SANDFIRE RESOURCES LIMITED - Capital/Financing Update 2011

Sandfire Resources NL ABN 55 105 154 185 Level 2, 31 Ventnor Ave, West Perth Western Australia 6005 Phone: +61 8 6430 3800 Fax: +61 8 6430 3849 Email: [email protected] Web: www.sandfire.com.au

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ASX/Media Release 29 March 2011

DEGRUSSA PROJECT: MAIDEN OPEN PIT ORE RESERVE HIGH-GRADE ORE RESERVE SET TO KICK-START DEGRUSSA COPPER-GOLD MINE

HIGHLIGHTS

Maiden Probable Ore Reserve for the DeGrussa open pit totalling 368,000t @ 13.6% Cu, 2.4g/t Au ( 50,000t contained copper , 29,000oz contained gold ), including:
143,000 tonnes of high-grade Direct Sale Ore (DSO) grading 25.6% Cu , 2.5g/t Au for 37,000t of contained copper and 12,000oz of contained gold (supergene chalcocite)
226,000t of massive sulphide and chalcocite ore @ 6.1% Cu, 2.4g/t Au (14,000t contained copper, 17,000oz contained gold) to be stockpiled for processing in the commissioning phase of the 1.5Mtpa DeGrussa Concentrator.
Increases Sandfire’s total Ore Reserve inventory (including Underground Ore Reserves) to 8.39Mt @ 5.6% Cu, 1.8g/t Au ( 465,000t contained copper , 485,000oz contained gold ).
Work continuing to allow the conversion of open pit oxide copper resources of 3.58Mt @ 1.2% Cu and 0.5g/t Au (44,000t contained copper, 56,000oz contained gold), inferred chalcocite resources of 0.19Mt @ 4.4%Cu and 1.2g/tAu (8,000t contained copper and 7,000t contained gold) and zinc to Ore Reserves.
2.32Mt of Inferred Massive Sulphide resources @ 4.3% Cu and 2.0g/t Au (100,000t contained copper, 149,000oz of gold) planned to be upgraded to Indicated status, available for determination of ore reserves, by future underground drilling.
Mining of open pit on track to commence by mid-2011 .

Sandfire Resources NL (ASX : SFR ; “Sandfire”) is pleased to report maiden Open Pit Ore Reserves for its 100%-owned DeGrussa Copper Gold Project in Western Australia totalling an estimated 50,000 tonnes of contained copper and 29,000 ounces of contained gold – laying the foundations for prestrip of the initial open pit mining operation to commence by mid-year.

The maiden probable Ore Reserves include 37,000 tonnes of contained copper in high-grade chalcocite ore which will be available for direct shipping to customers.

The Open Pit Ore Reserves are in addition to the Underground Ore Reserves reported on 4 March 2011. The Open Pit Ore Reserve is based on the previously reported Indicated Resources of supergene chalcocite and massive sulphide ore in the upper portions of the DeGrussa and Conductor 1 deposits.

Chalcocite below a cut off grade of 8.5%, and all massive sulphide ore will be stockpiled and processed during the commissioning phase of the 1.5mtpa on-site concentrator in 2012.

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29 March 2011

The maiden Open Pit Ore Reserves do not include the previously reported open pit oxide copper resources totalling 3.58Mt @ 1.2% Cu and 0.5g/t Au (44,000t contained copper, 56,000oz contained gold). Work is continuing as part of the DeGrussa Project Definitive Feasibility Study (DFS) to establish the optimum treatment method for these oxide copper resources, after which a significant proportion of these resources is expected to be available for conversion to Ore Reserves.

Further, the remaining Inferred Primary Massive Sulphide Resources totalling 2.32Mt @ 4.3% Cu and 2.0g/t Au (100,000t contained copper, 149,000oz of gold) are planned to be upgraded to Indicated status, available for determination of ore reserves, by future underground drilling. (See full March 2011 JORC Resource Table for the DeGrussa Project in Appendix A to this release).

The resource categories that have been converted to reserve status to date are highlighted in orange as shown in the March 2011 JORC Resource Table for the DeGrussa Project (see Appendix A).

Maiden Open Pit Ore Reserves

The maiden probable Ore Reserves for the DeGrussa open pit are set out in Table 1 below:

Table 1: Open Pit Ore Reserves (See Note 1)

Reserve Classification	Treatment Destination	Deposit Material	Tonnes (Mt)	Copper %	Gold g/t	Contained Copper (t)	Contained Gold (oz)
Probable	Direct Sale Ore	Chalcocite	0.14	25.6	2.5	37,000	12,000
	Massive Sulphide Concentrator	Chalcocite Conductor 1 MS DeGrussa MS	0.09 0.03 0.11	5.1 3.9 7.5	2.5 1.9 2.4	5,000 1,000 8,000	7,000 2,000 8,000
	Massive Sulphide Concentrator Sub-Total:		0.23	6.1	2.4	14,000	17,000
Total Probable Ore Reserve			0.37	13.6	2.4	50,000	29,000

The inclusion of the open pit reserves has resulted in a revised Ore Reserve inventory for the DeGrussa Project, as set out in Table 2 below:

Table 2: DeGrussa Copper-Gold Project – 28 March 2011 Ore Reserve Statement

Deposit	Reserve Category	Mining Method	Tonnes (Mt)	Copper (%)	Gold (g/t)	Contained Copper (t)	Contained Gold(oz)
DeGrussa	Probable	Open Pit - DSO	0.14	25.6	2.5	37,000	12,000
DeGrussa/C1/Chalcocite	Probable	Open Pit	0.23	6.1	2.4	14,000	17,000
DeGrussa	Probable	Underground	1.50	6.6	1.9	99,000	90,000
Conductor 1	Probable	Underground	5.76	4.9	1.8	283,000	337,000
Conductor 4	Probable	Underground	0.76	4.4	1.2	33,000	30,000
Total	Probable		8.39	5.6	1.80	465,000	485,000

Note 1 A cut-off grade of 8.5% Cu is applied on the Chalcocite to provide a targeted 26% Cu direct sale product (Achieved 25.6% Cu after dilution). All other material within the defined deposit boundaries has been included in the reporting of Ore Reserves with any subeconomic 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. These Ore Reserves occur within an open pit design containing 26Mt of total material, resulting in a waste to ore strip ratio of 70:1.

Note 2 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. Note: Refer to the Competent Person’s Statement – Ore Reserves at the end of this release.

29 March 2011

Sandfire’s Managing Director, Mr K arl Simich, said the initial open pit operati o n was focused on rapid extraction of the high-grade DSO r e serves to generate early revenue for the operation, with the second stage of the open pit focused on mi n ing the oxide copper and primary sulphide m aterial.

“In addition to the 50,000 tonnes of copper in the current open pit ore reserves , there is a further 44,000 tonnes of contained copper in the oxide resources, and we are working to co n vert this material to Ore Reserves upon finalising a suit a ble treatment route. The open pit ope r ations will continue for approximately two years with minin g on track to commence by the middle of thi s year,” Mr Simich said.

“It will be a busy second quarter fo r Sandfire, with the Definitive Feasibility Study nearing completion, the award of further contracts and the completion of our project financing – clea r ing the way for full-scale construction and development to ki c k off by mid-year,” he added.

ENDS

For further information contact: Sandfire Resources NL Karl Simich – Managing Director/CEO John Evans – Executive Technical Director Office: +61 8 6430 3800

Read Corporate Mobile: +61 419 929 046 (Nichol a s Read) Mobile: +61 421 619 084 (Paul Armstrong)