SANDFIRE RESOURCES LIMITED — Capital/Financing Update 2006

Aug 27, 2006

EVENTINOR AVE WEST PERTH 6005 WESTERN AUSTRALIA PO BOX 1495 WEST PERTH 6872 WESTERN AUSTRALIA

T 461 8 9226 5833 F +61 8 9226 5844 $\begin{array}{ll} \texttt{C} \texttt{admin} \texttt{R} \texttt{and} \texttt{line} \texttt{com}. \texttt{an} \ \texttt{www} \texttt{smooth} \texttt{free} \texttt{com} \texttt{no} \end{array}$

No. of pages lodged: 1

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

PASPALEY DEAL FINALISED/SHARE PLACEMENT

Pursuant to the authorities conferred at the recent general meeting and partially utilising the Company's capacity under the 15% rule, the Company:

• formalised an agreement to purchase mining tenements (in the locality of Borroloola) ă from Mr Nicholas Paspaley in consideration for the grant of 5,400,000 options exercisable at 60 cents on or before 30 June 2007;
• Argonaut Securities have finalised a placement, to institutional and sophisticated Á investors under S708 of the Corporations Act, of eight million ordinary fully paid shares at an issue price of \$0.55 to raise \$4,400,000.

The funds, which will be applied to general working capital, ensure the Company:

• can continue the aggressive pursuit of its exploration campaign on its existing projects; ٠ and
• is fully funded to undertake the planned comprehensive reconnaissance exploration ٠ programme at the now expanded Borroloola project.

An Appendix 3B will be released as soon as cleared funds are received.

Mal Smartt Company Secretary 25 August 2006