SANDFIRE RESOURCES LIMITED — Interim / Quarterly Report 2011

Apr 12, 2011

Sandfire Resources NL ABN 55 105 154 185

ASX Code: SFR

Web Page: www.sandfire.com.au

Issued Capital:

Ordinary Shares	148.3M
Options	12.0M

Major Shareholders:

OZ Minerals (ASX: OZL) 18.9%
POSCO	16.0%
Institutions	20.5%
Founders/Board	8.1%

Directors:

Derek La Ferla Non-Executive Chairman

Karl M Simich Managing Director and CEO

W. John Evans Executive Technical Director

Jonghun Jong Non-Executive Director

Robert Scott Independent Non-Executive Director

Management:

Matthew Fitzgerald CFO and Company Secretary

Martin Reed Project Manager

M ARCH 2 01 1 QU ARTERL Y REPORT HIGHLIGHTS

DEGRUSSA COPPER-GOLD PROJECT, Western Australia

FEASIBILITY STUDIES

• Sandfire Resources NL (ASX: SFR "Sandfire" or "the Company") achieved several significant milestones during the March 2010 Quarter, including estimation of asa maiden Phase 1 JORC resource for its high-grade DeGrussa • Sandfire Board conditionally approved development of the DeGrussa Project as an open pit and underground mine with a 1.5Mtpa concentrator, on the strength of a robust Pre-Feasibility Study, key outcomes including:
• Copper-Gold Project in Western Australia containing 372,000 tonnes of copper and 439,000 ounces of gold. o Life-of-mine extraction of 10.68Mt of material grading 5.0% Cu, 1.7g/t Au (531,000t copper, 579,000oz gold)
• The achievement of this high-quality resource within eight months from the o Production of 60-70,000tpa of payable copper metal and 40- 45,000oz pa of gold over initial scheduled mine life of 7+ years
  • o C1 cash operating costs of US$0.90-$1.00/lb including gold credits
• commencement of the resource drill-out represents an outstanding achievement and underpins the value of the Company and its growth o Pre-tax operating cash flow of A$330-350M per annum (from FY 2012/2013)
• strategy to become a leading mid-tier Australian mining company. Scoping Studies for a potential mine development at DeGrussa progressed during the Quarter, with the lodgement of a Mining Lease Application (MLA) marking the first critical milestone towards development. • Definitive Feasibility Study (DFS) on track to be finalised in conjunction with an appropriate funding package in Q2 of CY2011, enabling pre-strip of the open pit, underground development and on-site construction to commence by mid-2011.

MAIDEN ORE RESERVES

• Sandfire successfully raised $67 million on the back of the Phase 1 JORC resource announcement through a strongly supported institutional share placement and Share Purchase Plan. This puts the Company in a very strong • Maiden Ore Reserve inventory of 8.39Mt @ 5.6% Cu, 1.8g/t Au (465,000t copper, 485,000oz gold) announced comprising:
• position to fund both pre-development activities and continue to progress a very aggressive 2010 exploration program both at DeGrussa and within the o Underground Probable Ore Reserve of 8.02Mt @ 5.2% Cu, 1.8g/t Au (415,000t copper, 456,000oz gold); and
• broader Doolgunna Project. 1. DOOLGUNNA COPPER-GOLD PROJECT, WESTERN AUSTRALIA (Sandfire 100%) o Open Pit Probable Ore Reserve of 0.37Mt @ 13.6% Cu, 2.4g/t Au (50,000t copper, 29,000oz gold) – including 143,000t of high-grade Direct Sale Ore (DSO) grading 25.6% Cu, 2.5g/t Au plus 226,000t of massive sulphide and chalcocite ore grading 6.1% Cu, 2.4g/t Au to be stockpiled for processing during commissioning of the concentrator.

The Doolgunna Project is located 900km north of Perth and approximately MINERAL RESOURCES

• 150km north of Meekatharra in the Peak Hill mineral field of Western Australia. The Project comprises a dominant 395 square kilometre tenement package within an emerging copper-gold mineralised belt. The Project area lies close to a number of existing and historical gold mines and infrastructure • Work is continuing to allow conversion of open pit oxide copper resources of 3.58Mt @ 1.2% Cu and 0.5g/t Au (44,000t copper, 56,000oz gold), inferred chalcocite resources of 0.19Mt @ 4.4% Cu and 1.2g/t Au (8,000t copper and 7,000oz gold) and zinc to Ore Reserves.
• including the Goldfields Gas Pipeline and Great Northern Highway. The DeGrussa Copper-Gold Project, which was discovered in mid-2010, lies in • 2.32Mt of Inferred Massive Sulphide resources @ 4.3% Cu and 2.0g/t Au (100,000t copper, 149,000oz gold) planned to be upgraded to Indicated status, available for determination of ore reserves, by future drilling.

the north-eastern portion of the Doolgunna tenements. A Phase 1 JORC EXPLORATION

compliant Indicated and Inferred Resource of 7.13 million tonnes grading 5.2% copper, 1.9g/t gold and 15g/t silver was completed in February 2010. A Scoping Study is currently underway on the DeGrussa Project. • Three zones of massive sulphides, the most significant of which was 9.3m thick, intersected in the gap between Conductor 4 and Conductor 5, as deep diamond drilling continues targeting repeats of the VMS bodies at depth.

Figure 1 – DeGrussa Project: Location CORPORATE

• Well advanced in discussions with potential financiers on project funding.
• 1.0 DEGRUSSA COPPER-GOLD PROJECT, WESTERN AUSTRALIA • Sandfire to subscribe for a cornerstone 17.1% stake in junior explorer Whinnen Resources (ASX: WWW), which intends to secure an extensive portfolio of high-quality copper, gold and silver exploration projects in the Atacama mining region of northern Chile.

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

Sandfire's 100%-owned DeGrussa Copper set to become a premier high-grade copper mine and one of the largest copper producers in Western Australia Copper-Gold Project, located 900km north-east of Perth in Western Australia, is Australia.

The Company also has aggressive exploration programs underway targeting copper near-mine environment and across its tenement holdings in the region. grade mine copper-gold deposits, both in the

Figure 1 – DeGrussa Copper-Gold Project Location Gold Location, Western Australia

1.1 Overview

The March 2011 Quarter saw the achievement of several significant milestones with the Feasibility Study ("PFS") on the DeGrussa Copper announce a conditional development approval ("DFS") and project funding package – calendar quarters unless otherwise noted Copper-Gold Project on 4 March 2011 enabling approval for the Project, subject to completion of a Definitive Feasibility Study both of which are on track to be finalised in Q2 of 2011 ( ). delivery of a positive Preenabling the Company's Board to all references in

The investment decision reflects the Company's confidence in the outcomes and quality of the PFS and its commitment to progress development of the DeGrussa Project as rapidly as possible. It construction and equipment supply contracts to be let prior to completion of the DFS, putting the Company in a strong position to achieve its timetable o to commission the 1.5Mtpa concentrator in Q3 of 2012. nt of commencing construction on site at DeGrussa by mid also enables key mining, f mid-2011 and starting

The PFS confirmed the financial and technical strength of production of 60-70,000 tonnes of payable copper in concentrate and 40 of-mine C1 cash operating costs of US$0.90 the DeGrussa Project, 0 40-45,000 ounces of gold at competitive life mine US$0.90-$1.00/lb (see key PFS assumptions below). with forecast annual metal 45,000 life-

The Project is anticipated to generate average annual pre 2012/2013 financial year onwards (life-of both Indicated and Inferred Resources forecast cash flows will facilitate rapid repayment of the Project's forecast capital cost. including contingencies, is estimated at A$270 million for plant and infrastructure and A$130 million for open pit and underground development. pre-tax operating cash flows of A$330 of-mine plan of approximately 7+ years includes P esources) based on open pit and 1.5Mtpa of underground production. lows A$330-$350 million from the Probable Ore Reserves and ) production. These strong Pre-production capital,

With the completion of the PFS, the Company which is on track for completion during the June 2011 Quarter chalcocite and near-surface gold mineralisation, currently in Indicated Resources, into Ore Reserves. FS, has transitioned seamlessly into a Definitive Feasibility Study ("DFS") Quarter, including ongoing work to convert the oxide copper,

Given the Project's technical and economic Quarter and the strong outlook for the copper market, surface strengths, A$106 million cash holding at the end of the March 2011 Sandfire is in a strong position and , well advanced in

March 2011 Quarterly Report 13 April 2011

discussions with potential financiers regarding project funding, and is confident that a suitable funding package will be completed during the June 2011 quarter, in conjunction with the DFS.

The Company will commence discussions with potential off-take partners during the June 2011 Quarter and has engaged internationally recognised firms to provide advice on the marketing and sale of the DSO and concentrate. Both the DSO and concentrates are within limits that classify them as "clean".

Given the tight market outlook for concentrates over the next five to ten years, the Company expects to be able to readily place its concentrate production.

1.2 Maiden Ore Reserves and JORC Mineral Resources

Maiden Ore Reserves

The maiden Ore Reserve statement for the DeGrussa Project, encompassing both planned open pit and underground operations, was finalised during the Quarter and is summarised below:

Deposit	Reserve Category	Mining Method	Tonnes(Mt)	Copper(%)	Gold(g/t)	ContainedCopper (t)	ContainedGold(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	1.8	465,000	485,000

Table 1: DeGrussa Copper-Gold Project – March 2011 Ore Reserve Statement

• Note 1 Open pit ore reserves 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 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. 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 Underground ore reserves 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.

The maiden open pit Ore Reserve, which includes 37,000 tonnes of contained copper in high-grade chalcocite ore which will be available for direct shipping to customers, lays the foundations for pre-strip of the initial open pit mining operation to commence by mid-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% Cu, and all massive sulphide ore will be stockpiled and processed during the commissioning phase of the 1.5Mtpa on-site concentrator in 2012.

The maiden Ore Reserves were derived from the updated JORC compliant Measured, Indicated and Inferred Resource inventory for the DeGrussa Project of 14.33Mt grading 4.6% Cu and 1.6g/t Au for 652,000 tonnes of contained copper and 742,000 ounces of contained gold, which includes additional resource modelling completed since the updated JORC Resource inventory reported in the Company's December 2010 Quarterly Report.

The resource zones and categories converted to ore reserve status to date are highlighted in orange as shown in the March 2011 JORC Mineral Resource Table for the DeGrussa Project (see Table 2 below), which reflects an overall 93% conversion of contained copper metal from underground and open pit Indicated Resources to Probable Ore Reserves.

JORC Mineral Resource Statement

Table 2 – DeGrussa Copper-Gold Project – March 2011 JORC Mineral Resource Statement

Zone	ResourceCategory	Location	Tonnes(Mt)	Copper (%)	Gold (g/t)	ContainedCopper (t)	ContainedGold (oz)	CompetentPerson
GoldLaterite	Measured	Open pit	0.14	-	1.5	-	7,000	1
Copper	Measured	Open pit	2.17	1.1	0.5	24,000	37,000	1
Oxides	Indicated	Open pit	1.41	1.4	0.4	20,000	19,000	1
Supergene	Indicated	Open pit	0.25	17.6	2.6	43,000	20,000	2
Chalcocite	Inferred	Open pit	0.19	4.4	1.2	8,000	7,000	1
Primary	Indicated	Open pit/Underground	7.80	5.8	2.0	456,000	502,000	1
MassiveSulphides	Inferred	Underground	2.32	4.3	2.0	100,000	149,000	1
TOTAL			14.33	4.6	1.6	652,000	742,000

Note: 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

Open Pit Mineral Resources

The conceptual two-stage open pit for the DeGrussa Project is shown in Figure 2 below, showing the different ore types.

Figure 2 – Schematic Section of the DeGrussa Open Cut showing the lateritic gold, oxide copper and chalcocite zones overlying the main Conductor 1 and DeGrussa sulphide lodes

The maiden 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), shown in green in Figure 2 above. 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.

Underground Inferred Primary Massive Sulphide Resource

Further drilling is planned from underground drilling positions to in-fill the Inferred Primary Massive Sulphide Resource in the Conductor 4 and 5 deposits (2.32Mt @ 4.3% Cu and 2.0g/t Au for 100,000t of contained copper and 149,000oz of contained gold) to upgrade them to Indicated Resource status, and make them available for potential determination of Ore Reserves.

Surface drilling does not currently represent a cost effective or technically sound method for drilling out these remaining resources, which will therefore be drilled from underground as drilling locations become available. The 2.32 million tonnes of Inferred Resources of Primary Massive Sulphide have been included within the PFS life-ofmine plan.

1.3 Pre-Feasibility Study

The DeGrussa Project Pre-Feasibility Study (PFS) was compiled by WA-based engineering company Mintrex with input from a number of other key contributors and industry experts as well as in-house Sandfire personnel. The PFS has been undertaken to a high level of detail and quality, including quotations from key open pit and underground mining contractors and engineering companies.

The PFS was completed and announced to the market on 4 March 2011, enabling the Sandfire Board to announce conditional development approval for the DeGrussa Project based on an open pit and underground mine with a 1.5Mtpa concentrator:

• Life-of-mine extraction of 10.68Mt of material grading 5.0% Cu, 1.7g/t Au (531,000t copper, 579,000oz gold)
• Production of 60-70,000tpa of payable copper metal and 40-45,000oz pa of gold over initial scheduled mine life of 7+ years
• C1 cash operating costs of US$0.90-$1.00/lb including gold credits
• Pre-tax operating cash flow of A$330-350M per annum (from FY 2012/2013)

1.4 DeGrussa Project Execution Plan

The DeGrussa Project will be developed as an integrated open pit and underground mining operation with a conventional copper flotation processing facility and supporting infrastructure located on site. Key elements of the project execution plan include:

• Conventional two-stage open pit mining operation over a period of approximately two years to extract the high-grade Probable Reserve of Direct Shipping Material (DSO) of 143,000 tonnes grading 25.6% Cu and 2.5g/t Au (37,000t of contained copper metal and 12,000oz of contained gold) and oxide copper Mineral Resource of 3.58Mt grading 1.2% copper and 0.5g/t gold (44,000t of copper metal and 56,000oz of gold);
• 298,000t of chalcocite and massive sulphide material (non-DSO) at 6.0% Cu and 2.4g/t Au (18,000t of contained copper and 23,000t of contained gold) to be mined and stockpiled to allow accelerated plant ramp up;
• A long-term underground mine using long-hole open stoping (both transverse and longitudinal) with minor areas of jumbo cut and fill or up-hole benching in some of the narrower areas. Open stopes will be up to 50m high by 25m long by the orebody width (up to 40m, but averaging 20m), with the proposed mining sequence aiming for maximum extraction of the resource using pastefill;
• Underground ore to be processed via a conventional 1.5Mtpa processing facility. Based on metallurgical test work undertaken on DeGrussa ore the processing facility will utilise single stage crushing, two stage milling and classification circuits followed by conventional flotation, de-watering and filtration to produce a high-grade, high-quality copper concentrate; and
• Annual average production of 220-240,000 tonnes of high-quality copper concentrate grading 27% Cu to be transported by road to Port Hedland or Geraldton for export to international customers.

The construction phase will employ over 600 personnel at peak construction with long-term employment of around 400.

Key Project Fundamentals

The DeGrussa Project PFS has confirmed a technically and financial robust mining operation with the following key project life-of-mine (LOM) parameters:

Item	PFS Fundamentals LOM
Mining method:	Open pit (2 years), underground (7+ years)
Construction time:	13 months (commencing June 2011)
First production:	Open pit – Q1 CY 2012
	Underground – Q3 CY 2012
Processing rate:	1.5Mtpa
Metallurgical recovery:	91%
Average annual concentrate production:	220-240,000tpa grading 27% Cu
Average annual payable metal output:	60-70,000tpa payable copper
	40-45,000oz payable gold
Pre-production capital cost estimate:	A$270M (plant and infrastructure)
	A$130M (open pit/underground development)
	A$400M total (including contingencies)
C1 cash operating costs:	US$0.90–$1.00/lb (including gold credits)
Annual gross sales revenue (average):	A$550-600M
Annual pre-tax operating net cash flow (average):	A$330-$350M

Assumptions used in the PFS, determined in consultation with long term independent concensus views:

• Life-of-mine copper price of US$7,673/tonne (US$3.48/lb)
• Life-of-mine gold price of US$1,300/oz
• Long-term exchange rate of A$1.00:US$0.86
• Cost of extracting open pit copper oxide and gold material incurred as waste with no allowance for revenue benefit (process route design in progress to determine revenue stream)

Project Implementation Timeline

• Q2 CY 2011:
  • o Documentation of the underground mining contract
  • o Award of key construction contracts
  • o Delivery of DFS
  • o Completion of project funding package and final development approval
  • o Commencement of pre-strip of open pit
• Q3 CY 2011
  • o Commencement of on-site construction
  • o Commencement of box-cut excavation and underground mine development
• Q1 CY 2012
  • o Commencement of DSO and oxide copper extraction
• Q2 CY 2012
  • o First sales of DSO to customers
  • o Initial access established to underground deposits
• Q3 CY 2012
  • o Commissioning of 1.5Mtpa concentrator using stockpiled chalcocite and sulphide material from the open pit

1.5 Development and Award of Key Contracts

During the Quarter, Sandfire signed a contract with the leading European-based process technology group, Outotec, to purchase the key long-lead processing equipment required for the Project for a sum in excess of $20 million.

The award of the contract – for the supply and delivery of ball mill, SAG mill, flotation cells, thickeners and a concentrate filter that will be used in the construction of the 1.5Mtpa DeGrussa concentrator – reflects Sandfire's high level of confidence in the robustness of the DeGrussa Project and its commitment to proceed with project development as rapidly as possible.

Placing orders for key long-lead items now puts the Company in a position to achieve its timetable of commencing construction by mid-2011 and starting to commission the concentrator in the third Quarter of 2012.

Sandfire has continued to progress with approvals, key development and operational contracts:

• Mining Proposal Stage 1 approval for open pit and underground works
• Underground Mining contract awarded subject to contract documentation
• Open Pit Mining contract awarded and signed, mobilising fleet to site
• 200 person temporary camp buildings purchased and on site, installation contract awarded
• 400 person permanent camp building manufacture contract awarded
• Bulk earthworks (access road, plant site, etc) preferred tenderer selected
• Catering and janitorial awarded
• Offices, workshops, fuel storage, wash bay contracts finalised with selected tenderers
• The Process Plant will be constructed using an engineering, procurement and construction (EPC) fixed lump sum contract. The EPC tenders have been received and this contract will be awarded in Q2 2011.

1.6 Recruitment of Personnel

During the Quarter, Sandfire continued to recruit key personnel and senior managers to oversee the transition into production at DeGrussa. Key appointments during the March Quarter included General Manager Operations, Commercial Manager – Legal Counsel, Commercial Manager, Underground Manager, Quarry Manager, OHS&T Manager, Environmental Superintendent, Chief Mine Surveyor and Construction Superintendent.

1.7 Exploration and Resource Definition Drilling

All of the Company's contracted drilling rigs returned to site following the Christmas break, with a combination of diamond, RC and RAB/Aircore drilling undertaken focusing on several different objectives.

RAB/AC drilling has focused on sterilisation drilling at the waste dump, mine infrastructure, access roads and airstrip, as well as drilling to define the near-surface geology of the prospective corridor around DeGrussa. In addition, one RC rig has worked on completing production wells at four sites to the west of the Great Northern Highway. Diamond and RC drilling has focused on cementing and casing existing diamond drill holes as required prior to commencement of development and mining. Diamond drilling undertaken during the Quarter included:

• diamond tails to two RC pre-collars targeting the potential for mineralisation between Conductor 4 and Conductor 5;
• a tail to the RC hole DGRC249, located 5km east of Conductor 5;
• drilling the fourth of a line of +600m deep holes along a north-south profile, 3km east of the Conductor 5 deposit;
• drilling vertical geotechnical holes to investigate the ground characteristics at the site of the proposed Crushed Ore Bin;
• five geotechnical drill holes to test ground conditions in the vicinity of the proposed DeGrussa open pit;
• a hole drilled to provide a perpendicular-to-strike intersection of the Conductor 1 orebody; and
• deep drill holes targeting potential extensions of the Conductor 1 host horizon.

RC and Aircore drilling has focused on the following objectives:

• Sterilisation drilling at the eastern half of the proposed airstrip;
• Sterilisation drilling to the east and south of the proposed open pit;
• Sterilisation drilling on the western and eastern margins of the waste dump;
• Sterilisation drilling along the southern border of the mine infrastructure area; and
• Exploration drilling adjacent to the south of the known orebodies.

Two diamond drill holes were completed targeting the gap between the Conductor 4 and Conductor 5 deposits. DGDD-277 intersected three zones of massive sulphides, of which the most significant was 9.3 metres thick (including several thin barren zones), and is interpreted to represent the western edge of the currently modelled Conductor 5 deposit.

The second hole, DGDD-276, intersected 7.6 metres of chalcopyrite-rich massive sulphides some 85 metres to the south-west of the modelled extent of Conductor 5. This intercept was 145 metres below the predicted target position for the Conductor 4 ore zone and is interpreted to represent either a down-plunge extension of the Conductor 5 ore zone beneath Conductor 4 or a down-faulted portion of Conductor 4. The drill data is being reviewed with the aim of targeting additional drill holes to test this area once assay results are received.

In parallel with pre-development activities, Sandfire is continuing an aggressive exploration program at DeGrussa including a diamond drilling program targeting potential repetitions of the VMS lenses at depth beneath the known cluster of deposits. Drilling has been hampered by the extreme wet weather conditions in the Northeastern Goldfields caused by the recent cyclonic activity. Drilling of the first deep diamond drill hole, DGDD-288, was completed targeting a position directly below Conductor 4. A total of 6-8 holes are planned as part of this program.

1.8 Doolgunna Project – Iron Ore Exploration

Sandfire has located and mapped seven separate zones of iron mineralisation within the Robinson Range at Doolgunna. The total area of low phosphorus, hematite-goethite mineralisation is approximately 200,000 square metres contained in two moderate sized deposits and five small deposits. There are several areas where the mineralisation extends under cover. The Doolgunna Project straddles the Great Northern Highway and is ideally located for a small mining operation, trucking to either railheads or export ports.

In light of the Company's focus on the DeGrussa Project, no significant activity was carried out on the Doolgunna iron ore prospects during the Quarter.

2. BORROLOOLA PROJECT, Northern Territory (100%)

The Borroloola Project comprises a total area of approximately 10,887 square kilometres, following a compulsory partial surrender, of granted tenements and tenements under application in the Northern Territory. The Project encloses a significant proportion of the Batten Fault Zone, host to the giant McArthur River lead and zinc mine deposit. This deposit is the second largest SEDEX base metal deposit in the world. The Project also covers nearcoastal areas of Cretaceous rocks considered to be highly prospective for sedimentary manganese mineralisation, similar to the world-class Groote Eylandt manganese deposits north of the Borroloola Project in the Gulf of Carpentaria.

2.1 Base Metal Exploration

No significant activity was carried out on the Borroloola Project during the Quarter due to the northern wet season.

2.2 Manganese Exploration

No field work was carried out on the Borroloola Manganese Project during the quarter.

3. URANDY PROJECT: Western Australia (Sandfire 100%)

The Urandy Project is located in the West Pilbara region some 80 km southeast of the coastal town of Onslow. The property is prospective for gold and base metals, hosted in the Paleoproterozoic Ashburton Formation.

No field work was carried out on the Urandy Project during the Quarter.

4. YANNARIE PROJECT: Western Australia (Sandfire 100%)

The Yannarie Project is located 250 km northeast of Carnarvon on the west coast of Western Australia.

No field work was carried out on the Yannarie Project during the Quarter.

5. CORPORATE

5.1 Cash Position and Project Finance

Sandfire held A$106 million in cash assets at the end of the March 2011 Quarter. The company is well advanced in discussions with potential financiers regarding project funding, and is confident that a suitable funding package will be completed during the June 2011 quarter, in conjunction with the DFS.

5.2 Investment in Whinnen Resources Limited

During the Quarter, Sandfire agreed to subscribe for a cornerstone 17.1% stake in junior explorer Whinnen Resources Limited (ASX: WWW – "Whinnen"), which intends to secure an extensive portfolio of high-quality copper, gold and silver exploration projects in the Atacama mining region of northern Chile.

The investment provides Sandfire with low-cost, low-risk exposure to an emerging resource portfolio in one of the world's richest copper-gold provinces and is consistent with its objective of identifying and securing potential future business development opportunities outside of its flagship DeGrussa Copper-Gold Project in Western Australia and other copper, gold and manganese interests in Australia.

Whinnen has announced the proposed acquisition of 100% of the privately owned company Mystic Sands Pty Ltd, which has assembled an extensive and highly prospective copper portfolio and also holds an option over a prospective gold project in Chile. Mystic Sands was established by an in-country English expatriate geologist with extensive experience in the Chilean mining industry.

Sandfire will subscribe for 26.5 million shares ($1.9 million) as part of a $7.28 million share placement being undertaken by Whinnen to sophisticated investors at $0.07 per share. In addition, Sandfire will be issued with 17 million Whinnen shares and 14.5 million 30 April 2014 options with an exercise price of A$0.20 per share as part of a Technical Services Agreement between the companies.

This will result in Sandfire acquiring a 17.1% interest in Whinnen on completion of the capital raising and acquisition, both of which are subject to shareholder approval and the other conditions included in the announcement by Whinnen.

Sandfire will provide ongoing technical advice and support in relation to exploration activities on the Mystic Sands properties or any new projects acquired by Whinnen in the future.

As part of the agreement, Sandfire has the right to maintain its interest in the event of any future capital raisings by Whinnen which would result in the dilution of its position. In addition, Sandfire has a first right of refusal to purchase 70% of any future minerals produced from Whinnen's projects and can nominate two Directors to join the Whinnen Board.

KARL M. SIMICH MANAGING DIRECTOR AND CEO

13 April 2011

For further information, please contact:

Karl Simich – Managing Director/CEO John Evans – Technical Director Office: +61 8 6430 3800

Media Inquiries:

Nicholas Read – Read Corporate: Mobile: +61 419 929 046 (Nicholas Read)

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 Member 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.

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.