SANDFIRE RESOURCES LIMITED — Capital/Financing Update 2004

Dec 12, 2004

12 WALKER AVENUE www.sandfire.com.au

13 December 2004

No. of pages lodged: 2

Company Announcements Office Australian Stock Exchange Limited $4th$ Floor 20 Bridge Street SYDNEY NSW 2000

Dear Sir/Madam

MARKET UPDATE

Since the September Quarterly Report, there have been significant developments on several of the Company's projects.

Borroloola

As foreshadowed in the September Quarterly announcement, the Company has completed a limited drilling program at Borroloola to test six of the targets generated earlier in the year. Seven holes were drilled in this program. The drilling contractor encountered drilling difficulties resulting in a less than satisfactory outcome from some of the drilling resulting in holes 4 and 7 being abandoned and certain of the other holes being terminated prematurely. However, the results obtained will provide good information for the 2005 program.

In summary and based on visual assessment only (assays are awaited):

Hole BRCD1, drilled to test the IP anomaly near the Gordons prospect, intersected several mineralised zones, two being copper rich.

Hole BRCD2, drilled to test the gravity anomaly, intersected a wide interval of Tawallah Group rocks and now concluded to be the cause of the gravity anomaly.

BRCD3, drilled to test a weak IP anomaly south of the gravity anomaly, intersected Tawallah Group rocks with pyrite/iron oxides after pyrite.

BRCD4 and BRCD7, drilled to test the northern most IP anomaly on the Coppermine Creek Fault near the Four Archers Fault, were abandoned (due to drilling issues).

BRCD5, drilled to test the IP anomaly immediately south of the BRCD4 site, failed to produce a result to adequately explain the observed data.

BRCD6, drilled to test a weak IP anomaly south of the Coppermine Creek Fault, intersected McArthur Group rocks with the cause of the anomaly possibly due to a more shale rich sequence.

Urandy

The airborne survey data from Urandy have been received and are being integrated with the Company's existing exploration data. The initial conclusions confirm that three of the conceptual targets identified from the regional data and included in the IPO Prospectus are direct exploration targets. Other structural targets are also evident in the data and are being heeesea

Yannarie

The Yannarie airborne survey has just been completed but only data for the northern part of the survey has been received. Two direct exploration targets have been identified in this data set. These targets were also selected from the regional data and included as conceptual targets in the IPO Prospectus. Of significance, the anomaly in the northern part of E08/1374 is coincident with the base metal mineralisation at Coria Springs.

Sandfire

The Company is engaging appropriate consultants to assist in the model building phase of this project. This phase is expected to take several months and, subject to obtaining the appropriate approvals, will enable the drilling campaign to commence on or about July/August 2005.

Doolgunna

Most of the previous exploration data have been compiled. This has delineated the main structural corridor which will be targeted for follow up in 2005.

Mt Augustus

Preliminary mapping undertaken over the recent months has located a stratigraphic horizon near the base of the seguence anomalous in base metals. Further geological work is planned to investigate this occurrence. The available aeromagnetic data covering the area is being sourced and compiled to assist in this phase of work.

Yours faithfully SANDFIRE RESOURCES NL

GREGORY H STEEMSON Managing Director