FINANCIAL REPORT FOR THE YEAR ENDED 30 JUNE 2012 DIRECTORS’ REPORT

14 Remuneration report (audited) (continued)

14.10 Equity Instruments

Table 3a: Options vested during the year[A, B]

Options vested during the year

Note Non-executive directors Jonghun Jong C Executive directors Karl M Simich W John Evans Other key management personnel Martin Reed Matthew L Fitzgerald Total	Grant date Exercise price ($) Expiry date Vesting date	Number %
	27-Nov-2009 $5.44 27-Nov-2014 27-Nov-2011 27-Nov-2009 $5.44 27-Nov-2014 27-Nov-2011 27-Nov-2009 $5.44 27-Nov-2014 27-Nov-2011 21-Jun-2010 $4.40 15-Jun-2015 15-Jun-2012 11-Mar-2011 $9.00 28-Feb-2016 28-Feb-2012 21-Jun-2010 $4.40 15-Jun-2015 15-Jun-2012 11-Mar-2011 $9.00 28-Feb-2016 28-Feb-2012	20,000 100.00 200,000 100.00 110,000 100.00 133,333 100.00 116,666 100.00 133,333 100.00 266,666 100.00 979,998

A No share options were granted to key management persons, including executives, as remuneration during the financial year. Options vested relate to options granted in previous financial years.

B Each option carries the right to subscribe for one fully paid ordinary share in Sandfire Resources NL. For details on the valuation of the options, including models and assumptions used, refer to note 22 of the financial report.

C Jonghun Jong resigned 28 February 2012.

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FINANCIAL REPORT FOR THE YEAR ENDED 30 JUNE 2012 DIRECTORS’ REPORT

14 Remuneration report (audited) (continued)

14.10 Equity Instruments (continued)

Table 3b: Rights granted, modified and vested during the year

Note Executive directors Karl M Simich 1,3 1,3 1,3 2,3 2,3 2,3 W John Evans 1,3 1,3 1,3 2,3 2,3 2,3 Total	Terms and conditions for each grant during the year Number Grant / Modification Date Fair value ($) Indexed notional value ($) Expiry date Initial vesting date	Rights vested during the year Number %	Rights tested during the year Number 15-Dec-11 15-Jun-12 Test price Fair value Test price Fair value
	266,666 8-Aug-2011 $1.05 - $2.78 $3.80 15-Dec-2015 15-Jun-2011 266,667 8-Aug-2011 $1.12 - $2.83 $4.40 15-Dec-2015 15-Jun-2012 266,667 8-Aug-2011 $2.63 - $3.60 $5.00 15-Dec-2015 15-Jun-2013 500,000 8-Aug-2011 $0.86 - $2.64 $9.00 15-Dec-2016 15-Jun-2013 500,000 8-Aug-2011 $1.21 - $2.36 $10.30 15-Dec-2016 15-Jun-2014 500,000 8-Aug-2011 $1.46 - $2.10 $11.70 15-Dec-2016 15-Jun-2015 66,666 8-Aug-2011 $1.05 - $2.78 $3.80 15-Dec-2015 15-Jun-2011 66,667 8-Aug-2011 $1.12 - $2.83 $4.40 15-Dec-2015 12-Jun-2012 66,667 8-Aug-2011 $2.63 - $3.60 $5.00 15-Dec-2015 15-Jun-2013 166,666 8-Aug-2011 $0.86 - $2.64 $9.00 15-Dec-2016 15-Jun-2013 166,667 8-Aug-2011 $1.21 - $2.36 $10.30 15-Dec-2016 15-Jun-2014 166,667 8-Aug-2011 $1.46 - $2.10 $11.70 15-Dec-2016 15-Jun-2015	- - 266,667 100.00 - - - - - - - - - - 66,667 100.00 - - - - - - - -	266,666 $7.08 - $7.08 - 266,667 $4.40 $2.54 66,666 $7.08 - $7.08 - 66,667 $4.40 $2.54
	3,000,000	333,334	666,666

• 1 The terms and conditions of the rights, initially granted 2 July 2010, were modified 8 August 2011. Refer to note 14.5 of the remuneration report for details.

• 2 This grant relates rights issued under the Company’s long-term Indexed Bonus Plan during the current financial year. Refer to note 14.5 of the remuneration report for details.

• 3 The fair value of the rights is calculated at the reporting date using the Black-Scholes option pricing model. In accordance with the terms and conditions of the long-term Indexed Bonus Plan, the ultimate value of the long-term rights will be calculated on the initial vesting date and subsequent testing dates. Vested rights are tested on 15 June and 15 December of each calendar year subsequent to the initial vesting date and up to expiry. The fair value of the rights at each of the test dates, is the difference between the 5-day volume weighted average ASX price of underlying Company shares and the higher of the initial INV or the highest test price that occurred prior to that test date. For details on the valuation of the rights, including models and assumptions used, refer to note 22 of the financial report.

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FINANCIAL REPORT FOR THE YEAR ENDED 30 JUNE 2012 DIRECTORS’ REPORT

14 Remuneration report (audited) (continued)

14.10 Equity Instruments (continued)

Table 4: Value of options granted, exercised and lapsed during the year

	Value of options	Value of options	Value of options	Value of options
	granted during	exercised during	sold during the	lapsed during the
	the year	the year	year (A)	year
	$	$	$	$
Key management personnel
Matthew L Fitzgerald	-	-	306,500	-

A The value is calculated as the market price of shares of the Company as at close of trading on the date the options were disposed after deducting the price to exercise the options.

There were no alterations to the terms and conditions of options awarded as remuneration since their award date.

Shares issued on exercise of options

No options over ordinary shares, previously granted as compensation, were exercised during the reporting period.

Signed in accordance with a resolution of the directors.

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Derek La Ferla Non-executive Chairman

Karl M. Simich Managing Director and Chief Executive Officer

West Perth, 17 September 2012

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• 28 -

CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME FOR THE YEAR ENDED 30 JUNE 2012

Note Sales revenue 6 Unrealised price adjustments gains (losses) 6 Other income 4 Changes in inventories of finished goods and work in progress Mine operations costs Employee benefit expenses 7 Freight, treatment and refining expenses Royalties expense Exploration and evaluation expenses Depreciation and amortisation expenses 7 Share of net loss of associate Impairment expense 4 Administrative expenses Profit (loss) before net finance income Finance income 8 Finance expense 8 Net finance income Profit (loss) before income tax Income tax benefit 9 Net profit (loss) for the year Other comprehensive income for the period, net of tax Total comprehensive income for the period Loss per share Basic and diluted loss per share attributable to ordinary equity holders (cents) 10	2012 $000 2011 $000
	20,684 - (326) - 1,470 212 5,852 - (2,920) - (14,986) (17,521) (3,985) - (1,263) - (26,424) (39,342) (4,524) (1,135) (650) - (1,463) - (5,008) (3,684)
	(33,543) (61,470) 1,217 4,632 (235) (39)
	982 4,593
	(32,561) (56,877) 8,678 29,826
	(23,883) (27,051)
	- -
	(23,883) (27,051)
	15.85 19.16

The above consolidated statement of comprehensive income should be read in conjunction with the accompanying notes.

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CONSOLIDATED STATEMENT OF FINANCIAL POSITION AS AT 30 JUNE 2012

Note ASSETS Cash and cash equivalents 11 Trade and other receivables 12 Inventories 13 Other current assets Total current assets Receivables 12 Inventories 13 Mine properties 14 Property, plant and equipment 15 Investment in associate 4 Deferred tax assets 9 Total non-current assets TOTAL ASSETS LIABILITIES Trade and other payables 16 Interest bearing liabilities 17 Provisions 18 Total current liabilities Trade and other payables 16 Interest bearing liabilities 17 Provisions 18 Total non-current liabilities TOTAL LIABILITIES NET ASSETS EQUITY Issued capital 19 Reserves 22 Accumulated losses TOTAL EQUITY	2012 $000 2011 $000
	100,389 74,041 7,015 1,456 7,254 - 1,085 656
	115,743 76,153
	3 3,168 6,233 - 163,670 23,856 202,232 37,588 1,189 - 40,580 31,881
	413,907 96,493
	529,650 172,646
	49,626 30,289 94,146 660 1,311 363
	145,083 31,312
	1,383 350 251,019 996 14,929 1,536
	267,331 2,882
	412,414 34,194
	117,236 138,452
	213,007 210,325 6,077 6,092 (101,848) (77,965)
	117,236 138,452

The above consolidated statement of financial position should be read in conjunction with the accompanying notes.

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• 30 -

CONSOLIDATED STATEMENT OF CHANGES IN EQUITY FOR THE YEAR ENDED 30 JUNE 2012

Note At 1 July 2011 Loss for the period Other comprehensive income Total comprehensive income for the period Transactions with owners in their capacity as owners: Exercise of options 19 Share issue costs net of income tax benefit Transfer from share-based payments reserve on exercise of options Share based payments recognised at fair value 22 Share of movement in share based payments reserve from associate 4 At 30 June 2012 At 1 July 2010 Loss for the period Other comprehensive income Total comprehensive income for the period Transactions with owners in their capacity as owners: Shares issued 19 Share issue costs net of income tax benefit Exercise of options 19 Transfer from share-based payments reserve on exercise of options Share based payments recognised at fair value 22 At 30 June 2011	Issued capital Share based payments reserve Accumulated losses Total equity $000 $000 $000 $000
	210,325 6,092 (77,965) 138,452
	- - (23,883) (23,883)
	- - - -
	- - (23,883) (23,883)
	1,968 - - 1,968
	(73) - - (73)
	787 (787) - -
	- 795 - 795
	- (23) - (23)
	213,007 6,077 (101,848) 117,236
	Issued capital Share based payments reserve Accumulated losses Total equity $000 $000 $000 $000
	105,096 2,570 (50,914) 56,752 - - (27,051) (27,051) - - - -
	- - (27,051) (27,051) 103,259 - - 103,259 (2,593) - - (2,593) 3,535 - - 3,535 1,028 (1,028) - - - 4,550 - 4,550
	210,325 6,092 (77,965) 138,452

The above consolidated statement of changes in equity should be read in conjunction with the accompanying notes.

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• 31 -

CONSOLIDATED STATEMENT OF CASH FLOWS FOR THE YEAR ENDED 30 JUNE 2012

Note Cash flows from operating activities Cash receipts Cash paid to suppliers and employees Payments for exploration and evaluation Interest received Net cash inflow (outflow) from operating activities 20 Cash flows from investing activities Payments for property, plant and equipment Proceeds from sale of property, plant and equipment Payments for mine properties Payments for investments in associate 4 Refunds (payments) of security deposits and bonds Net cash inflow (outflow) from investing activities Cash flows from financing activities Proceeds from issue of shares Proceeds from the exercise of options Share issue costs Proceeds from borrowings Payment of finance lease liabilities Finance establishment costs Interest and other costs of finance paid Net cash inflow (outflow) from financing activities Net increase (decrease) in cash and cash equivalents Cash and cash equivalents at the beginning of the period Cash and cash equivalents at the end of the period 11, 20	2012 $000 2011 $000
	18,187 - (28,052) (5,434) (29,533) (44,224) 3,073 4,864
	(36,325) (44,794)
	(146,494) (23,448) 98 - (123,628) (12,696) (1,855) - 3,165 (2,773)
	(268,714) (38,917)
	- 103,259 1,968 3,535 (94) (4,648) 350,000 - (350) (99) (9,274) (90) (10,863) (39)
	331,387 101,918
	26,348 18,207 74,041 55,834
	100,389 74,041

The above consolidated statement of cash flows should be read in conjunction with the accompanying notes.

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• 32 -

NOTES TO THE FINANCIAL STATEMENTS

FOR THE YEAR ENDED 30 JUNE 2012

1 Corporate Information

The consolidated financial statements of Sandfire Resources NL for the year ended 30 June 2012 were authorised for issue in accordance with a resolution of the directors on 17 September 2012.

Sandfire Resources NL (the Parent) is a company incorporated in Australia whose shares are publicly traded on the Australian Stock Exchange (ASX). The nature of the operations and principal activities of the Company are described in the directors’ report.

2 Summary of significant accounting policies

Basis of preparation

The financial report of the Group, a for-profit entity, is a general purpose financial report, which has been prepared in accordance with the requirements of the Corporations Act 2001 , Australian Accounting Standards and other authoritative pronouncements of the Australian Accounting Standards Board. The financial report has been prepared on a historical cost basis.

The financial report is presented in Australian dollars and all values are rounded to the nearest thousand dollars ($000) unless otherwise stated.

(a) Compliance with IFRS

The financial report complies with International Financial Reporting Standards (IFRS) as issued by the International Accounting Standards Board.

(b) New Accounting Standards and interpretations

(i) Changes in accounting policy and disclosures – mandatory standards

The accounting policies adopted are consistent with those of the previous financial year except as described below. Certain comparative information has been reclassified to conform with the current year’s presentation.

The Group has adopted the following new and amended Australian Accounting Standards and AASB Interpretations as of 1 July 2011:

• AASB 124 Related Party Disclosures (amendment) , effective 1 January 2011.

• AASB 2009-12 Amendments to Australian Accounting Standards [AASBs 5, 8, 108, 110, 112, 119, 133, 137, 139, 1023 & 1031 and Interpretations 2, 4, 16, 1039 & 1052], effective 1 January 2011.

• AASB 2010-4 Amendments to Australian Accounting Standards arising from the Annual Improvement Project [AASB 1, AASB 7, AASB 101, AASB 134 and Interpretation 13], effective 1 January 2011.

• AASB 2010-5 Amendments to Australian Accounting Standards [AASB 1, 3, 4, 5, 101, 107, 112, 118, 119, 121, 132, 133, 134, 137, 139, 140, 1023 & 1038 and Interpretations 112, 115, 127, 132 & 1042], effective 1 July 2011.

• AASB 2010-6 Australian Additional Disclosures , effective 1 July 2011.

• AASB 1048 Interpretation of Standards, effective a July 2011.

The adoption of the new and amended standards or interpretations had no impact on the financial position or performance of the Company.

(ii) Changes in accounting policy and disclosures – early adoption of standards

The following standards were early adopted by the Group during the current financial year:

• Interpretation 20 Stripping Costs in the Production Phase of a Surface Mine effective 1 July 2013. This interpretation applies to stripping costs incurred during the production phase of a surface mine. Production stripping costs are to be capitalised as part of an asset, if an entity can demonstrate that it is probable future economic benefits will be realised, the costs can be reliably measured and the entity can identify the component of an ore body for which access has been improved. This asset is to be called the “stripping activity asset”. The stripping activity asset shall be depreciated or amortised on a systematic basis, over the expected useful life of the identified component of the ore body that becomes more accessible as a result of the stripping activity. The units of production method shall be applied unless another method is more appropriate. Refer to accounting policy note 2(l) for more details.

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• 33 -

NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2012

2 Summary of significant accounting policies (continued)

(b) New Accounting Standards and interpretations (continued)

(iii) Accounting Standards and Interpretations issued but not yet effective

Australian Accounting Standards and Interpretations that have recently been issued or amended but are not yet effective and have not been adopted by the Company for the reporting period ending 30 June 2012, are outlined in the table below.

			Application date and
			impact on the Company’s
Reference	Title	Summary	financial report
2010-8	Amendments to	These amendments address the determination of deferred	The amendments which
	Australian Accounting	tax on investment property measured at fair value and	become mandatory for the
	Standards – Deferred	introduce a rebuttable presumption that deferred tax on	Group’s 30 June 2013
	Tax: Recovery of	investment property measured at fair value should be	financial statements are not
	Underlying Assets	determined on the basis that the carrying amount will be	expected to have any
	[AASB 112]	recoverable through sale. The amendments also incorporate_SIC-21 Income Taxes – Recovery of Revalued_	impact on the financial statements.
		_Non-Depreciable Assets_into AASB 112.
AASB 2011-9	Amendments to	This Standard requires entities to group items presented in	The amendments which
	Australian Accounting	other comprehensive income on the basis of whether they	become mandatory for the
	Standards –	might be reclassified subsequently to profit or loss and	Group’s 30 June 2013
	Presentation of Other	those that will not.	financial statements are not
	Comprehensive		expected to have any
	Income		impact on the financial
	[AASB 1, 5, 7, 101,		statements.
	112, 120, 121, 132,
	133, 134, 1039 &
	1049]
AASB 10	Consolidated	AASB 10 establishes a new control model that applies to	The amendments which
	Financial Statements	all entities. It replaces parts of AASB 127_Consolidated_	become mandatory for the
		_and Separate Financial Statements_dealing with the	Group’s 30 June 2014
		accounting for consolidated financial statements and UIG-	financial statements are not
		112_Consolidation – Special Purpose Entities._	expected to have any
		The new control model broadens the situations when an	impact on the financial
		entity is considered to be controlled by another entity and	statements.
		includes new guidance for applying the model to specific
		situations, including when acting as a manager may give
		control, the impact of potential voting rights and when
		holding less than a majority voting rights may give control.
		Consequential amendments were also made to other
		standards via AASB 2011-7.
AASB 11	Joint Arrangements	AASB 11 replaces AASB 131_Interests in Joint Ventures_	The amendments which
		and UIG-113_Jointly- controlled Entities – Non-monetary_	become mandatory for the
		_Contributions by Ventures._AASB 11 uses the principle of	Group’s 30 June 2014
		control in AASB 10 to define joint control, and therefore the	financial statements are not
		determination of whether joint control exists may change.	expected to have any
		In addition it removes the option to account for jointly	impact on the financial
		controlled entities (JCEs) using proportionate	statements.
		consolidation. Instead, accounting for a joint arrangement
		is dependent on the nature of the rights and obligations
		arising from the arrangement. Joint operations that give
		the venturers a right to the underlying assets and
		obligations themselves is accounted for by recognising the
		share of those assets and obligations. Joint ventures that
		give the venturers a right to the net assets is accounted for
		using the equity method.
		Consequential amendments were also made to other
		standards via AASB 2011-7 and amendments to AASB
		128.
AASB 12	Disclosure of	AASB 12 includes all disclosures relating to an entity’s	The amendments which
	Interests in Other	interests in subsidiaries, joint arrangements, associates	become mandatory for the
	Entities	and structures entities. New disclosures have been	Group’s 30 June 2014
		introduced about the judgments made by management to	financial statements are not
		determine whether control exists, and to require	expected to have any
		summarised information about joint arrangements,	impact on the financial
		associates and structured entities and subsidiaries with	statements.
		non-controlling interests.

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• 34 -

NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2012

2 Summary of significant accounting policies (continued)

(b)	New	Accounting Standards and interpretations (continued)	Accounting Standards and interpretations (continued)
AASB 13		Fair Value	AASB 13 establishes a single source of guidance for	The amendments which
		Measurement	determining the fair value of assets and liabilities. AASB	become mandatory for the
			13 does not change when an entity is required to use fair	Group’s 30 June 2014
			value, but rather, provides guidance on how to determine	financial statements are not
			fair value when fair value is required or permitted.	expected to have any
			Application of this definition may result in different fair	impact on the financial
			values being determined for the relevant assets.	statements.
			AASB 13 also expands the disclosure requirements for all
			assets or liabilities carried at fair value. This includes
			information about the assumptions made and the
			qualitative impact of those assumptions on the fair value
			determined.
			Consequential amendments were also made to other
			standards via AASB 2011-8.
AASB 119		Employee Benefits	The main change introduced by this standard is to revise	The amendments which
			the accounting for defined benefit plans. The amendment	become mandatory for the
			removes the options for accounting for the liability, and	Group’s 30 June 2014
			requires that the liabilities arising from such plans is	financial statements are not
			recognised in full with actuarial gains and losses being	expected to have any
			recognised in other comprehensive income. It also revised	impact on the financial
			the method of calculating the return on plan assets.	statements.
			The revised standard changes the definition of short-term
			employee benefits. The distinction between short-term
			and other long-term employee benefits is now based on
			whether the benefits are expected to be settled wholly
			within 12 months after the reporting date.
			Consequential amendments were also made to other
			standards via AASB 2011-10.
Annual		Annual Improvements	This standard sets out amendments to International	The amendments which
Improvements		to IFRSs 2009–2011	Financial Reporting Standards (IFRSs) and the related	become mandatory for the
2009–2011 Cycle		Cycle	bases for conclusions and guidance made during the International Accounting Standards Board’s Annual Improvements process. These amendments have not yet	Group’s 30 June 2014 financial statements are not expected to have any
			been adopted by the AASB.	impact on the financial
			The following items are addressed by this standard:	statements.
			IFRS 1 First-time Adoption of International Financial
			Reporting Standards
			� Repeated application of IFRS 1
			� Borrowing costs
			IAS 1 Presentation of Financial Statements
			� Clarification of the requirements for comparative
			information
			IAS 16 Property, Plant and Equipment
			� Classification of servicing equipment
			IAS 32 Financial Instruments: Presentation
			� Tax effect of distribution holders of equity instruments
			IAS 34 Interim Financial Reporting
			� Interim financial reporting and segment information for
			total assets and liabilities
AASB 2011-4		Amendments to	This Amendment deletes from AASB 124 individual key	The amendments which
		Australian Accounting	management personnel disclosure requirements for	become mandatory for the
		Standards to Remove	disclosing entities that are not companies.	Group’s 30 June 2014
		Individual Key		financial statements are not
		Management		expected to have any
		Personnel Disclosure		impact on the financial
		Requirements		statements.
		[AASB 124]

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• 35 -

NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2012

2 Summary of significant accounting policies (continued)

(b) New Accounting Standards and interpretations (continued)

AASB	1053	Application of Tiers of	This Standard establishes a differential financial reporting	The amendments which
		Australian Accounting	framework consisting of two Tiers of reporting	become mandatory for the
		Standards	requirements for preparing general purpose financial	Group’s 30 June 2014
			statements:	financial statements are not
			(a) Tier 1: Australian Accounting Standards (b) Tier 2: Australian Accounting Standards – Reduced	expected to have any impact on the financial statements.
			Disclosure Requirements
			Tier 2 comprises the recognition, measurement and
			presentation requirements of Tier 1 and substantially
			reduced disclosures corresponding to those requirements.
			The following entities apply Tier 1 requirements in
			preparing general purpose financial statements:
			(a) For-profit entities in the private sector that have public
			accountability (as defined in this Standard)
			(b) The Australian Government and State, Territory and
			Local Governments
			The following entities apply either Tier 2 or Tier 1
			requirements in preparing general purpose financial
			statements:
			(a) For-profit private sector entities that do not have public
			accountability
			(b) All not-for-profit private sector entities
			(c) Public sector entities other than the Australian
			Government and State, Territory and Local
			Governments.
			Consequential amendments to other standards to
			implement the regime were introduced by AASB 2010-2,
			2011-2, 2011-6, 2011-11 and 2012-1.
AASB	2012-2	Amendments to	AASB 2012-2 principally amends AASB 7 Financial	The amendments which
		Australian Accounting	Instruments: Disclosures to require disclosure of	become mandatory for the
		Standards –	information that will enable users of an entity’s financial	Group’s 30 June 2014
		Disclosures –	statements to evaluate the effect or potential effect of	financial statements are not
		Offsetting Financial	netting arrangements, including rights of set-off associated	expected to have any
		Assets and Financial	with the entity’s recognised financial assets and	impact on the financial
		Liabilities	recognised financial liabilities, on the entity’s financial	statements.
			position.
AASB	2012-4	Amendments to	AASB 2012-4 adds an exception to the retrospective	The amendments which
		Australian Accounting	application of Australian Accounting Standards under	become mandatory for the
		Standards –	AASB 1 First-time Adoption of Australian Accounting	Group’s 30 June 2014
		Government Loans	Standards to require that first-time adopters apply the	financial statements are not
			requirements in AASB 139 Financial Instruments:	expected to have any
			Recognition and Measurement (or AASB 9 Financial	impact on the financial
			Instruments) and AASB 120 Accounting for Government	statements.
			Grants and Disclosure of Government Assistance
			prospectively to government loans (including those at a
			below-market rate of interest) existing at the date of
			transition to Australian Accounting Standards.
AASB	2012-5	Amendments to	AASB 2012-5 makes amendments resulting from the	The amendments which
		Australian Accounting	2009-2011 Annual Improvements Cycle. The Standard	become mandatory for the
		Standards arising	addresses a range of improvements, including the	Group’s 30 June 2014
		from Annual	following:	financial statements are not
		Improvements 2009– 2011 Cycle	� Repeat application of AASB 1 is permitted (AASB 1); and	expected to have any impact on the financial
				statements.
			� Clarification of the comparative information
			requirements when an entity provides a third balance
			sheet (AASB 101 Presentation of Financial
			Statements).
AASB	2012-3	Amendments to	AASB 2012-3 adds application guidance to AASB 132	The amendments which
		Australian Accounting	Financial Instruments: Presentation to address	become mandatory for the
		Standards –	inconsistencies identified in applying some of the offsetting	Group’s 30 June 2016
		Offsetting Financial	criteria of AASB 132, including clarifying the meaning of	financial statements are not
		Assets and Financial	“currently has a legally enforceable right of set-off” and that	expected to have any
		Liabilities;	some gross settlement systems may be considered	impact on the financial
			equivalent to net settlement.	statements.

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• 36 -

NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2012

2 Summary of significant accounting policies (continued)

(b) New Accounting Standards and interpretations (continued)

AASB	9	Financial Instruments	AASB 9 includes requirements for the classification and	The amendments which
			measurement of financial assets. It was further amended	become mandatory for the
			by AASB 2010-7 to reflect amendments to the accounting	Group’s 30 June 2016
			for financial liabilities.	financial statements are not
			These requirements improve and simplify the approach for classification and measurement of financial assets	expected to have any impact on the financial
			compared with the requirements of AASB 139. The main	statements.
			changes are described below.
			(a) Financial assets that are debt instruments will be
			classified based on (1) the objective of the entity’s
			business model for managing the financial assets; (2)
			the characteristics of the contractual cash flows.
			(b) Allows an irrevocable election on initial recognition to
			present gains and losses on investments in equity
			instruments that are not held for trading in other
			comprehensive income. Dividends in respect of these
			investments that are a return on investment can be
			recognised in profit or loss and there is no impairment
			or recycling on disposal of the instrument.
			(c) Financial assets can be designated and measured at
			fair value through profit or loss at initial recognition if
			doing so eliminates or significantly reduces a
			measurement or recognition inconsistency that would
			arise from measuring assets or liabilities, or
			recognising the gains and losses on them, on different
			bases.
			(d) Where the fair value option is used for financial
			liabilities the change in fair value is to be accounted for
			as follows: (i) The change attributable to changes in
			credit risk are presented in other comprehensive
			income (OCI); and (ii) The remaining change is
			presented in profit or loss.
			If this approach creates or enlarges an accounting
			mismatch in the profit or loss, the effect of the changes in
			credit risk are also presented in profit or loss.
			Consequential amendments were also made to other
			standards as a result of AASB 9, introduced by AASB
			2009-11 and superseded by AASB 2010-7 and 2010-10.

(c) Basis of consolidation

The consolidated financial statements comprise the financial statements of Sandfire Resources NL and its subsidiaries (as outlined in note 21) as at and for the period ended 30 June each year (the Group). Interests in associates are equity accounted and are not part of the consolidated Group (see note 2(d) below).

Subsidiaries are all those entities over which the Group has the power to govern the financial and operating policies so as to obtain benefits from their activities. The existence and effect of potential voting rights that are currently exercisable or convertible are considered when assessing whether a group controls another entity.

The financial statements of the subsidiaries are prepared for the same reporting period as the parent company, using consistent accounting policies. In preparing the consolidated financial statements, all intercompany balances, transactions, unrealised gains and losses resulting from intra-group transactions and dividends have been eliminated in full.

Subsidiaries are fully consolidated from the date on which control is obtained by the Group and cease to be consolidated from the date on which control is transferred out of the Group.

(d) Investment in an associate

The Group’s investment in its associate is accounted for using the equity method. An associate is an entity in which the Group has, or has the ability to exert, significant influence.

Under the equity method, the investment in the associate is carried on the statement of financial position at cost plus post acquisition changes in the Group’s share of net assets of the associate. Goodwill relating to the associate is included in the carrying amount of the investment and is neither amortised nor individually tested for impairment.

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• 37 -

NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2012

2 Summary of significant accounting policies (continued)

(d) Investment in an associate (continued)

The income statement reflects the Group’s share of the results of operations of the associate. When there has been a change recognised directly in the equity of the associate, the Group recognises its share of any changes and discloses this, when applicable, in the statement of changes in equity. Unrealised gains and losses resulting from transactions between the Group and the associate are eliminated to the extent of the interest in the associate.

The Group’s share of profit (loss) of an associate is shown on the face of the income statement. This is the profit (loss) attributable to equity holders of the associate and, therefore, is profit (loss) after tax and non-controlling interests in the subsidiaries of the associate.

The financial statements of the associate are prepared for the same reporting period as the Group. When necessary, adjustments are made to bring the accounting policies in line with those of the Group.

(e) Operating segments

An operating segment is a component of the Group about which separate financial information is available that is evaluated regularly by the Group’s key management personnel in deciding how to allocate resources and in assessing performance.

Segment information that is evaluated by key management personnel is prepared in conformity with the accounting policies adopted for preparing the financial statements of the Group.

Operating segments have been identified based on the information provided to the chief operating decision makers – being the executive management team and the Board of directors.

(f) Foreign currency

(i) Functional and presentation currency

The consolidated financial statements are presented in Australian dollars. Items included in the financial statements of each of the Group’s entities are measured using the currency of the primary economic environment in which the entity operates, the ‘functional currency’. The functional currency of Sandfire Resources NL is Australian dollars ($).

(ii) Transactions and balances

Transactions in foreign currencies are initially recorded in the functional currency at the respective functional currency rates prevailing at the date of the transaction.

Monetary assets and liabilities denominated in foreign currencies are retranslated at the spot rate of exchange ruling at the reporting date. Foreign exchange gains and losses resulting from the settlement of such transactions and from the translation at year-end exchange rates of monetary assets and liabilities denominated in foreign currencies are recognised in the Income Statement.

Non-monetary items that are measured in terms of historical cost in a foreign currency are translated using the exchange rate as at the date of the initial transaction. Non-monetary items measured at fair value in a foreign currency are translated using the exchange rates at the date when the fair value was determined.

(g) Revenue recognition

Revenue is recognised to the extent that it is probable that the economic benefits will flow to the Group and the revenue can be reliably measured, regardless of when the payment is being made. Revenue is measured at the fair value of the consideration received or receivable, taking into account contractually defined terms of payment and excluding taxes or duty. The specific recognition criteria described below must also be met before revenue is recognised.

(i) Sale of goods – direct shipping ore

Revenue from the sale of goods is recognised when persuasive evidence of an arrangement exists, usually in the form of an executed sales agreement, indicating there has been a transfer of risks and rewards to the customer, no further processing is required by the Group, the quantity and quality of the goods has been determined with reasonable accuracy, the price is fixed or determinable, and collectability is probable. This is generally when title passes, which for the sale of direct shipping ore represents the bill of lading date when the ore is delivered for shipment.

Revenue on provisionally priced sales is recognised at the estimated fair value of the total consideration received or receivable. Royalties paid and payable are separately reported as expenses.

Contract terms for many of the Group’s sales allow for a price adjustment based on a final assay of the goods by the customer to determine content. Recognition of the sales revenue for these commodities is based on the most recently determined estimate of product specifications with a subsequent adjustment made to revenue upon final determination.

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• 38 -

NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2012

2 Summary of significant accounting policies (continued)

(g) Revenue recognition (continued)

The terms of direct shipping ore sales contracts with third parties contain provisional pricing arrangements. The selling price for metal in direct shipping ore is based on prevailing spot prices at the time of shipment to the customer and adjustments to the sales price occur based on movements in quoted market prices up to the date of final settlement.

These provisionally priced sales contracts contain an embedded derivative that is required to be separated from the host contract for accounting purposes. Accordingly, the embedded derivative, which does not qualify for hedge accounting, is recognised at fair value, with subsequent changes in fair value recognised in the Income Statement in each period until final settlement. Changes in fair value over the Quotational Period (QP) and up until final settlement are estimated by reference to forward market prices. The QP often reflects the average time to elapse between the date of shipment and the date of processing by the smelter at final destination. This pricing methodology is normal for the industry.

For amounts at balance date still subject to price adjustments due to the quotational period remaining open, a final settlement price is estimated based on the closing LME (London Metals Exchange) copper price on the final day of the month. This revaluation is performed up until the final invoice is received. The actual settlement price may vary from this estimate.

(ii) Sale of goods – gold laterite ore

Sales of gold laterite are recognised when the ore is presented for processing. Revenue is based on recovery grades and prevailing gold prices at the time of final production.

(iii) Interest revenue

Revenue is recognised as interest accrues using the effective interest method. This is a method of calculating the amortised cost of a financial asset and allocating the interest income over the relevant period using the effective interest rate, which is the rate that exactly discounts estimated future cash receipts through the expected life of the financial asset to the net carrying amount of the financial asset. Interest income is included in finance income in the income statement.

(iv) Rendering of services

Revenue from services rendered is recognised in the income statement in proportion to the stage of completion of the transaction at the reporting date.

(h) Cash and cash equivalents

Cash and cash equivalents in the statement of financial position and statement of cash flows comprise cash at bank and on hand and short-term deposits that are readily convertible to known amounts of cash and which are subject to an insignificant risk of changes in value.

(i) Trade and other receivables

Trade receivables are recognised initially at fair value and subsequently measured at amortised cost using the effective interest method, less an allowance for impairment. Provisional payments in relation to trade receivables are due for settlement within 30 days from the date of recognition, with any mark to market adjustment due for settlement usually from 60-90 days. Sales of direct shipping ore and gold laterite are recognised in accordance with note 2(g).

Collectability of trade receivables is reviewed on an ongoing basis. Individual debts that are known to be uncollectible are written off when identified. An impairment provision is recognised when there is objective evidence that the Group will not be able to collect the receivable. Financial difficulties of the debtor, default payments or debts more than 90 days overdue are considered objective evidence of impairment. The amount of the impairment loss is the receivable carrying amount compared to the present value of estimated future cash flows, discounted at the original effective interest rate. The amount of the impairment is recognised in the income statement.

(j) Inventories

Stores and consumables and ore are stated at the lower of cost and net realisable value. Cost comprises direct materials, direct labour and an appropriate proportion of variable and fixed indirect expenditure.

Costs are assigned to individual items of inventory on the basis of weighted average costs. Cost includes direct material, waste removal including amortisation (refer accounting policy 2(l)), mining, processing, labour, related transportation costs to the point of sale and other fixed and variable costs directly related to mining activities.

Net realisable value is the estimated selling price in the ordinary course of business less the estimated costs of completion and the estimated costs necessary to make the sale.

Stores and consumables, and ore inventories expected to be processed or sold within twelve months after the balance sheet date, are classified as current assets. All other inventories are classified as non-current assets.

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• 39 -

NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2012

2 Summary of significant accounting policies (continued)

(k) Exploration and evaluation expenditure

Pre-licence costs are expensed in the period in which they are incurred.

Once the legal right to explore has been acquired, exploration and evaluation expenditure incurred on licences where the technical feasibility and commercial viability of extracting mineral resources has not yet been established is expensed as incurred. The directors of the Company generally consider a project to be economically viable on the satisfactory completion of a feasibility study and a JORC reserve estimate.

Exploration and evaluation expenditure include the costs of acquiring and maintaining the rights to explore, investigate, examine and evaluate an area of mineralisation, and assessing the technical feasibility and commercial viability of extracting the mineral resources from that area.

Once the technical feasibility and commercial viability of extracting mineral resources are demonstrable (at which point, the Company considers it probable that economic benefits will be realised), the Company capitalises any further evaluation costs incurred for the particular licence to mine properties.

Cash flows arising from exploration and evaluation expenditure

Cash flows arising from exploration and evaluation expenditure are included in the statement of cash flows as an operating activity.

(l) Mine properties

Mine development

Mine property and development assets are stated at historical cost less accumulated amortisation and any impairment losses recognised. Mine property and development assets include costs incurred in accessing the ore body and costs to develop the mine to the production phase, once the technical feasibility and commercial viability of an ore body has been established.

Overburden and waste removal

Overburden and other waste removal costs (stripping costs) incurred in the development of a surface mine before production commences are capitalised and included as part of mine properties as development phase stripping. These costs include direct costs and an allocation of relevant indirect expenditure.

Stripping costs incurred during the production phase of a surface mine are capitalised when the Group can identify the component of an ore body for which access has been improved and are included as part of mine properties as production phase stripping. These costs include direct costs and an allocation of relevant indirect expenditure.

Amortisation

The Group amortises mine property and development assets from the commencement of commercial production. The amortisation methods adopted by the Group are shown in table below:

Category	Amortisation method
Mine development	Units of material extracted method over the life of mine.
Development phase stripping	Tonnes of contained copper (direct shipping ore and sulphides) method over the life of
	mine.
Production phase stripping	Tonnes of contained copper (direct shipping ore and sulphide) method, over the
	expected useful life of the identified component of the ore body that becomes more
	accessible as a result of the stripping activity.

The Group commenced commercial production on the Company’s surface mine in February 2012.

(m) Property, plant and equipment

Property, plant and equipment is stated at historical cost, less accumulated depreciation and accumulated impairment losses, if any. Historical cost includes expenditure that is directly attributable to the acquisition of the items and costs incurred in bringing the asset into use.

Subsequent costs are included in the asset’s carrying amount or recognised as a separate asset, as appropriate, only when it is probable that future economic benefits associated with the item flow to the Group and the cost of the item can be measured reliably. The carrying amount of the replaced part is derecognised. All other repairs and maintenance costs are recognised in the income statement as incurred.

The capitalised value of a finance lease is also included within property, plant and equipment.

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• 40 -

NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2012

2 Summary of significant accounting policies (continued)

(m) Property, plant and equipment (continued)

Depreciation

The depreciation methods adopted by the Group are shown in table below:

Category	Depreciation method
Plant and equipment	Straight line over the life of the asset (3 to 10 years)
Motor vehicles	Straight line over the life of the asset (3 to 5 years)
Leased equipment	Straight line over the life of the asset (3 to 5 years)

An item of property, plant and equipment and any significant part initially recognised is derecognised upon disposal or when no future economic benefits are expected from its use or disposal. Any gain or loss arising on derecognition of the asset (calculated as the difference between the net disposal proceeds and the carrying amount of the asset) is included in the income statement when the asset is derecognised.

The assets' residual values, useful lives and depreciation methods are reviewed, and adjusted if appropriate, at each financial year end.

(n) Leases

The determination of whether an arrangement is or contains a lease is based on the substance of the arrangement at inception date, whether the fulfillment of the arrangement is dependent on the use of a specific asset or assets or the arrangement conveys a right to use the asset, even if that right is not explicitly specified in an arrangement.

Group as lessee

Finance leases that transfer to the Group substantially all the risks and benefits incidental to ownership of the leased item, are capitalised at the commencement of the lease at the fair value of the leased property or, if lower, at the present value of the minimum lease payments and are also disclosed as interest bearing liabilities. Lease payments are apportioned between the finance charges and reduction of the lease liability so as to achieve a constant rate of interest on the remaining balance of the liability. Finance charges are recognised in finance costs in the income statement.

Capitalised leased assets are depreciated over the useful life of the asset. However, if there is no reasonable certainty that the Group will obtain ownership by the end of the lease term, the asset is depreciated over the shorter of the estimated useful life of the asset and lease term.

Operating lease payments are recognised as an operating expense in the income statement on a straight-line basis over the lease term.

(o) Impairment of non-financial assets

The Group assesses at each reporting date whether there is an indication that an asset may be impaired. If any indication exists, or when annual impairment testing for an asset is required, the Group estimates the asset’s recoverable amount. An asset’s recoverable amount is the higher of an asset’s or cash generating unit’s (CGU) fair value less costs to sell and its value in use and is determined for an individual asset, unless the asset does not generate cash inflows that are largely independent of those from other assets or groups of assets. When the carrying amount of an asset or CGU exceeds its recoverable amount, the asset is considered impaired and is written down to its recoverable amount. In assessing value in use, the estimated future cash flows are discounted to their present value using a pre-tax discount rate that reflects current market assessments of the time value of money and the risks specific to the asset. In determining fair value less costs to sell, recent market transactions are taken into account, if available. If no such transactions can be identified, an appropriate valuation model is used. These calculations are corroborated by valuation multiples, quoted share prices for publicly traded subsidiaries or other available fair value indicators.

The Group bases its impairment calculation on detailed budgets and forecast calculations, which are prepared separately for each of the Group’s CGUs to which the individual assets are allocated. These budgets and forecast calculations cover a period of three to seven years.

Impairment losses of continuing operations, including impairment on inventories, are recognised in the income statement in expense categories consistent with the function of the impaired asset, except for a property previously revalued and the revaluation was taken to other comprehensive income. In this case, the impairment is also recognised in other comprehensive income up to the amount of any previous revaluation.

For assets excluding goodwill, an assessment is made at each reporting date whether there is any indication that previously recognised impairment losses may no longer exist or may have decreased. If such indication exists, the Group estimates the asset’s or CGUs recoverable amount. A previously recognised impairment loss is reversed only if there has been a change in the assumptions used to determine the asset’s recoverable amount since the last impairment loss was recognised.

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• 41 -

NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2012

2 Summary of significant accounting policies (continued)

(o) Impairment of non-financial assets (continued)

The reversal is limited so that the carrying amount of the asset does not exceed its recoverable amount, nor exceed the carrying amount that would have been determined, net of depreciation, had no impairment loss been recognised for the asset in prior years. Such reversal is recognised in the income statement unless the asset is carried at a revalued amount, in which case, the reversal is treated as a revaluation increase.

(p) Trade and other payables

Trade and other payables are carried at amortised cost and due to their short-term nature they are not discounted. They represent liabilities for goods and services provided to the Group prior to the end of the financial year that are unpaid and arise when the Group becomes obliged to make future payments in respect of the purchase of these goods and services. The amounts are generally unsecured and are usually paid within 60 days of recognition.

(q) Interest bearing loans and liabilities

All loans and borrowings are initially recognised at the fair value of the consideration received less directly attributable transaction costs.

After initial recognition, interest-bearing loans and borrowings are subsequently measured at amortised cost using the effective interest method. Fees paid on the establishment of loan facilities that are yield related are included as part of the carrying amount of the loans and borrowings.

Borrowings are classified as current liabilities unless the Company has an unconditional right to defer settlement of the liability for at least 12 months after the reporting date.

Borrowing costs

Borrowing costs directly attributable to the acquisition, construction or production of a qualifying asset (i.e. an asset that necessarily takes a substantial period of time to get ready for its intended use or sale) are capitalised as part of the cost of that asset. All other borrowing costs are expensed in the period they occur. Borrowing costs consist of interest and other costs that an entity incurs in connection with the borrowing of funds.

(r) Provisions

General

Provisions are recognised when the Group has a present obligation (legal or constructive) as a result of a past event, it is probable that an outflow of resources embodying economic benefits will be required to settle the obligation and a reliable estimate can be made of the amount of the obligation. When the Group expects some or all of a provision to be reimbursed the reimbursement is recognised as a separate asset but only when the reimbursement is virtually certain. The expense relating to any provision is presented in the income statement net of any reimbursement.

Provisions are measured at the present value of management's best estimate of the expenditure required to settle the present obligation at the reporting date. The discount rate used to determine the present value reflects current market assessments of the time value of money and the risks specific to the liability. The increase in the provision resulting from the passage of time is recognised in finance costs.

(i) Employee leave benefits (wages, salaries, annual leave and sick leave)

Liabilities for wages and salaries, including non-monetary benefits and annual leave expected to be settled within 12 months of the reporting date are recognised in respect of employees' services up to the reporting date. They are measured at the amounts expected to be paid when the liabilities are settled. Expenses for non-accumulating sick leave are recognised when the leave is taken and are measured at the rates paid or payable.

(ii) Long service leave

The liability for long service leave is recognised and measured as the present value of expected future payments to be made in respect of services provided by employees up to the reporting date using the projected unit credit method. Consideration is given to expected future wage and salary levels, experience of employee departures, and periods of service. Expected future payments are discounted using market yields at the reporting date on national government bonds with terms to maturity and currencies that match, as closely as possible, the estimated future cash outflows. The Group does not have obligations with respect to long service leave as at 30 June 2012.

(iii) Rehabilitation, restoration and dismantling

The Group records the present value of estimated costs of legal and constructive obligations required to restore and rehabilitate operating locations in the period in which the obligation is incurred. The nature of these restoration activities includes dismantling and removing structures, rehabilitating mines and tailings dams, dismantling operating facilities, closure of plant and waste sites, and restoration, reclamation and re-vegetation of affected areas.

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• 42 -

NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2012

2 Summary of significant accounting policies (continued)

(r) Provisions (continued)

The obligation generally arises when the asset is installed or the ground/environment is disturbed at the production location. When the liability is initially recognised, the present value of the estimated costs is capitalised by increasing the carrying amount of the related assets to the extent that it was incurred by the development/construction of the asset. The capitalised cost of this asset is depreciated over the useful life of the related asset. Rehabilitation and restoration obligations arising from the Group’s exploration activities are recognised immediately in the income statement in accordance with the Group’s accounting policy 2(k).

Over time, the discounted liability is increased for the change in present value based on the discount rates that reflect current market assessments and the risks specific to the liability. The periodic unwinding of the discount is recognised in the income statement as a finance cost. Additional disturbances or changes in rehabilitation costs will be recognised as additions or charges to the corresponding assets and rehabilitation liability when they occur.

The provisions referred to above do not include any amounts related to remediation costs associated with unforeseen circumstances.

(s) Share-based payment transactions

(i) Equity settled transactions

The Group provides benefits to its employees and contractors (including key management personnel) in the form of share-based payments, whereby employees render services in exchange for rights over shares (equity-settled transactions). The cost of these equity-settled transactions with employees is measured by reference to the fair value of the equity instruments at the date at which they are granted. The fair value of the options granted is measured using the Black-Scholes option pricing model. Further details of which are given in note 22.

In valuing equity-settled transactions, no account is taken of any vesting conditions, other than (if applicable):

• Non-vesting conditions that do not determine whether the Group receives the services that entitle the employees to receive payment in equity or cash; and

• Conditions that are linked to the price of the shares of Sandfire Resources NL (market conditions).

The cost of equity-settled transactions is recognised, together with a corresponding increase in equity, over the period in which the performance and/or service conditions are fulfilled (the vesting period), ending on the date on which the relevant employees become fully entitled to the award (the vesting date).

At each subsequent reporting date until vesting, the cumulative charge to the income statement is the product of:

• a) The grant date fair value of the award;

• b) The current best estimate of the number of awards that will vest, taking into account such factors as the likelihood of employee turnover during the vesting period and the likelihood of non-market performance conditions being met; and

• c) The expired portion of the vesting period.

The charge to the income statement for the period is the cumulative amount as calculated above less the amounts already charged in previous periods. There is a corresponding entry to equity.

Until an award has vested, any amounts recorded are contingent and will be adjusted if more or fewer awards vest than were originally anticipated to do so. Any award subject to a market condition or non-vesting condition is considered to vest irrespective of whether or not that market condition or non-vesting condition is fulfilled, provided that all other conditions are satisfied.

If a non-vesting condition is within the control of the Group or the employee, the failure to satisfy the condition is treated as a cancellation. If a non-vesting condition within the control of neither the Group nor employee is not satisfied during the vesting period, any expense for the award not previously recognised is recognised over the remaining vesting period, unless the award is forfeited.

If the terms of an equity-settled award are modified, as a minimum an expense is recognised as if the terms had not been modified. An additional expense is recognised for any modification that increases the total fair value of the share-based payment arrangement, or is otherwise beneficial to the employee, as measured at the date of modification.

If an equity-settled award is cancelled, it is treated as if it had vested on the date of cancellation, and any expense not yet recognised for the award is recognised immediately. However, if a new award is substituted for the cancelled award and designated as a replacement award on the date that it is granted, the cancelled and new award are treated as if they were a modification of the original award, as described in the previous paragraph.

The dilutive effect, if any, of outstanding options is reflected as additional share dilution in the computation of diluted loss per share (see note 10).

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• 43 -

NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2012

2 Summary of significant accounting policies (continued)

(s) Share-based payment transactions (continued)

(ii) Cash settled transactions

The Group also provides benefits to employees and contractors (including key management personnel) in the form of cash-settled share-based payments, whereby employees render services in exchange for cash, the amounts of which are determined by reference to movements in the price of the shares of Sandfire Resources NL.

The ultimate cost of these cash-settled transactions will be equal to the actual cash paid to the employees, which will be the fair value at settlement date.

The cumulative cost recognised until settlement is a liability and the periodic determination of this liability is as follows:

• At each reporting date between grant and settlement, the fair value of the award is determined;

• During the vesting period, the liability recognised at each reporting date is the fair value of the award at that date multiplied by the percentage of the vesting period completed;

• From the end of the vesting period until settlement, the liability recognised is the full fair value of the liability at the reporting date; and

• All changes in the liability are recognised in employee benefits expense for the period.

The fair value of the liability is determined, initially and at each reporting date until it is settled, by applying the BlackScholes option pricing model, taking into account the terms and conditions on which the award was granted, and the extent to which employees have rendered service to date (see note 22).

(t) Issued capital

Ordinary shares are classified as equity. Incremental costs directly attributable to the issue of new shares or options are shown in equity as a deduction, net of tax, from the proceeds.

(u) Income taxes and other taxes

Current tax assets and liabilities for the current period are measured at the amount expected to be recovered from or paid to the taxation authorities based on the current period's taxable income. The tax rates and tax laws used to compute the amount are those that are enacted or substantively enacted at the reporting date.

Current income tax relating to items recognised directly in equity is recognised in equity and not in the income statement. Management periodically evaluates positions taken in the tax returns with respect to situations in which applicable tax regulations are subject to interpretation and establishes provisions where appropriate.

Deferred income tax is provided on all temporary differences at the reporting date between the tax bases of assets and liabilities and their carrying amounts for financial reporting purposes.

Deferred income tax liabilities are recognised for all taxable temporary differences except:

• When the deferred income tax liability arises from the initial recognition of goodwill or of an asset or liability in a transaction that is not a business combination and that, at the time of the transaction, affects neither the accounting profit nor taxable profit or loss;

• In respect of taxable temporary difference associated with investments in subsidiaries, associates and interests in joint ventures, when the timing of the reversal of the temporary difference can be controlled and it is probable that the temporary difference will not reverse in the foreseeable future.

Deferred income tax assets are recognised for all deductible temporary differences, the carry forward of unused tax credits and unused tax losses. Deferred tax assets are recognised to the extent that it is probable that taxable profit will be available against which the deductible temporary differences, and the carry forward of unused tax credits and unused tax losses can be utilised, except:

• When the deferred tax asset relating to the deductible temporary difference arises from the initial recognition of an asset or liability in a transaction that is not a business combination and, at the time of the transaction, affects neither the accounting profit nor taxable profit or loss;

• In respect of deductible temporary differences associated with investments in subsidiaries, associates and interests in joint ventures, deferred tax assets are recognised only to the extent that it is probable that the temporary differences will reverse in the foreseeable future and taxable profit will be available against which the temporary differences can be utilised.

The carrying amount of deferred tax assets is reviewed at each reporting date and reduced to the extent that it is no longer probable that sufficient taxable profit will be available to allow all or part of the deferred tax asset to be utilised. Unrecognised deferred tax assets are reassessed at each reporting date and are recognised to the extent that it has become probable that future taxable profits will allow the deferred tax asset to be recovered.

Deferred tax assets and liabilities are measured at the tax rates that are expected to apply in the year when the asset is realised or the liability is settled, based on tax rates (and tax laws) that have been enacted or substantively enacted at the reporting date.

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• 44 -

NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2012

2 Summary of significant accounting policies (continued)

(u) Income taxes and other taxes (continued)

Deferred tax relating to items recognised outside profit or loss is recognised outside profit or loss. Deferred tax items are recognised in correlation to the underlying transaction either in other comprehensive income or directly in equity.

Deferred tax assets and deferred tax liabilities are offset only if a legally enforceable right exists to set off current tax assets against current income tax liabilities and the deferred taxes relate to the same taxable entity and the same taxation authority.

Tax benefits acquired as part of a business combination, but not satisfying the criteria for separate recognition at that date, would be recognised subsequently if new information about facts and circumstances changed. The adjustment would either be treated as a reduction to goodwill (as long as it does not exceed goodwill) if it was incurred during the measurement period or in profit or loss.

Other taxes

Revenues, expenses and assets are recognised net of the amount of GST except:

• When the GST incurred on a purchase of goods and services is not recoverable from the taxation authority, in which case the GST is recognised as part of the cost of acquisition of the asset or as part of the expense item as applicable.

• Receivables and payables, which are stated with the amount of GST included.

The net amount of GST recoverable from, or payable to, the taxation authority is included as part of receivables or payables in the statement of financial position.

Cash flows are included in the statement of cash flows on a gross basis and the GST component of cash flows arising from investing and financing activities, which is recoverable from, or payable to, the taxation authority is classified as part of operating cash flows.

Commitments and contingencies are disclosed net of the amount of GST recoverable from, or payable to, the taxation authority.

(v) Loss per share

Basic loss per share is calculated as net loss attributable to members of the Group divided by the weighted average number of ordinary shares. Diluted loss per share is calculated by adjusting the net loss attributable to members of the Group and the number of shares outstanding for the effects of all dilutive potential ordinary shares, which include share options.

(w) Financial instruments

Offsetting of financial instruments

Financial assets and financial liabilities are offset and the net amount reported in the consolidated statement of financial position if, and only if:

• There is a currently enforceable legal right to offset the recognised amounts

• There is an intention to settle on a net basis, or to realise the assets and settle the liabilities simultaneously

Fair value of financial instruments

The fair value of financial instruments that are traded in active markets at each reporting date is determined by reference to quoted market prices, without any deduction for transaction costs.

For financial instruments not traded in an active market, the fair value is determined using appropriate valuation techniques. Such techniques may include:

• Using recent arm’s length market transactions

• Reference to the current fair value of another instrument that is substantially the same

• A discounted cash flow analysis or other valuation models

An analysis of fair values of financial instruments and further details as to how they are measured are provided in Note 23.

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• 45 -

NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2012

3 Significant accounting judgements, estimates and assumptions

The preparation of the financial statements requires management to make judgements, estimates and assumptions that affect the reported amounts in the financial statements. Management continually evaluates its judgements and estimates in relation to assets, liabilities, contingent liabilities, revenue and expenses. Management bases its judgements and estimates on historical experience and on other various factors it believes to be reasonable under the circumstances, the result of which form the basis of the carrying values of assets and liabilities that are not readily apparent from other sources.

Management has identified the following critical accounting policies for which significant judgements, estimates and assumptions are made. Actual results may differ from these estimates under different assumptions and conditions and may materially affect financial results or the financial position reported in future periods.

Further details of the nature of these assumptions and conditions may be found in the relevant notes to the financial statements.

Significant accounting estimates and assumptions

Rehabilitation, restoration and dismantling provision

The Group assesses its rehabilitation, restoration and dismantling (rehabilitation) provision annually. Significant estimates and assumptions are made in determining the provision for rehabilitation as there are numerous factors that will affect the ultimate liability payable. These factors include estimates of the extent and costs of rehabilitation activities, technological changes, regulatory changes, cost increases as compared to the inflation rates, and changes in discount rates. These uncertainties may result in future actual expenditure differing from the amounts currently provided. The provision at reporting date represents management’s best estimate of the present value of the future rehabilitation costs required. Changes to estimated future costs are recognised in the statement of financial position by either increasing or decreasing the rehabilitation liability and rehabilitation asset if the initial estimate was originally recognised as part of an asset measured in accordance with IAS 16 Property, Plant and Equipment . Any reduction in the rehabilitation liability and therefore any deduction from the rehabilitation asset may not exceed the carrying amount of that asset. If it does, any excess over the carrying value is taken immediately to profit or loss.

If the change in estimate results in an increase in the rehabilitation liability and therefore an addition to the carrying value of the asset, the entity is required to consider whether this is an indication of impairment of the asset as a whole and test for impairment in accordance with AASB 136. If the revised assets, net of rehabilitation provisions, exceed the recoverable value, that portion of the increase is charged directly to the income statement.

Ore reserve and resource estimates

Ore reserves are estimates of the amount of ore that can be economically and legally extracted from the Group’s mining properties. The Group estimates its ore reserves and mineral resources based on information compiled by appropriately qualified persons relating to the geological data on the size, depth and shape of the ore body, and requires complex geological judgments to interpret the data. The estimation of recoverable reserves is based upon factors such as estimates of foreign exchange rates, commodity prices, future capital requirements, and production costs along with geological assumptions and judgments made in estimating the size and grade of the ore body and removal of waste material. Changes in these estimates may impact upon the carrying value of mine properties, property, plant and equipment, provision for rehabilitation, recognition of deferred tax assets, inventory, and depreciation and amortisation charges.

Technical feasibility and commercial viability of extracting mineral resources

The Group assesses a project to be in a development stage when the project is assessed as being technically and commercially viable. The process for determining whether a project is technically and commercially viable involves a number of judgements and estimates, including forecasting metal prices, assessing resource grades and viable methods of extracting the mineral resource. The directors of the Company generally consider a project to be economically viable upon the satisfactory completion of a feasibility study and a JORC reserve estimate.

Impairment of non-financial assets

The Group assesses impairment of all assets at each reporting date by evaluating conditions specific to the Group and to the particular asset that may lead to impairment. If an impairment trigger exists the recoverable amount of the asset is determined. As at 30 June 2012 the Group assessed that no indication of impairment existed.

Taxation and recovery of deferred tax assets

Judgment is required in determining whether deferred tax assets and certain deferred tax liabilities are recognised on the statement of financial position. Deferred tax assets, including those arising from unrecouped tax losses, capital losses and temporary differences, are recognised only where it is considered more likely than not that they will be recovered, which is dependent on the generation of sufficient future taxable profits.

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• 46 -

NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2012

3 Significant accounting judgements, estimates and assumptions (continued)

Assumptions about the generation of future taxable profits depend on management's estimates of future cash flows. These depend on estimates of future production and sales volumes, operating costs, restoration costs, capital expenditure, dividends and other capital management transactions. Judgements are also required about the application of income tax legislation. These judgements and assumptions are subject to risk and uncertainty, hence there is a possibility that changes in circumstances will alter expectations, which may impact the amount of deferred tax assets and deferred tax liabilities recognised on the statement of financial position and the amount of other tax losses and temporary differences not yet recognised. In such circumstances, some or all of the carrying amounts of recognised deferred tax assets and liabilities may require adjustment, resulting in a corresponding credit or charge to the statement of comprehensive income.

Share-based payment transactions

The Group measures the cost of equity-settled and cash-settled transactions with employees and contractors (including key management personnel) by reference to the fair value of the instruments. Estimating fair value for share based payment transactions requires determining the most appropriate valuation model, which is dependent on the terms and conditions of the grant. This estimate also requires determining the most appropriate inputs to the valuation model including the expected life of the instrument, volatility and dividend yield and making assumptions about them. The assumptions and models used for estimating fair value for share-based payment transactions are disclosed in note 22.

Estimated useful lives of assets

The estimation of the useful lives of assets has been based on historical experience, lease terms (for leased equipment) and turnover policies (for motor vehicles). In addition, the condition of the assets is assessed at least once per year and considered against the remaining useful life. Adjustments to useful lives are made when considered necessary.

4 Investment in associate White Star Resources Ltd Movement in carrying amount of investment Acquisition at cost Share of losses after income tax Share of movement in reserves Impairment Closing carrying amount	2012 $000 2011 $000
	1,189 -
	3,325 (650) (23) (1,463) 1,189

On 8 July 2011, the Group announced that it had subscribed for a 17.4% stake in junior explorer White Star Resources Ltd (ASX: WSR), formerly Whinnen Resources Ltd (ASX: WWW), a South American-focused copper-gold explorer. The Group was issued 26.5 million shares at $0.07 per share, for a total cost of $1.855 million, as part of the $7.28 million share placement undertaken by White Star to sophisticated investors. In addition, the Group was issued with 17 million White Star shares and 14.5 million options with an exercise price of $0.20 per share and an expiry date of 30 April 2014 as part of Technical Services Agreement between the companies, recognising $1.47 million as other income.

The share price of White Star as at 30 June 2012 was 2.7 cents. The Group accounts for the investment in White Star using the equity method of accounting.

The share of losses after income tax of $650,000 represents the Group’s share of the net loss after tax of White Star after adjustments to expense capitalised exploration expenditure recognised by White Star, in accordance with the Group’s accounting policy (see policy note 2(k)).

At the date of this report, White Star has not completed its full year financial statements as at 30 June 2012 and therefore summarised financial information on White Star at 30 June 2012 is not included in these financial statements. The following information is based on the White Star interim financial statements for the half year ended 31 December 2011, which are White Star’s latest auditor reviewed financial statements:

				Net loss
in $000	Assets	Liabilities	Revenue	after tax
White Star Resources Ltd	12,890	476	256	(762)

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• 47 -

NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2012

5 Segment information

The Group operates the DeGrussa Mine, a copper-gold mine located in the Bryah Basin mineral province of Western Australia, approximately 900 kilometres north-east of Perth and 150 kilometres north of Meekatharra. The principal activities of the project are mining of copper, gold and silver and development of projects. The DeGrussa Mine generates revenue from the sale of copper products to customers in Asia.

Other operations include the Group’s Office (which includes all corporate expenses that cannot be directly attributed to the operation of the consolidated entity’s operating segment), investment in White Star Resources Ltd (refer note 4 to the financial report) and exploration projects including Doolgunna, Borroloola and Kennedy Highway.

Segment information that is evaluated by key management personnel is prepared in conformity with the accounting policies adopted for preparing the financial statements of the Group.

in $000 Income statement for the year ended 30 June 2012 Sales revenue Unrealised price adjustments gains (losses) Other income Changes in inventories of finished goods and work in progress Mine operations costs Employee benefit expenses Freight, treatment and refining expenses Royalties expense Exploration and evaluation expenses Depreciation and amortisation expenses Share of net loss of associates Impairment expense Other expenses Profit (loss) before net financing income and income tax Finance income Finance expense Profit (loss) before income tax Income tax benefit Net profit (loss) for the year Income statement for the year ended 30 June 2011 Other income Employee benefit expenses Exploration and evaluation expenses Depreciation and amortisation expenses Other expenses Profit (loss) before net financing income and income tax Finance income Finance expense Profit (loss) before income tax Income tax benefit Net profit (loss) for the year	DeGrussa Mine Other operations Group
	20,684 - 20,684
	(326) - (326)
	- 1,470 1,470
	5,852 - 5,852
	(2,920) - (2,920)
	(122) (14,864) (14,986)
	(3,985) - (3,985)
	(1,263) - (1,263)
	- (26,424) (26,424)
	(3,149) (1,375) (4,524)
	- (650) (650)
	- (1,463) (1,463)
	- (5,008) (5,008)
	14,771 (48,314) (33,543)
	1,217
	(235)
	(32,561)
	8,678
	(23,883)
	DeGrussa Mine Other operations Group - 212 212 - (17,521) (17,521) - (39,342) (39,342) - (1,135) (1,135) - (3,684) (3,684)
	- (61,470) (61,470) 4,632 (39)
	(56,877) 29,826
	(27,051)

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• 48 -

NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2012

5 Segment information (continued)

Adjustments and eliminations

Finance income and expenses and deferred taxes are not allocated to individual segments as they are managed on a Group basis.

Information about geographical areas and products

Information about geographical areas and products
Revenues from external customers 30 June 2012 Copper - direct shipping ore Gold - direct shipping ore Gold - laterite ore Total sales revenue	Australia $000 Asia $000 Group $000
	- 17,098 17,098
	- 2,100 2,100
	1,486 - 1,486
	1,486 19,198 20,684

The Group commenced commercial production from the open pit of the DeGrussa Mine during the current financial year and accordingly did not have sales revenue during the comparative financial year ended 30 June 2011.

Note 6 Sales revenue, unrealised price adjustment gains (losses) Sales revenue Copper - direct shipping ore (i) Gold - direct shipping ore (i) Gold - laterite ore Unrealised price adjustments gains (losses) (i) Copper metal price adjustment Gold metal price adjustment Copper and gold foreign exchange adjustment	2012 $000 2011 $000
	17,098 - 2,100 - 1,486 -
	20,684 -
	(307) - 31 - (50) -
	(326) -

• (i) Sandfire delivers direct shipping ore to customers on the industry standard basis using prevailing London Metal Exchange (LME) metal prices.

For those sales based on prevailing LME metal prices, the customer makes a provisional payment to Sandfire against a provisional invoice for the contained copper and precious metal credits (for gold and silver) in the shipment. Final settlement of the payment is based on the average LME metal price over a subsequent pricing period as specified by the terms of the sales contract.

The period commencing on the date of shipment to the end of the pricing period is known as the Quotational Period (QP). The QP historically reflects the average time to elapse (usually 3 to 4 months) between the date of shipment and the date of processing by the smelter at final destination. This pricing methodology is normal for the industry.

At balance date, provisional invoices issued with an open QP have been revalued at rates which provide an estimate of the average settlement price. This has resulted in an unfavourable $326,000 (2011: $nil) mark-to-market adjustment to profit or loss for outstanding provisional pricing of sales at balance date.

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• 49 -

NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2012

Note 7 Expenses Profit (loss) before income tax includes the following expenses: Depreciation Plant and equipment Motor vehicles Leased equipment Less depreciation capitalised to mine properties Total depreciation Amortisation Development phase stripping Total depreciation and amortisation Lease payments included in statement of comprehensive income Minimum lease payments – operating lease Cost of goods sold Net loss on sale of property, plant and equipment Consultant share-based payments Employee benefits expenses Wages and salaries Defined contribution superannuation expense Employee share-based payments 22 Other employee benefits expense Less employee benefits expenses capitalised to mine properties and property, plant and equipment 8 Finance income (expense) Finance income Interest on bank deposits Less interest on bank deposits capitalised to mine properties and property, plant and equipment Foreign exchange gain Finance (expense) Interest charges Less interest charges capitalised to mine properties and property, plant and equipment (i) Foreign exchange loss		2012 $000 2011 $000
		948 706 311 329 395 113
		1,654 1,148 (279) (13)
		1,375 1,135 3,149 -
		4,524 -
		824 999
		2,547 - 11 - - 75 21,455 11,823 1,778 726 3,643 8,163 1,325 710
		28,201 21,422 (13,215) (3,901)
		14,986 17,521
		2,865 4,632 (1,807) -
		1,058 4,632 159 -
		1,217 4,632
		(12,807) (39) 12,695 -
		(112) (39) (123) -
		(235) (39)

(i) The Group has capitalised $12,695,000 (2011: $nil) in borrowing costs to qualifying assets in accordance with the Group’s accounting policy with respect to borrowing costs (see accounting policy note 2(q)).

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• 50 -

NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2012

9 Income tax expense (benefit) The major components of income tax expense (benefit) are: Current income tax Current income tax expense (benefit) Under (over) provision for prior year Deferred income tax Origination and reversal of temporary differences Tax benefits previously not recognised, now recognised Under (over) provision for prior year Income tax expense (benefit) reported in statement of comprehensive income Amounts charged (credited) directly to equity Deferred income tax related to items charged (credited) directly to equity Share issue costs Income tax expense (benefit) reported in equity Reconciliation between tax expense (benefit) recognised in the statement of comprehensive income and tax expense (benefit) calculated per the statutory income tax rate Loss before tax Income tax expense (benefit) using domestic corporate tax rate of 30% (2011: 30%) Increase (decrease) in income tax due to: Non-deductible expenses Movement in unrecognised temporary differences with respect to Investment in associate Under (over) provision for prior year Non-assessable income Recognition of previously unrecognised prior year tax losses Income tax expense (benefit)	2012 $000 2011 $000
	(34,860) (15,369) (5,738) - 26,527 273 - (14,730) 5,393 -
	(8,678) (29,826)
	(21) (2,055)
	(21) (2,055)
	(32,561) (56,877)
	(9,768) (17,063) 802 2,030 633 - (345) - - (63) - (14,730)
	(8,678) (29,826)

Recognised deferred tax assets and liabilities

in $000 Opening balance Charged to income Charged to equity Closing balance Tax expense (benefit) in the statement of comprehensive income Amounts recognised in the statement of financial position: Deferred tax asset Deferred tax liability	2012 2011 Current tax payable Deferred income tax Current tax payable Deferred income tax	2012 2011 Current tax payable Deferred income tax Current tax payable Deferred income tax	2012 2011 Current tax payable Deferred income tax Current tax payable Deferred income tax
	Current tax payable
	-	31,881 - 8,678 - 21 -	- 29,826 2,055
	-
	-
	-	40,580 -	31,881
		(8,678) 40,580 - 40,580	(29,826) 31,881 -
			31,881

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• 51 -

NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2012

9 Income tax expense (benefit) (continued) Deferred income tax at 30 June relates to the following: Deferred tax liabilities Mine properties Property, plant & equipment Accrued interest receivable Other Gross deferred tax liabilities Set-off of deferred tax assets Net deferred tax liabilities Deferred tax assets Employee benefits provision Inventories Other payables and accruals Rehabilitation, restoration and dismantling provision Share issue costs reflected in equity Revenue losses available for offset against future taxable income Other Gross deferred tax assets Set-off of deferred tax assets Net deferred tax assets	2012 $000 2011 $000
	36,020 687 3,069 378 - 62 60 -
	39,149 1,127
	39,149 1,127
	- -
	393 109 1,483 - 770 69 4,479 461 1,147 1,583 71,359 30,786 98 -
	79,729 33,008
	39,149 1,127
	40,580 31,881

Tax losses

The Group has recognised deferred tax assets on Australian carry forward revenue losses on the basis that it is probable that future taxable profit will be available against which the unused tax losses can be utlised. The results of the DeGrussa Definitive Feasibility Study (DFS) and updated financial modelling support the probability of recognition of these deferred tax assets. As at 30 June 2012, there are no unrecognised tax losses or temporary differences.

10 Loss per share Basic and diluted loss per share (cents)	2012 2011
	15.85 19.16

The calculation of basic loss per share at 30 June 2012 was based on the loss attributable to ordinary shareholders of $23,883,000 (2011: $27,051,000) and a weighted average number of ordinary shares outstanding of 150,712,453 (2011: 141,161,598).

As at 30 June 2012, certain options detailed within note 19 are considered to be potential ordinary shares. However, as the Group is in a loss position, the potential ordinary shares are considered to be anti-dilutive in nature, as their exercise will not result in a diluted loss per share that shows an inferior view of earnings performance of the Group than is shown by basic loss per share. For this reason, the options have not been included in the determination of diluted loss per share and the diluted loss per share is disclosed to be the same as basic loss per share.

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• 52 -

NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2012

Note 11 Cash and cash equivalents Cash at bank and on hand Short-term deposits Debt service reserve account (i) Cost overrun account (ii)	2012 $000 2011 $000
	72,389 14,397 - 59,644 8,000 - 20,000 -
	100,389 74,041

Under the terms and conditions of the Group’s Project Loan Facility (see note 17), the Group must maintain:

• (i) A cash debt service reserve amount equal to the next quarter’s scheduled amortisation payment and projected interest payment; and

• (ii) A balance of $20 million in the cost overrun account, to only be withdrawn and used as a contingency in the event of a cost overrun to achieve project (DeGrussa Copper-Gold Project) completion. Following project completion a minimum of $20 million is to be held in the debt service reserve account, until the final facility repayment date, being 31 December 2015 (see note 17).

12 Trade and other receivables Current Trade receivables Accrued interest Other receivables Non current Security and environmental bonds	2,382 - - 208 4,633 1,248
	7,015 1,456
	3 3,168

All amounts are not considered past due or impaired. It is expected that these amounts will be received when due. The Group does not hold any collateral in relation to these receivables.

See note 23 on credit risk of trade receivables to understand how the Group manages and measures credit quality of trade receivables that are neither past due nor impaired.

13 Inventories

Current Ore stockpiles (i) Stores and consumables Non current Ore stockpiles (i)	6,863 - 391 -
	7,254 -
	6,233 -

• (i) $5,852,000 of the inventory balance as at 30 June 2012 relates to ore extracted during the production phase and is classified as a change in inventories of finished goods and work in progress on the face of the statement of comprehensive income. $7,244,000 relates to ore extracted during the development phase.

All inventories at 30 June 2012 are valued at cost.

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• 53 -

NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2012

14 Mine properties

Mine property and development assets include costs incurred in accessing the ore body and costs to develop the mine to the production phase, once the technical feasibility and commercial viability of a mining operation has been established.

Reconciliation of the carrying amounts for each class of mine properties is set out below

At 1 July 2011 net of accumulated amortisation Additions Disposals Amortisation At 30 June 2012 net of accumulated amortisation At 30 June 2012 Cost Accumulated amortisation Net carrying amount	Mine development $000 Development phase stripping $000 Production Stripping $000 Rehabilitation, restoration and dismantling $000	Total $000
	18,574 4,408 - 874	23,856
	87,598 38,410 12,375 4,580	142,963
	- - - -	-
	- (3,149) - -	(3,149)
	106,172 39,669 12,375 5,454	163,670
	106,172 42,818 12,375 5,454	166,819
	- (3,149) - -	(3,149)
	106,172 39,669 12,375 5,454	163,670

At 1 July 2010 net of accumulated amortisation Additions Disposals Amortisation At 30 June 2011 net of accumulated amortisation At 30 June 2011 Cost Accumulated amortisation Net carrying amount	Mine development $000 Development phase stripping $000 Rehabilitation, restoration and dismantling $000 Total $000
	- - - - 18,574 4,408 874 23,856 - - - - - - - -
	18,574 4,408 874 23,856
	18,574 4,408 874 23,856 - - - -
	18,574 4,408 874 23,856

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• 54 -

NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2012

15 Property, plant and equipment

Reconciliation of the carrying amounts for each class of property, plant and equipment is set out below

At 1 July 2011 net of accumulated depreciation Additions Disposals Transfers Depreciation At 30 June 2012 net of accumulated depreciation At 30 June 2012 Cost Accumulated depreciation Net carrying amount	Plant and equipment $000 Motor vehicles $000 Leased equipment $000 Assets under construction $000 Rehabilitation, restoration and dismantling $000 Total $000
	1,899 718 1,274 33,538 159 37,588
	1,599 119 1,408 153,966 9,315 166,407
	(2) (13) (94) - - (109)
	- - - - - -
	(948) (311) (395) - - (1,654)
	2,548 513 2,193 187,504 9,474 202,232
	4,481 1,476 2,683 187,504 9,474 205,618
	(1,933) (963) (490) - - (3,386)
	2,548 513 2,193 187,504 9,474 202,232

At 1 July 2010 net of accumulated depreciation Additions Disposals Transfers Depreciation At 30 June 2011 net of accumulated depreciation At 30 June 2011 Cost Accumulated depreciation Net carrying amount	Plant and equipment $000 Motor vehicles $000 Leased equipment $000 Assets under construction $000 Rehabilitation, restoration and dismantling $000 Total $000
	1,497 1,007 320 - 50 2,874 1,036 112 1,067 33,538 109 35,862 - - - - - - 72 (72) - - - - (706) (329) (113) - - (1,148)
	1,899 718 1,274 33,538 159 37,588
	2,892 1,373 1,387 33,538 159 39,349 (993) (655) (113) - - (1,761)
	1,899 718 1,274 33,538 159 37,588

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• 55 -

NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2012

Note 16 Trade and other payables Current Trade payables and accruals Other payables Interest payable 17 Related party payables – cash-settled share-based payments 22 Related party payables – KMP related entities 21 Non-current Related party payables – cash-settled share-based payments 22	2012 $000 2011 $000
	43,169 28,455 3,028 204 1,944 - 1,485 1,610 - 20
	49,626 30,289
	1,383 350

Terms and conditions of the above financial liabilities:

• Trade payables and accruals are non-interest bearing and are normally settled on 60-day terms;

• Other payables are non-interest bearing and have an average term of three months.

• Interest payable relates to the Group’s DeGrussa Project Loan Facility and is normally settled quarterly throughout the financial year. Refer to note 17 for details.

• For terms and conditions relating to cash-settled share-based payments, refer to note 22.

• For terms and conditions relating KMP related entities, refer to note 21.

• For explanations on the Group’s credit risk management processes, refer to note 23.

17 Interest bearing liabilities Current interest-bearing loans and borrowings Obligations under finance leases and hire purchase contracts Insurance premium funding Secured bank loan DeGrussa Project Loan Facility (i) Capitalised finance establishment costs (net of amortisation) offset against Project Loan Facility Total current interest-bearing loans and borrowings Non-current interest-bearing loans and borrowings Obligations under finance leases and hire purchase contracts Secured bank loan DeGrussa Project Loan Facility (i) Capitalised finance establishment costs (net of amortisation) offset against Project Loan Facility Total non-current interest-bearing loans and borrowings (i) Finance facilities The Group has access to the following facilities: DeGrussa Project Loan Facility Bond Facility Facilities utilised at reporting date: DeGrussa Project Loan Facility Bond Facility Facilities not utilised at reporting date: DeGrussa Project Loan Facility Bond Facility	649 339 630 321 95,000 - (2,133) -
	94,146 660
	1,744 996 255,000 - (5,725) -
	251,019 996
	380,000 - 10,000 -
	390,000 -
	350,000 - 4,250 -
	354,250 -
	30,000 - 5,750 -
	35,750 -

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• 56 -

NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2012

17 Interest bearing liabilities (continued)

Finance facilities

The Group’s financing arrangements are provided under a secured loan facility with the Group’s bankers and are secured by a fixed and floating charge over the Group’s assets, including the DeGrussa Project and the broader Doolgunna Project, and a mining mortgage over the Project tenements. The full $390 million facility, which includes $10 million relating to bonding, is designed to underpin the Group’s construction and development of its DeGrussa Copper-Gold Project in Western Australia and follows the Definitive Feasibility Study (DFS) completed in June 2011.

The facility was finalised and executed on 29 September 2011, with the first drawdown of $190 million completed on 10 November 2011. The facility is repayable in set quarterly instalments, with the first repayment due on 31 March 2013, and is to be fully repaid by 31 December 2015. Refer to note 23 for further details relating to repayment dates.

The bond facility is drawn in the form of bank guarantees to the relevant State Government for environmental restoration and property managers for security deposits and does not involve the provision of funds.

The Group completed the final drawdown under the Project Loan Facility, totaling $30 million, subsequent to 30 June 2012.

Interest rate and liquidity risk

Information regarding interest rate and liquidity risk exposure is set out in note 23.

18 Provisions Current Employee benefits Non-current Rehabilitation, restoration and dismantling	2012 $000 2011 $000
	1,311 363
	14,929 1,536

Movement in provisions

Movements in each class of provision during the financial year are set out below:

At 1 July 2011 Arising during the year Utilised At 30 June 2012	Employee benefits $000 Rehabilitation, restoration and dismantling $000 Total $000
	363 1,536 1,899
	1,869 13,393 15,262
	(921) - (921)
	1,311 14,929 16,240

Nature and timing of provisions

Employee benefits

The employee benefits provision comprises provisions for employee annual leave. Refer to note 22 for the relevant accounting policy.

Rehabilitation, restoration and dismantling

The Group makes full provision for the future cost of rehabilitating operating locations on a discounted basis at the time of developing the operating facilities and installing and using those facilities. The rehabilitation, restoration and dismantling provision represents the present value of rehabilitation costs relating to operating locations as at 30 June 2012. These provisions have been created based on the Group’s internal estimates. Assumptions, based on the current economic environment, have been made which management believes are a reasonable basis upon which to estimate the future liability. These estimates are reviewed regularly to take into account any material changes to the assumptions, however, actual rehabilitation costs will ultimately depend upon future market prices for the necessary decommissioning works required which will reflect market conditions at the relevant time. Furthermore, the timing of rehabilitation is likely to depend on when the mines cease to produce at economically viable rates. This, in turn, will depend upon future market prices, which are inherently uncertain.

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NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2012

19 Issued capital Ordinary and paid up capital	2012 $000 2011 $000
	213,007 210,325

Issued ordinary shares

The holders of ordinary shares are entitled to receive dividends from time to time and are entitled to one vote per share at meetings of the Company. All shares rank equally with regard to the Group’s residual assets. Ordinary shares have no par value.

share at meetings of the Company. All shares rank equally with regard to shares have no par value.	the Group’s residual assets. Ordinary
Movement in ordinary shares on issue On issue at 1 July Issue of shares for cash Exercise of options On issue at 30 June	2012 Number 2011 Number
	149,384,969 130,009,760 - 15,352,779 1,852,666 4,022,430
	151,237,635 149,384,969

Posco Australia Pty Ltd (POSA)

Australian Securities Exchange (ASX) has granted the Company a waiver from listing rule 6.18 to the extent necessary to permit the Company to give POSA the right to maintain its percentage interest in the issued capital of the Company by participating in any issue of shares or subscribing for shares (the “Top-Up Right”) in respect of a diluting event which occurs or is announced in the period of 5 years following completion of the subscription agreement entered into between the Company and POSA on 2 May 2008. The Top-Up-Right:

• (i) lapses if POSA’s percentage holding in the Company falls below 10%;

• (ii) lapses if the strategic relationship between the Company and POSA ceases or changes in such a way that it effectively ceases; and

• (iii) may only be transferred to an entity in the wholly owned group of POSA.

Any securities issued under the Top-Up-Right are offered to POSA for cash consideration that is no more favourable than offered to third parties.

Movement in shares under option

Options expiring on or before Note 8 August 2011 30 September 2011 6 July 2012 (i) 30 September 2012 12 July 2013 12 July 2013 12 July 2013 27 November 2014 27 November 2014 27 November 2014 15 June 2015 15 June 2015 15 June 2015 28 February 2016 (ii) 28 February 2016 (ii) 28 February 2016 (ii)	Exercise Price On issue 1 Jul 11 Issued Exercised On issue 30 Jun 12
	$0.40 350,000 - (350,000) - $0.50 600,000 - (600,000) - $1.40 596,000 - (276,000) 320,000 $3.00 200,000 - (200,000) - $0.60 1,010,000 - - 1,010,000 $0.80 1,340,000 - (360,000) 980,000 $1.00 1,600,000 - - 1,600,000 $4.66 330,000 - - 330,000 $5.44 330,000 - - 330,000 $6.22 330,000 - - 330,000 $3.80 333,332 - (66,666) 266,666 $4.40 333,333 - - 333,333 $5.00 333,335 - - 333,335 $9.00 1,083,329 166,666 - 1,249,995 $10.30 1,083,332 166,666 - 1,249,998 $11.70 1,083,339 166,668 - 1,250,007
	10,936,000 500,000 (1,852,666) 9,583,334

• (i) The options on issue at 30 June 2012 were exercised subsequent to year end. Refer to note 25 for details.

(ii) The options were issued to senior employees and officers of the Group. Refer to note 22 for details.

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• 58 -

NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2012

19 Issued capital (continued)

Capital management

The primary objective of the Group’s capital management is to ensure that it maintains a strong liquidity position in order to support its business and maximise shareholder value.

The Group manages and makes adjustments to its capital structure in light of changes in economic conditions. In order to maintain or adjust the capital structure, the Group may for example return capital to shareholders, issue new shares or sell assets to reduce debt.

The Group signed a $390 million secured loan facility, secured by a fixed and floating charge over the Group’s assets, including the DeGrussa Project and the broader Doolgunna Project, to underpin the construction and development of its DeGrussa Copper-Gold Project in Western Australia (see note 17). Prior to the current financial period, the Group’s focus has been to raise sufficient capital through the issue of additional shares to fund exploration and evaluation activities.

The directors have not recommended the declaration of a dividend and no dividends were paid or declared by the Company during the current or previous financial year.

The Group is not subject to externally imposed capital requirements other than restrictions relating to the Company’s finance facilities as disclosed in this report (see note 17).

Note 20 Cash flow statement reconciliation Cash and cash equivalents in the statement of cash flows Reconciliation of cash flows from operating activities Loss for the period Adjusted for: Loss on sale of assets Depreciation and amortisation included in statement of comprehensive income Capitalised interest revenue Interest charges Equity-settled employee share-based payments included in statement of comprehensive income Equity-settled consultant share-based payments included in statement of comprehensive income Share of net loss of associates Impairment of investment in associates Other income Rehabilitation, restoration and dismantling provision Income tax benefit Operating loss before changes in working capital and provisions Decrease (increase) in trade and other receivables Decrease (increase) in inventories Decrease (increase) in other current assets (Decrease) increase in trade and other payables (Decrease) increase in interest bearing liabilities (Decrease) increase in payables and provisions Net cash outflow from operating activities Non cash financing and investing activities Equity-settled employee share-based payments capitalised to mine properties 22	2012 $000 2011 $000
	100,389 74,041
	(23,883) (27,051) 11 - 4,524 1,135 1,807 - 112 39 553 3,071 - 75 650 - 1,463 - (1,470) - (503) 485 (8,678) (29,826)
	(25,414) (52,072) (4,706) (689) (6,242) - (702) 262 155 7,764 308 - 276 79
	(36,325) (44,656)
	242 1,404

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• 59 -

NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2012

21 Related party disclosures

The financial statements include the financial statements of the Group and the subsidiaries listed in the following table:

table:
Name Note Country of incorporation SFR Copper & Gold Peru S.A. (i) Peru	% equity interest
	2012 2011 100.00 -

(i) The wholly owned subsidiary was formed and incorporated by the Company on 11 April 2012.

The ultimate parent

Sandfire Resources NL is the ultimate parent based and listed in Australia.

Associate

White Star Resources Ltd

The Group has a 17.4% interest in White Star Resources Ltd (White Star) (2011: nil). Refer to note 4 for details.

Information relating to Sandfire Resources NL (the ‘Parent entity’)

The results and financial position of the Group for the financial year ended 30 June 2012 and financial year ended 30 June 2011 represent that of the Parent entity.

Compensation of key management personnel of the Group

Compensation of key management personnel of the Group
Short-term employee benefits Post-employment benefits Share-based payments Total compensation	2012 $ 2011 $
	3,104,485 2,424,355 89,414 55,086 3,151,044 4,818,171
	6,344,943 7,297,612

The amounts disclosed in the table are the amounts recognised as an expense during the reporting period related to key management personnel.

Option holdings of key management personnel

The movement during the reporting period in the number of options over ordinary shares in Sandfire Resources NL held, directly, indirectly or beneficially, by each key management person, including their related parties, is as follows:

Non-executive directors Jonghun Jong B Executive directors Karl M Simich W John Evans Other key management personnel Martin Reed Matthew L Fitzgerald	Balance at 1 Jul 11 Granted as remuneration Options exercised Other changes A Held on resignation Balance at 30 Jun 12 Vested and exercisable
	60,000 - - - 60,000
	3,000,000 - - - 3,000,000 2,800,000
	1,520,000 - - - 1,520,000 1,410,000
	650,000 - - - 650,000 166,666
	1,312,500 - - (50,000) 1,262,500 329,166

A Includes off-market transfers and sales.

B Mr Jong resigned 28 February 2012.

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NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2012

21 Related party disclosures (continued)

Non-executive directors Jonghun Jong Executive directors Karl M Simich W John Evans Other key management personnel Martin Reed Matthew L Fitzgerald	Balance at 1 Jul 10 Granted as remuneration Options exercised Other changes A Held on resignation Balance at 30 Jun 11 Vested and exercisable
	60,000 - - - 60,000 20,000 3,000,000 - - - 3,000,000 2,600,000 2,060,000 - (540,000) - 1,520,000 1,300,000 400,000 350,000 - (100,000) 650,000 33,333 450,000 800,000 - 62,500 1,312,500 245,833

A Includes off-market transfers and sales.

Shareholdings of key management personnel

The movement during the reporting period in the number of ordinary shares in Sandfire Resources NL held, directly, indirectly or beneficially, by each key management person, including their related parties, is as follows:

Non-executive directors Derek La Ferla Robert N Scott Executive directors Karl M Simich W John Evans Other key management personnel Martin Reed Matthew L Fitzgerald Non-executive directors Derek La Ferla Executive directors Karl M Simich W John Evans Other key management personnel Martin Reed Matthew L Fitzgerald	Balance at 1 Jul 11 Purchases Exercise of options Sales Held on resignation Balance at 30 Jun 12
	21,668 - - - 21,668
	- 5,000 - - 5,000
	3,909,735 - - - 3,909,735
	860,215 - - - 860,215
	6,733 - - - 6,733
	92,483 - - (73,483) 19,000
	Balance at 1 Jul 10 Purchases Exercise of options Sales Held on resignation Balance at 30 Jun 11
	- 21,668 - - 21,668 3,558,983 350,752 - - 3,909,735 260,215 60,000 540,000 - 860,215 6,215 518 - - 6,733 123,215 10,268 - (41,000) 92,483

Other transactions and balances with key management personnel and their related parties

A number of key management persons, or their related parties, hold positions in other entities that result in them having control or significant influence over the financial or operating policies of those entities and transacted with the Group during the reporting period. The terms and conditions of the transactions with management persons and their related parties were no more favourable than those available, or which might reasonably be expected to be available, on similar transactions to non-director related entities on an arm’s length basis. Outstanding balances at the year-end are unsecured and interest free and settlement occurs in cash. There have been no guarantees received for any related party payables.

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• 61 -

NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2012

21 Related party disclosures (continued)

The aggregate value of transactions and outstanding balances relating to key management personnel and their related entities over which they have control or significant influence were as follows:

KMP and their related entity Transaction Note Derek La Ferla– Norton Rose Australia Corporate and legal services (i) Karl M Simich– Tongaat Pty Ltd Lease of corporate office parking premises (ii) Karl M Simich– Resource Development Company Pty Ltd Lease of corporate office parking premises (iii) Karl M Simich– Resource Development Company Pty Ltd Corporate and financial services (iv)	Transactions value year ended 30 June Balance outstanding as at 30 June 2012 $ 2011 $ 2012 $ 2011 $
	9,266 289,084 - 20,476 12,600 12,600 - - 6,300 - - - 587,025 637,065 - -
	615,191 938,749 - 20,476

Notes to the other transactions and balances with key management personnel and their related parties table

(i) $9,266 (2011: $289,084) was charged to the Group by Norton Rose Australia, of which Derek La Ferla is a partner, for the provision of corporate and legal services.

(ii) $12,600 (2011: $12,600) was charged to the Group by Tongaat Pty Ltd for the lease of corporate office parking, including variable outgoings.

• (iii) $6,300 (2011: $nil) was charged to the Group by Resource Development Company Pty Ltd for the lease of corporate office parking, including variable outgoings.

• (iv) $587,025 (2011: $637,065) was charged to the Group by Resource Development Company Pty Ltd, of which Karl M Simich is a director, for the provision of corporate and financial services by RDC’s professionally qualified personnel.

22 Share based payments

Recognised share-based payments

Details of share based payments recognised during the current and previous financial year are shown in the following table:

Details of share based payments recognised during the current and previous table:	financial year are shown in the following
Note Equity-settled employee share-based payments 22(a) Equity-settled consultant share-based payments Cash-settled employee share-based payments 22(b) Total arising from share-based payments	2012 $000 2011 $000
	795 4,475 - 75 2,848 3,688
	3,643 8,238

Types of share-based payment plans

The Board has introduced share-based payment plans to promote continuity of employment/service and to provide additional incentive to employees and contractors, including key management personnel (KMP), to increase shareholder wealth. Rights and options under these plans are provided to KMP and staff based on their level of seniority and position within the Group and options may only be issued to directors subject to approval by shareholders in general meeting. The share-based payment plans are described below.

(a) Equity-settled employee share-based payments

Long-term Incentive Option Plan

The long-term Incentive Option Plan (IOP) provides for selected employees and contractors, including KMP, to be offered the opportunity to subscribe for options over ordinary fully paid shares each year for no consideration. Each option carries the right to subscribe for one fully paid ordinary share in Sandfire Resources NL.

Options under the plan are provided to employees based on their level of seniority and position within the Group. Options may only be issued to directors subject to approval by shareholders in general meeting.

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NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2012

22 Share based payments (continued)

Under the IOP the Board of directors has the right to issue options on terms and conditions they determine appropriate and in exercising that discretion may give regard to the following:

• the Eligible Participant’s length of service to the Group;

• the contribution made by the Eligible Participant to the Group; and

• the potential contribution of the Eligible Participant to the Group.

The directors may also impose certain conditions, including performance-related and service based conditions, on the right of the participant to exercise any option granted.

There are no voting or dividend rights attached to the options and options issued under the plan are to be issued for no consideration. Voting rights will be attached to the ordinary issued shares when the options have been exercised.

In accordance with the IOP, listed below are the terms and conditions of issues made by the Group during the financial year.

			Exercise	Service based vesting	Contractual
Grant	date	Number	price	conditions	life
Option	grant to senior employees and contractors	166,666	$9.00	28 February 2012	4 years
during	March 2012, expiring 28 February 2016	166,666	$10.30	28 February 2013	4 years
		166,668	$11.70	28 February 2014	4 years

The options cannot be exercised before the above listed dates (referred to as vesting conditions), except where either of the following events occurs before the relevant vesting condition is satisfied:

• The service of a bidder’s statement or a like document on the Company; or

• The option holder ceases to be an employee or contractor of the Company for any reason (including voluntary or involuntary resignation) (ceasing date); or

• If a merger by way of a scheme of arrangement under the Corporations Act 2001 (Cth) has been approved by the Court under section 411(4)(b) of the Corporations Act 2001 (Cth).

Where an option holder ceases to be an employee or contractor of the Group for any reason (including voluntary or involuntary resignation), the option holder will be entitled to exercise the options granted as a result of the offer in accordance with the terms of the offer, for a period up to 180 days after the ceasing date, after which the option holder’s options will lapse immediately and all rights in respect of those options will thereupon be lost.

Option pricing model

The fair value of options issued are estimated at the date of grant using the Black-Scholes option pricing model and have been recognised over the period in which the minimum service conditions are fulfilled (the vesting period). The following table sets out the assumptions made in determining the fair value of the options granted during the years ended 30 June 2012 and 30 June 2011.

Fair value at grant date Option exercise price Grant date Dividend yield Expected volatility Risk-free interest rate Expected life Share price on date of grant	30 June 2012 30 June 2011
	9 March 2012 Employee option grant 30 March 2012 Employee option grant 11 March 2011 Employee option grant
	$0.78 $0.89 $1.32 $0.77 $0.84 $1.29 $1.28 $1.00 $1.28 $9.00 $10.30 $11.70 $9.00 $10.30 $11.70 $11.70 $10.30 $11.70 9 Mar 12 9 Mar 12 9 Mar 12 30 Mar 12 30 Mar 12 30 Mar 12 11 Mar 11 11 Mar 11 11 Mar 11 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 50.00% 50.00% 50.00% 50.00% 50.00% 50.00% 50.00% 50.00% 50.00% 4.51% 3.36% 3.36% 4.28% 3.47% 3.47% 5.23% 5.23% 5.23% 6 months 1 year 2 years 6 months 3 years 2 years 3 years 2 years 3 years $7.90 $7.90 $7.90 $7.89 $7.89 $7.89 $6.43 $6.43 $6.43

The effects of early exercise have been incorporated into the calculations by using an expected life for the option that is shorter than the contractual life based on historical exercise behaviour, which is not necessarily indicative of exercise patterns that may occur in the future.

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NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2012

22 Share based payments (continued)

Movements in the year

The following table illustrates the number (No.) and weighted average exercise prices (WAEP) of, and movements in, share options issued during the current and previous financial years:

Outstanding at 1 July Granted during the year Exercised during the year A Outstanding at 30 June B Exercisable at 30 June	2012 No. 2012 WAEP 2011 No. 2011 WAEP
	10,936,000 $4.44 11,708,430 $1.58 500,000 $10.33 3,250,000 $10.33 (1,852,666) $1.06 (4,022,430) $0.88
	9,583,334 $5.40 10,936,000 $4.44
	6,419,994 $3.19 6,359,332 $1.25

A The weighted average share price at the date of exercise is $6.71 (2011: $6.06).

B The outstanding balance at 30 June 2012 is represented by:

Options expiring on or before 6 July 2012 12 July 2013 12 July 2013 12 July 2013 27 November 2014 27 November 2014 27 November 2014 15 June 2015 15 June 2015 15 June 2015 28 February 2016 28 February 2016 28 February 2016	Exercise Price On issue 30 Jun 12
	$1.40 320,000 $0.60 1,010,000 $0.80 980,000 $1.00 1,600,000 $4.66 330,000 $5.44 330,000 $6.22 330,000 $3.80 266,666 $4.40 333,333 $5.00 333,335 $9.00 1,249,995 $10.30 1,249,998 $11.70 1,250,007
	9,583,334

Weighted average remaining contractual life

The weighted average remaining contractual life for share options outstanding as at 30 June 2012 is 2.48 years (2011: 2.98 years).

Range of exercise price

The range of exercise prices for options outstanding at the end of the year was $0.60 - $11.70 (2011: $0.40 - $11.70). As the range of exercise prices is wide, refer to the above table for further information in assessing the number and timing of additional shares that may be issued and the cash that may be received upon exercise of those options.

Weighted average fair value

The weighted average fair value of options granted during the year was $0.98 (2011: $0.97).

(b) Cash-settled employee share-based payments

During the 2011 financial year, the Company’s Remuneration and Nomination Committee approved the Long-term Indexed Bonus Plan (long-term bonus plan) to align the objectives of executive directors with that of the Company.

The Company granted 1,000,000 rights to executive directors in July 2010 and granted a further 2,000,000 rights to executive directors in August 2011.

The Company sets an initial indexed notional value (INV) for rights issued under the bonus plan. Rights issued under the plan are long term in nature and have multiple vesting dates, with current rights vesting from 15 June 2011 to 15 December 2016.

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NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2012

22 Share based payments (continued)

On the first vesting date, the holder of the awards receives, at the Company’s sole discretion, either cash, or subject to any shareholder approval required under the Corporations Act 2001 and the ASX Listing Rules, ordinary shares in the Company for the difference between the 5-day volume weighted average ASX price of underlying Company shares prior to the vesting date (test price), and the INV set when the rights were initially granted. At each subsequent test date, the award is retested, whereby the holder receives the difference between the 5-day volume weighted average ASX price of underlying Company shares prior to the test date and the higher of the initial INV or the highest test price that occurred prior to that date.

Termination and change of control provisions

Participant initiated termination

Where a participant ceases to be an employee or contractor of the Group prior to vesting of their award, all outstanding rights will expire and cease to carry any rights or benefits.

Group initiated termination

Where the engagement or employment is terminated by the Group for reasons other than serious misconduct, the rights will continue to vest for 180 days following the end of the required notice period, with the final vesting date to be the date on which the 180 day notice period expires.

Change of control

In the event of a change of control of the Company, the vesting period will be brought forward to the date of the change of control and awards will automatically vest.

Listed below are the terms and conditions of rights issued by the Company during the current financial year.

		Indexed
		notional	Initial vesting		Contractual
Grant date	Number	value	date	Test dates	life
Long-term bonus plan grant to	666,666	$9.00	15 June 2013	15 June and 15 December	5 years
executive directors of the Company				from 2013 to 2016
on 8 August 2011, expiring 15	666,667	$10.30	15 June 2014	15 June and 15 December	5 years
December 2016.				from 2014 to 2016
	666,667	$11.70	15 June 2015	15 June and 15 December	5 years
				from 2015 to 2016

The Company also modified the terms and conditions of existing rights granted under the long-term bonus plan during the year ended 30 June 2011. Listed below are the modified terms and conditions of the rights, initially granted on 2 July 2010, modified in August 2011.

		Indexed
		notional	Initial vesting		Contractual
Grant date	Number	value	date	Test dates	life
Long-term bonus plan grant to	333,332	$3.80	15 June 2011	15 June and 15 December	4 years
executive directors of the Company				from 2011 to 2015
on 2 July 2010, modified on 8 August	333,334	$4.40	15 June 2012	15 June and 15 December	4 years
2011, expiring 15 December 2015.				from 2012 to 2015
	333,334	$5.00	15 June 2013	15 June and 15 December	4 years
				from 2013 to 2015

In accordance with the terms and conditions of the plan, the Company paid $846,331 (2011: $1,093,246) in cashsettled awards for the year ended 30 June 2012, representing vesting of long-term rights. The Company also recognised $2,001,679 (2011: $866,503) during the current financial year relating to the fair value liability of rights issued under the long-term bonus plan, valued in accordance with the pricing model as described below.

Pricing model

The ultimate cost of the rights issued and amended during the period will be equal to the actual cash paid to the participants, which will be the fair value at settlement date.

The cumulative cost recognised until settlement is recognised as a liability and the periodic determination of this liability is as follows:

• At each reporting date between grant and settlement, the fair value of the award is determined;

• During the vesting period, the liability recognised at each reporting date is the fair value of the award at that date multiplied by the percentage of the vesting period completed;

• From the end of the vesting period until settlement, the liability recognised is the full fair value of the liability at the reporting date; and

• All changes in the liability are recognised in employee benefits expense for the period.

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NOTES TO THE FINANCIAL STATEMENTS

FOR THE YEAR ENDED 30 JUNE 2012

22 Share based payments (continued)

The fair value of the liability is determined, initially and at each reporting date until it is settled, by applying the BlackScholes option pricing model, taking into account the terms and conditions on which the award was granted.

The following table sets out the assumptions made in determining the fair value of the rights granted and modified during the current financial year.

Fair value at reporting date Notional value or test price Dividend yield Expected volatility Risk-free interest rate Expected life (years) Share price at reporting date	Granted (2 Jul 2012) Modified (8 Aug 2011) Granted (8 Aug 2011)
	Tranche 1 Tranche 2 Tranche 3 Tranche 1 Tranche 2 Tranche 3
	$1.05-$2.78 $1.12 - $2.83 $2.63 - $3.60 $0.86 - $2.64 $1.21 - $2.36 $1.46 - $2.10
	(a)$7.08 (b)$6.94 $5.00 $9.00 $10.30 $11.70
	0.00% 0.00% 0.00% 0.00% 0.00% 0.00%
	50.00% 50.00% 50.00% 50.00% 50.00% 50.00%
	2.42 – 3.49% 2.42 – 3.49% 2.42 – 2.46% 2.42 – 2.58% 2.42 – 2.58% 2.42 – 2.58%
	0.5 – 3.5 0.5 – 3.5 1.0 – 3.5 1.0 – 4.5 2.0 – 4.5 3.0 – 4.5
	$7.16 $7.16 $7.16 $7.16 $7.16 $7.16

(a) Calculated as the 5-day volume weighted average ASX price of underlying Company shares prior to the initial vesting date of 15 June 2011.

(b) Calculated as the 5-day volume weighted average ASX price of underlying Company shares prior to the initial vesting date of 15 June 2012.

23 Financial risk management objectives and policies

The Group’s principal financial liabilities comprise loans and borrowings and trade and other payables. The main purpose of these financial liabilities is to finance the Group’s operations. The Group’s principal financial assets comprise trade and other receivables, and cash and short-term deposits that arise directly from its operations.

The Group’s activities expose it to a variety of financial risks such as:

• Market risk consisting of commodity price risk, foreign currency exchange risk and interest rate risk;

• Credit risk; and

• Liquidity risk.

This note presents information about the Group’s exposure to each of the above risks and the objectives, policies and processes the Group uses to measure and manage these risks.

Primary responsibility for the identification and control of these financial risks rests with the Group’s senior management. The Group’s senior management is supported by the Audit and Risk Committee under the authority of the Board. The Audit and Risk Committee provides assurance to the Board that the Group’s financial risk-taking activities are governed by appropriate policies and procedures and that financial risks are identified, measured and managed in accordance with group policies and group risk appetite.

The Group uses different methods to measure and manage different types of risks to which it is exposed. These include monitoring levels of exposure to interest rates via assessments of market forecasts for interest rates and monitoring liquidity risk through the development of future rolling cash flow forecasts.

As at 30 June 2012, the Group did not use any form of derivatives to hedge its exposures. The Group does not enter into or trade financial instruments, including derivative financial instruments, for speculative purposes.

Market risk

Market risk is the risk that the fair value of future cash flows of a financial instrument will fluctuate because of changes in market prices. Market prices for the Group comprise three types of risk: interest rate risk, currency risk and commodity price risk. Financial instruments affected by market risk include loans and borrowings, trade receivables and cash and short-term deposits.

Interest rate risk

Interest rate risk is the risk that the fair value of future cash flows of a financial instrument will fluctuate because of changes in market interest rates. The Group’s exposure to the risk of changes in market interest rates relates primarily to the Group’s current and non-current debt obligations with floating interest rates. The Group is also exposed to interest rate risk on its cash and short-term deposits.

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NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2012

23 Financial risk management objectives and policies (continued)

At 30 June 2012 the interest rate profile of the Group’s interest-bearing financial instruments was:

Financial assets Cash and cash equivalents Financial liabilities Interest bearing liabilities	Fixed interest rate maturity Average interest rate % Variable interest rate $000 Less than 1 year $000 1 to 5 years $000 More than 5 years $000 Total $000
	3.39 100,389 - - - 100,389
	6.34 350,000 1,279 1,744 - 353,023

At 30 June 2011 the interest rate profile of the Group’s interest-bearing financial instruments was:

			Fixed	interest rate maturity	interest rate maturity
	Average	Variable	Less than 1	1 to 5	More than	5
	interest rate	interest rate	year	years	years		Total
	%	$000	$000	$000	$000		$000
Financial assets
Bank balances	4.99	14,396	-		-	-	14,396
Short-term deposits	6.01	-	59,644		-	-	59,644
Security and environmental bonds	6.02	-	3,156		-	-	3,156
Financial liabilities
Interest bearing liabilities	7.31	-	660		996	-	1,656

The following table demonstrates the sensitivity of pre-tax losses and equity to a reasonably possible change in interest rates by +0.25%/-0.50% as at 30 June 2012 (2011: +1.00%/-1.00%) with all other variables held constant. The exposure is mainly as a result of borrowings and cash at bank at floating rates.

Note 0.25% increase (2011: 1.00% increase) (i) 0.50% decrease (2011: 1.00% decrease) (i)	Pre-tax loss higher (lower) Equity higher (lower) 2012 $000 2011 $000 2012 $000 2011 $000
	- 101 624 101 - (101) (1,248) (101)

(i) In accordance with the Group’s accounting policies, application of the above sensitivity analysis as at 30 June 2012 will increase/decrease the level of borrowing costs and interest revenue capitalised to the Group’s qualifying assets.

The assumed movement in basis points for the interest rate sensitivity analysis is based on the currently observable market environment.

Foreign currency risk

Foreign currency risk is the risk that the fair value or future cash flows of a financial instrument will fluctuate because of changes in foreign exchange rates. The Group’s exposure to the risk of changes in foreign exchange rates relates primarily to the Group’s operating activities (when revenue or expense is denominated in different currency from the Group’s functional currency), primarily with respect to the Australian dollar.

As at 30 June 2012, the Group did not use any form of derivatives to hedge its exposure to foreign currency risk.

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NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2012

23 Financial risk management objectives and policies (continued)

The following tables demonstrate the sensitivity of pre-tax losses and equity to a reasonably possible change in the US dollar and AUD exchange rate by +10%/-10% as at 30 June 2012 (2011: nil), with all other variables held constant.

10% increase (2011: nil) 10% decrease (2011: nil)	Pre-tax loss higher (lower) Equity higher (lower) 2012 $000 2011 $000 2012 $000 2011 $000
	(115) - (115) - 126 - 126 -

The impact on the Group’s loss before tax is due to changes in the fair value of trade receivables designated in US dollars.

Commodity price risk

The Group is exposed to commodity price volatility on sales made by its DeGrussa Copper-Gold Mine, which are priced on, or benchmarked to, open market exchanges. As at 30 June 2012, the Group did not use any form of derivatives to hedge its exposure to commodity price risk.

At reporting date, if commodity prices increased/decreased by +10%/-10% from the 30 June 2012 LME (London Metals Exchange) closing prices, pre-tax losses and equity for the year would have been impacted due the provisionally priced sales contract outstanding at year end (see note 6), as per the table below:

10% increase (2011: nil) 10% decrease (2011: nil)	Pre-tax loss higher (lower) Equity higher (lower) 2012 $000 2011 $000 2012 $000 2011 $000
	1,823 - 1,823 - (1,823) - (1,823) -

In accordance with Australian Accounting Standards, the sensitivity analysis includes the impact of the movement in commodity prices only on the outstanding trade receivables at the end of the year $2,382,000 (2011: $nil) and does not include the impact of the movement in commodity prices on the total sales for the year.

Credit risk

Credit risk is the risk that a counterparty will not meet its obligations under a financial instrument or customer contract, leading to a financial loss. The Group is exposed to credit risk from its operating activities (trade receivables) and from its financing activities, including deposits with banks and financial institutions. At the reporting date, the carrying amount of the Group’s financial assets represents the maximum credit exposure.

The credit risk on cash and cash equivalents is managed by restricting dealing to banks which are assigned high credit ratings by international credit rating agencies.

Credit risk in trade receivables is managed by the Group by undertaking a regular risk assessment process including assessing the credit quality of the customer, taking into account its financial position, past experience and other factors. As there are a relatively small number of transactions, they are closely monitored to ensure payments are made on time. Credit risk arising from sales to customers is managed by contracts that stipulate a provisional payment of at least 90 per cent of the estimated value of each sale. This is payable promptly after vessel loading. The balance outstanding is received within 60 days of the vessel arriving at the port of discharge. Additionally, several sales are covered by letter of credit arrangements with approved financial institutions.

The Group does not have any significant receivables which are past due at the reporting date.

Liquidity risk

Liquidity risk arises from the financial liabilities of the Group and the Group’s subsequent ability to meet its obligations to repay financial liabilities as and when they fall due.

The Group’s approach to managing liquidity is to ensure, as far as possible, that it will always have sufficient liquidity to meet its liabilities when due, under both normal and stressed conditions, without incurring unacceptable losses or risking damage to the Group’s reputation. The Group manages liquidity risk by conducting regular reviews of the timing of cash flows in order to ensure sufficient funds are available to meet these obligations.

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NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2012

23 Financial risk management objectives and policies (continued)

The table below analyses the Group’s financial liabilities into relevant maturity groupings based on the remaining period at the reporting date to the contractual maturity date. The amounts disclosed in the table are the contractual undiscounted cash flows.

Note Year ended 30 June 2012 Trade and other payables 16 Degrussa Project Loan Facility 17 Other interest bearing liabilities 17 Year ended 30 June 2011 Trade and other payables 16 Interest bearing liabilities 17	Within 6 months $000 6 to 12 months $000 1 to 5 years $000 Total $000
	48,141 1,485 1,383 51,009
	- 95,000 255,000 350,000
	865 414 1,744 3,023
	49,006 96,899 258,127 404,032
	28,679 1,610 350 30,639 485 270 1,111 1,866
	29,164 1,880 1,461 32,505

Finance Facilities

The Group’s financing arrangements are provided under a secured loan facility with the Group’s bankers and are secured by a fixed and floating charge over the Group’s assets, including the DeGrussa Project and the broader Doolgunna Project, and a mining mortgage over the Project tenements. The full $390 million facility, which includes $10 million relating to bonding, is designed to underpin the Group’s construction and development of its DeGrussa Copper-Gold Project in Western Australia and follows the Definitive Feasibility Study (DFS) completed in June 2011.

The facility was finalised and executed on 29 September 2011, with the first drawdown of $190 million completed on 10 November 2011. The facility is repayable in set quarterly instalments, with the first repayment due on 31 March 2013, and is to be fully repaid by 31 December 2015.

The bond facility is drawn in the form of bank guarantees to the relevant State Government for environmental restoration and property managers for security deposits and does not involve the provision of funds.

The Group completed the final drawdown, totaling $30 million, under the Project Loan Facility subsequent to 30 June 2012, for working capital purposes.

Fair value

The carrying amount of all financial assets and financial liabilities recognised in the Balance Sheet approximates their fair value.

24 Commitments

Operating lease commitments – Group as lessee

The Company leases corporate office and administrative facilities in West Perth and storage facilities in Western Australia and the Northern Territory. The leases have varying terms, with options to renew the lease on respective expiry dates. There are no restrictions placed upon the lessee by entering into these leases.

Future minimum rentals payable under non-cancellable operating leases as at 30 June are as follows:

Within one year After one year but not more than two years Total minimum lease payments	2012 $000 2011 $000
	750 979 26 727
	776 1,706

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NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2012

24 Commitments (continued)

Finance leases and hire purchase commitments – Group as lessee

The Group has finance leases and hire purchase contracts for various motor vehicles and mobile plant with a carrying amount of $2,193,000 (2011: $1,274,000). These lease contracts expire within three to five years. Future minimum lease payments under finance leases and hire purchase contracts together with the present value of the net minimum lease payments are as follows:

Note Within one year After one year but not more than five years Total minimum lease payments Less amounts representing finance charges Present value of minimum lease payments Included in the financial statements as: Current interest bearing liabilities 17 Non-current interest bearing liabilities 17 Total included in interest-bearing liabilities	2012 $000 2011 $000
	822 434 1,878 1,111
	2,700 1,545 (307) (210)
	2,393 1,335
	649 339 1,744 996
	2,393 1,335

Contractual commitments

DeGrussa Copper Gold Project

The Group has entered into a number of key construction, development and operations contracts as part of its development and operation of the DeGrussa Copper-Gold Project located in Western Australia. $488,996,000 of the contracted value remained active as at 30 June 2012 and a total of $196,251,000 of this contracted value has been incurred up to 30 June 2012. The Group expects to meet the remaining contractual commitments with respect to these contracts during the course of future financial periods, with payments to be made only on satisfactory completion of contracted terms.

Other Contractual commitments

Posco Australia Pty Ltd (POSA)

On 2 May 2008, the Company entered into a commercial agreement with Posco Australia Pty Ltd (POSA), whereby POSA, or POSA nominated affiliates, has the right to purchase 30% of the Company’s future mineral production, excluding gold and diamond production, at fair market value. The rights under the commercial agreement remain for as long as POSA has at least a 10% holding of Sandfire ordinary shares and entitles POSA to a 7.5% discount on the first $100m of offtake.

25 Events after the balance sheet date

Finance facilities

The Group completed the final drawdown under the Project Loan Facility, totalling $30 million, during August 2012, for working capital purposes.

Issued capital

Subsequent to year end the Group announced the issue of 320,000 fully paid ordinary shares from the exercise of 320,000 unlisted options with an exercise price of $1.40 and an expiry date of 6 July 2012.

The Group also announced the issue of the following unlisted options to senior management of the Company, pursuant to the Sandfire Resources NL Incentive Option Plan approved by shareholders at the annual general meeting held on 29 November 2011.

Number	Exercise price	Expiry date
250,000	$9.00	28 February 2016
166,667	$10.30	28 February 2016
83,333	$11.70	28 February 2016

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NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2012

26 Auditor remuneration

The auditor of Sandfire Resources NL is Ernst & Young.

The auditor of Sandfire Resources NL is Ernst & Young.
Amounts received or due and receivable by Ernst & Young (Australia) for: An audit and review of the financial report of the entity Other services in relation to the entity Taxation services – Research & Development Tax Concession Due diligence services Other advisory services	2012 $ 2011 $
	232,066 133,710
	31,533 25,000 - 3,500 - 6,180
	31,533 34,680
	263,599 168,390

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DIRECTORS’ DECLARATION FOR THE YEAR ENDED 30 JUNE 2012

In accordance with a resolution of the directors of Sandfire Resources NL, I state that:

1. In the opinion of the directors:

2. a) The financial statements and notes of Sandfire Resources NL for the financial year ended 30 June 2012 are in accordance with the Corporations Act 2001 , including:

   • (i) Giving a true and fair view of its financial position as at 30 June 2012 and performance; and

   • (ii) Complying with Accounting Standards (including the Australian Accounting Interpretations) and the Corporations Regulations 2001 .

3. b) The financial statements and notes also comply with International Financial Reporting Standards as disclosed in note 2(a).

4. c) There are reasonable grounds to believe that the Company will be able to pay its debts as and when they become due and payable.

5. This declaration has been made after receiving the declarations required to be made to the directors in accordance with section 295A of the Corporations Act 2001 for the financial year ending 30 June 2012.

On behalf of the Board

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Derek La Ferla Non-executive Chairman

Karl M. Simich Managing Director and Chief Executive Officer

West Perth, 17 September 2012

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• 72 -

INDEPENDENT AUDITOR’S REPORT FOR THE YEAR ENDED 30 JUNE 2012

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INDEPENDENT AUDITOR’S REPORT FOR THE YEAR ENDED 30 JUNE 2012

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