SANDFIRE RESOURCES LIMITED — Capital/Financing Update 2005

Aug 30, 2005

T +61 8 9226 5833 F + 61 8 9226 5844 Eladmin@sandfire.com.au www.sandfire.com.au

Dear Option Holder

YOUR OPTIONS TO ACQUIRE SANDFIRE RESOURCES NL CONTRIBUTING SHARES AT 10 CENTS PER CONTRIBUTING SHARE EXPIRE ON 30 SEPTEMBER 2005

We are writing to you as a registered holder of 30 September 2005 options in Sandfire Resources NL to remind vou that the options will expire at 5:00pm (WST) on 30 September 2005.

Your option holding may be exercised in whole or in part by payment of 10 cents for each option by no later than 30 September 2005. If payment is not received by 5:00pm (WST) on 30 September 2005 the options will lapse and all rights under the options will cease at that time.

Some of the courses of action available to you as a holder of these soon to expire options are:

• Exercise the options on or before 30 September 2005. $a)$
• $b)$ Sell your options. Quotation of the options will cease at the close of trading on 30 September 2005.
• Do nothing, ie allow your options to expire. If you do not exercise or sell your options they will expire on $C$ 30 September 2005 and your right to subscribe for contributing shares in Sandfire Resources NL at 10 cents per share will lapse.

There is no obligation upon option holders to exercise their options. However, under paragraph 6.1, of Appendix 6A of the Australian Stock Exchange (ASX) Listing Rules, the company is required to advise option holders of the information contained in this notice.

It should be noted that these options convert into a partly paid share with 15 cents remaining to be paid to become a fully paid share.

During the three (3) months preceding the date of this notice:

The last sale price of fully paid shares in Sandfire Resources N L was 18 cents on 29 August 2005, being the last sale on the Austrailian Stock Exchange prior to the date of this notice.

• the highest market sale price of fully paid shares was 21 cents on 21 July 2005, and $\bullet$
• the lowest market sale price of fully paid shares was 10.5 cents on 16 June 2005.

If you wish to exercise your options then you must complete your "Notice of Exercise of Options" form and forward it together with payment of 10 cents per option exercised to be received no later than 5:00pm (WST) on 30 September 2005 to the Company's share registry, being:

Security Transfer Registrars Pty Ltd PO Box 535 APPLECROSS WA 6953

Cheques should be made payable to "SANDFIRE RESOURCES NL" in Australian dollars only and should be crossed "Not negotiable". If you have any further questions please do not hesitate to contact our Registry on telephone (08) 9315 2333, facsimile (08) 9315 2233, or e-mail registrar@securitytransfer.com.au

Yours faithfully

MALCOLM SMARTT COMPANY SECRETARY

7-61-8 9226 5833 $F + 61892265844$ £ admin@sandfire.com.au www.sandfire.com.au

Terms and Conditions of the Options Expiring 30 September 2005 at $0.10 (SFRO)

• a) Definitions:
  • Exercise Price means the exercise price of each Option, being 10 cents. $(i)$
  • $(ii)$ Exniry Date means 5 OOpm (WST) on 30 September 2005.
  • Exercise Date means the Expiry Date or, if applicable, the Underwritten Expiry Date. $(iii)$
  • Exercise Notice means the form prescribed by the Company from time to time for the purpose of exercising Options. $(iv)$
  • Option Holder means the person or persons registered as the holder of one or more Options from time to time. $(v)$
  • Option Underwriter means any person or persons (other than the Company) that is party to an Option Underwriting Agreement. (vi)
  • Option Underwriting Agreement means all agreements made prior to the Expiry Date between the Company and an Option Underwriter whereby the (vii) Option Underwriter agrees to exercise the Underwritten Options prior to the Underwritten Expiry Date.
  • Contributing Share means a partly paid ordinary share in the capital of the Company (with the terms set out in Terms of Securities Rights Attaching to (viii) Contributing Shares)
  • Underwritten Expiry Date means, if the Company has entered into an Option Underwriting Agreement, 5.00pm (WST) 14 days after the Expiry Date. $(ix)$
  • Underwritten Options means that number of Unexercised Options the subject of an Option Underwriting Agreement. $(x)$
  • $(x)$ Unexercised Option Holder means any person or persons registered as the holder of Unexercised Options.
  • $(xii)$ Unexercised Options means all Options not exercised on or before the Expiry Date.
• $\mathbf{b}$ Each Option carries the right to subscribe for one Contributing Share of the same class as the Contributing Shares already on issue.
• $c$ Options may be exercised by defivering to the Company's registered office or the Company's share registry an Exercise Notice at any time prior to the Exercise Date
• The Exercise Notice must state the number of Options to be exercised and be accompanied by the relevant holding statement(s) and a cheque (in d) Australian currency) made payable to the Company for an amount being the result of the Exercise Price multiplied by the number of Options being exercised
• If the Company has entered into an Option Underwriting Agreement, then at the Expiry Date all Unexercised Option Holders immediately, $\alpha$ unconditionally and irrevocably appoint the Company as the Option Holder's agent to transfer all Unexercised Options the subject of an Option Underwriting Agreement to the Option Underwriter and the Option Underwriter is entitled to exercise the options prior to the Underwritten Expiry Date.
• $\mathbf{f}$ Following receipt of a properly executed Exercise Notice and application monies in respect of the exercise of any options by the Exercise Date, the Company will issue the resultant Contributing Shares and deliver notification of shareholdings.
• The Company win make application to have the Contributing Shares (issued pursuant to an exercise of Options) listed for quotation by ASX as soon as $g)$ there is a sufficient spread of Contributing Shares to satisfy the requirements of the Listing Rules. If Contributing Shares are already quoted on ASX at the time the relevant Options are exercised, the Company will make application to have the Contributing Shares (issued pursuant to an exercise of the relevant Options) listed for quotation by ASX within 7 days of the date of issue.
• $h)$ Contributing Shares issued pursuant to an exercise of Options shall rank, from the date of issue, pari passu with then existing Contributing Shares in all respects.
• $\mathbf{i}$ Options carry no right to participate in pro rata issues of securities to shareholders unless the Options are exercised before the record date for determining entitlements to the relevant pro rata issue.
• $\mathbf{j}$ Each Option Holder will be notified by the Company of any proposed pro rata issue of securities to shareholders in accordance with ASX Listing Rules.
• Subject to the Corporations Act 2001 and ASX Listing Rules, Options do not confer the right to a change in exercise price. $\bf k$
• $\left| \right\rangle$ In the event of a reorganisation (including reconstruction, consolidation, subdivision, reduction, or return) of the capital of the Company, the terms of the Options will be changed to the extent necessary to comply with the requirements of the ASX Listing Rules (in force at the time of the reorganisation).

NOTICE OF EXERCISE OF OPTIONS

Tо			Share Registry:
The DirectorsSandfire Resources NL			Security Transfer Registrars Pty LtdLevel 1-770 Canning Highway
I Ventnor Avenue			APPLECROSS WA 6153
WEST PERTH WA 6005			Email: registrar@securitytransfer.com.au
			Ph: (618) 9315 2333 Fax: (618) 9315 2233
1/We		Shareholder Number
		0f
		Being the registered holder of Options hereby exercise such Options to subscribe for
		$0.10 per share. I/We enclose application money of $
		the holder of the shares to be allotted to me/us and /we agree to accept such shares subject to the Rules of the Constitution of the Company
Individual or Holder 1	Securityholder 2	Securityholder 3	Date:
Director	Director/Secretary	Sole Director/Secretary	Day / Month / Year

This application, with application money in Australian Currency, should be lodged at the Company's Share Registry on or before the Expiry Date. NOTE: Cheque should be made payable to Sandfire Resources NL and forwarded to Security Transfer Registrars Pty Ltd.