SANDFIRE RESOURCES LIMITED — Interim / Quarterly Report 2012

Jul 26, 2012

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Loading of the “Flinterland” for the first shipment of DeGrussa Direct Shipping Ore, 21 May 2012

ASX Code:

JUNE 2012 QUARTERLY ACTIVITIES REPORT

HIGHLIGHTS

• Shipping of high-grade DSO commences.

SFR

Issued Capital:

Ordinary Shares 151.6M Options 9.3M

• First product sales agreement secured for sale of copper concentrate.

• Open pit and underground mining on schedule.

Major Shareholders:

OZ Minerals 19.7% POSCO 15.6%

Directors:

Derek La Ferla Non-Executive Chairman

• 28,000t of underground massive sulphide ore at 4.9% Cu mined and stockpiled ready for processing.

• Construction of DeGrussa processing plant well advanced and on schedule, with commissioning of some areas underway.

• Overall DeGrussa Project 86% complete.

Karl M. Simich Managing Director and CEO

W. John Evans Executive Technical Director

Soocheol Shin Non-Executive Director

Robert Scott Independent Non-Executive Director

• Plant start-up on track to commence in Q3 CY2012.

• Maiden Oxide Copper Ore Reserve (Proved and Probable) of 1.04Mt @ 2.3% Cu (23,000t contained copper) for the open pit.

• Design studies and statutory approvals underway for the Oxide Copper Processing Plant and infrastructure, with processing of oxide copper reserves targeted to commence by mid-CY 2013.

Management:

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Matthew Fitzgerald CFO & Company Secretary

Martin Reed Project Manager

Robert Klug Commercial Manager/Legal

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Sandfire Resources NL ABN 55 105 154 185

Level 1, 31 Ventnor Ave, West Perth Western Australia 6005 Phone: +61 8 6430 3800 Fax: +61 8 6430 3849 CIcc Email: info@sandfire.com.au Web: www.sandfire.com.au

1.0 OVERVIEW

Sandfire continued to make rapid progress towards its objective of becoming a leading Australian copper producer at its flagship DeGrussa Project, located 900km north of Perth in Western Australia.

A key milestone reached during the Quarter was the first shipment of Direct Shipping Ore (DSO), which departed from the Port of Geraldton on 21 May 2012.

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The shipment, comprising 6,500 dry tonnes (7,000 wet tonnes) of DSO chalcocite grading 34% Cu, departed on the Flinterland for delivery to customers in China. This landmark shipment marked Sandfire’s transition to producer status in open pit operations, with the commencement of cash flow coming just three years after the DeGrussa discovery was made – a significant milestone in the Company’s history.

Regular shipments of DSO are expected to continue over the remainder of CY 2012, with the second shipment having departed in early July. The high-grade DSO mined from the DeGrussa open pit is being sold under two sales contracts, with MRI Trading AG and Yunnan Copper Corporation Ltd.

On 16 July, Sandfire announced a maiden Ore Reserve estimate for DeGrussa Oxide Copper mineralisation, comprising 1.04Mt @ 2.3% Cu for 23,000t of contained copper. Sandfire has commenced design studies and statutory approvals for an oxide copper circuit, with processing of oxide copper targeted to commence by mid-CY 2013 which is expected to provide a low-cost, high-margin addition to the Company’s production profile.

Subsequent to the end of the Quarter, Sandfire also announced it had secured its first product

sales agreement for DeGrussa copper concentrate with an international trading house.

The Company remains on track to commence concentrate sales during Q4 of CY2012 and is aiming to finalise product sales agreements with 3-5 concentrate customers for up to 3-year terms to cover the bulk of its concentrate production, while allowing for delivery of a proportion of its production into the spot market with these or other customers.

Sandfire is undertaking the parallel development of an open pit and a longer term underground mine at DeGrussa. The open pit will extract Ore Reserves estimated at 1.63Mt grading 4.9% copper and 1.2g/t gold containing approximately 79,000 tonnes of copper (refer Table 2). Over the life-of-mine, the operation will extract an estimated 10.72 million tonnes of material grading 5% copper and 1.7g/t gold containing approximately 541,000 tonnes of copper and 599,000oz of gold, inclusive of Ore Reserves and Mineral Resources.

The open pit is on schedule, with a total of 7.0 million bank cubic metres (Mbcm) of material mined from Stage 1 and 1.8Mbcm mined from Stage 2 to the end of the Quarter. The underground mine development is also progressing on schedule with the Evans Decline advanced to 1,460m from the portal at the end of the Quarter. Total underground development reached 4.7km at the end of the Quarter and has recently passed 5km.

Continued strong progress was also achieved with construction of the 1.5Mtpa DeGrussa concentrator, with direct site construction now over 73% complete. Sandfire remains on target to achieve its key project milestones of:

• Plant start up – September 2012

• First concentrate production – Q4 CY2012;

• First underground stoping ore on the ROM stockpile – Q4 CY2012; and

• First concentrate shipment – Q4 CY2012.

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2.0 CONSTRUCTION & DEVELOPMENT

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Construction and development activities continued at the DeGrussa Project with the overall project now over 86 per cent complete and total spend to the end of the Quarter of $326 million, in line with the cost budgeted in the DFS.

2.1 Construction Progress

Further significant progress was achieved during the Quarter with key highlights including the installation and commissioning of the DeGrussa aerodrome, the commissioning of the power station and the receipt of notification from the Department of Environment & Conservation (DEC) that the Tailings Storage Facility Licence to operate has been approved.

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The status of key construction and development items is summarised below:

• Significant progress was achieved with construction of the Concentrator during the Quarter, with completion of all structural concrete and key civil works, delivery and installation of all major equipment items, commencement of structural steel erection, piping and electrical.

• Electrical energisation of the crushing area with temporary power during June, allowing installation of the programme logic and functional testing. Installation checks and pre-commissioning have commenced.

• Mechanical installation of the milling and flotation areas is well advanced. The SAG and Ball Mill drive train alignments are in progress. The first rotation of the mills is scheduled for mid-August and first ore in the SAG Mill remains on track for September 2012.

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Construction ProgressCon
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• The Power Station was connected in April, supplying power for the underground mine, mining contractor facilities, exploration core yard and the village.

• Installation of the 11kV power supply to the Process Plant is underway to allow commissioning of the plant electrical substations to commence in July.

• The Tailings Storage Facility (TSF) was completed and the Department of Environment & Conservation issued the TSF Licence to Operate.

• Construction of the Paste Plant commenced and was well advanced at the end of the Quarter. Most civil works and some tank construction were completed. The Paste Plant project is 53% complete and is due for commissioning in late Q4 CY2012.

• The DeGrussa Aerodrome has been commissioned and is now fully operational with up to 71 seat aircraft now regularly transporting the fly-in, fly-out workforce.

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3.0 OPERATIONS

Mining continued in the DeGrussa open pit and in the underground mine during the Quarter, with excellent progress being achieved. Table 1 summarises production.

Table 1: Production Summary

Table 1: Production Summary
	JUN QTR 12 MAR QTR 12 PTD
Open Pit Total Material Mined bcm	2,120,000 1,862,000 8,752,000
DSO Copper Mined tonnes	13,000 5,000 17,000
Cu %	25.7 34.2 28.0
Aug/t	5.3 3.2 4.8
Oxide Copper Mined tonnes	103,000 196,000 578,000
(>1% Cu) Cu %	1.3 2.8 1.9
Aug/t	2.1 1.5 1.0
Oxide Copper Mined tonnes	263,000 179,000 1,208,000
(<1% Cu) Cu %	0.7 0.2 0.7
Aug/t	0.1 0.1 0.1
Oxide Gold Mined tonnes	21,000 1,000 118,000
(>1.5g/t Au) Aug/t	2.3 4.7 2.9
Oxide Gold Mined tonnes	85,000 - 157,000
(<1.5g/t Au) Aug/t	1.4 - 1.1
Massive Sulphide tonnes	27,000 1,000 28,000
Cu %	4.9 3.9 4.9
Aug/t	1.1 1.7 1.1
UG Decline Development m	205 330 1,460
UG Total Lateral Development m	1,932 1,365 4,748
Shipped tonnes	6,500 - 6,500
Cu %	34.4 - 34.4
Aug/t	4.3 - 4.3

Sandfire completed its first shipment of Chalcocite Direct Shipping Ore (DSO) on 21 May 2012 ( see 4.0 – Sales and Marketing below ).

Chalcocite below the DSO cut-off grade and massive sulphide from the open pit will be stockpiled and processed during the commissioning and initial production phases of the 1.5mtpa on-site concentrator commencing in Q3 CY2012.

3.2 Underground Mining

Underground mine development progressed on schedule during the Quarter, with the Evans Decline advancing to 1,460m from the portal and 234m below surface by Quarter-end. A total of 4,748m of lateral and vertical underground development has been completed to the end of the June 2012 Quarter.

To date, 28,000 tonnes of massive sulphide ore grading 4.9% Cu has been mined from underground and stockpiled on the ROM pad ready for processing.

Development in the Evans Decline has now reached the base of the second stoping horizon at 2325m RL. The stoping panels are 50m high. The first stoping panel is between 2425 and 2375m RL. The three levels for this line of stopes in Conductor 1 are now well advanced with production drilling due to commence in the current Quarter.

First stope firing is on schedule for early Q4 CY2012.

3.1 Open Pit Mining & Ore Production

Since the first DSO was mined in the open pit in February 2012 over 17,000 tonnes of chalcocite DSO grading 28.0% Cu and 4.8g/t gold has been mined.

In addition, a significant portion of the Oxide Copper Ore Reserve has already been mined and stockpiled ( see section 4.0 – Oxide Copper Reserve below ).

The open pit is on schedule, with a total of 7.0 million bank cubic metres (Mbcm) of material mined from Stage 1 and 1.8Mbcm mined from Stage 2 to the end of the Quarter. The planned open pit is over 65 per cent complete and is currently at a depth of 85 metres below surface.

At the base of the Stage 2 Open Pit is 0.14Mt of massive sulphide ore at a grade of 3.8% Cu which was originally included within the Underground Ore Reserve but which will now be mined in the Stage 2 open pit and is planned to be processed in mid-CY 2013.

As a result of this massive sulphide now being mined as part of the open pit and the maiden Oxide Copper Ore Reserve, the overall Open Pit Ore Reserve for the DeGrussa Project, stated as at 31 March 2012, totals 1.63Mt @ 4.9% Cu, 1.2g/t Au for 79,000 tonnes of contained copper and 64,000 ounces of contained gold.

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4.0 OXIDE COPPER ORE RESERVE

Subsequent to the end of the Quarter, on 16 July 2012, Sandfire announced a maiden Proved and Probable Ore Reserve estimate for the Oxide Copper from the open pit, totalling 1.04Mt @ 2.3% Cu for 23,000t of contained copper ( see Table 2 ).

The Oxide Copper Reserve estimation follows extensive metallurgical testwork which has enabled Sandfire to scope out the design of a low-cost recovery circuit for the oxide material.

Following completion of the Reserve estimate, Sandfire has commenced design studies and statutory approvals for an oxide copper circuit at

DeGrussa, which is expected to provide a lowcost, high-margin addition to its production profile.

First production from the Oxide Copper Ore Reserve is planned to begin in mid-CY2013, in addition to the annualised production profile in the first three years of operations of 77,000tpa of copper and 36,000ozpa of gold.

A significant portion of the Oxide Copper Ore Reserve has already been mined and stockpiled as part of the DeGrussa open pit operations. As at the end of the June 2012 Quarter, 0.58Mt of copper oxide ore grading 1.9% Cu and 1.0g/t Au had been mined from the open pit and stockpiled in close proximity to the planned Oxide Copper Processing Plant.

Figure 1 – DeGrussa Project Open Pit

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Table 2: Updated DeGrussa Project Open Pit Ore Reserve – stated as at 31 March 2012*

Reserve Classification	Treatment Destination	Deposit Material Tonnes (Mt) Copper (%) Gold (g/t) Contained Copper (t) Contained Gold (oz)
Proved	Ore Sale	Laterite Gold 0.10 - 3.0 - 9,000
Proved	Oxide Copper Processing/ Concentrator	Oxide Copper 0.52 2.0 0.7 10,000 11,000
Probable	Oxide Copper Processing/ Concentrator	Oxide Copper 0.52 2.5 0.4 13,000 7,000
Probable	Direct Sale Ore	Chalcocite 0.15 25.9 2.5 38,000 12,000
Probable	Massive Sulphide Concentrator	Chalcocite 0.09 5.1 2.5 5,000 7,000 Conductor 1 MS 0.14 3.8 1.9 5,000 9,000 DeGrussa MS 0.11 7.5 2.4 8,000 8,000
	Massive Sulphide Concentrator Sub-Total: 0.34 5.3 2.2 18,000 25,000
Total Open Pit Ore Reserve 1.63 4.9 1.2 79,000 64,000

**Note *** Ore Reserves contained in this table have been updated from the Ore Reserve Statement disclosed by the Company on 29 March 2011. Mining activities, including stockpiling, and sale of product have continued since 31 March 2012.

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5.0 SALES AND MARKETING

5.1 DSO Shipments

On 21 May 2012, the first shipment of highgrade Direct Shipping Ore (DSO) from the DeGrussa open pit was loaded in the Port of Geraldton on the Flinterland and departed for customers in China.

The shipment, comprising 6,500 dry tonnes (7,000 wet tonnes) of DSO grading 34% Cu.

The first shipment marks Sandfire’s transition to producer status in the open pit operations, with regular DSO shipments expected over the remainder of CY2012 as the open pit progresses. The second shipment departed in early July.

The high-grade DSO mined from the open pit is being sold under sales contracts, secured during Q4 CY2011, with MRI Trading AG and Yunnan Copper Corporation Ltd.

5.2 Concentrate Off-take Agreements

On 20 July Sandfire concluded its first off-take agreement for copper concentrate production from the DeGrussa Project commencing January 2013.

The contract, with an international trading house, follows a highly successful off-take marketing process for DeGrussa concentrate, during which firm offers were received from a wide range of smelters and traders short-listed to receive the final invitation to bid.

Sandfire is aiming to finalise product sales agreements with 3-5 concentrate customers for up to 3-year terms to cover the bulk of its concentrate production, while allowing for delivery of proportion of its production into the spot market with these or other customers.

The Company’s marketing process has targeted a mix of traders and smelters.

Sandfire expects to conclude the remaining contracts over the coming months, ahead of the anticipated commencement of concentrate sales.

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5.3 DeGrussa Laterite Gold Processing

Sandfire has entered into an Ore Sale and Purchase Agreement with Barrick (Plutonic) Ltd to process the lateritic gold material mined as part of the open pit operations. Some 0.1Mt of this material at an average grade of 3.0g/t (9,900oz contained gold) has already been mined and stockpiled.

The current schedule for this material is to be processed before the end of CY2012.

6.0 FEASIBILITY STUDIES & METALLURGY

6.1 Copper oxide

Metallurgical work during the quarter continued to focus on the oxide resource. Investigations into a suitable processing route for the oxide copper ore commenced in 2011, culminating in successful bench-scale processing to produce a saleable concentrate. This has enabled conversion of the higher grade portion of the previously announced Measured and Indicated open pit Oxide Copper Mineral Resources to Ore Reserves ( see above ).

Based on the metallurgical testwork conducted to date, the proposed Oxide Copper Processing Plant will include crushing, wet scrubbing and screening to three size fractions, followed by gravity separation at a scoped processing rate of 350-400,000 tonnes per annum. This will produce an intermediate concentrate suitable for further batch treatment in the 1.5Mtpa DeGrussa concentrator with the addition of sulphidising agents allowing conventional flotation.

Testwork completed to date indicates that approximately 40% of the material will be removed by the oxide plant, resulting in a 50%

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increase in grade ahead of delivery to the DeGrussa concentrator.

Testwork is continuing aimed at further refinement of the processing route and enhancement of the metallurgical performance of the proposed oxide plant. The objective of this testwork is to deliver further conversion of in situ Mineral Resources (including current lower grade stockpiles) to Ore Reserves.

Sandfire considers that the DeGrussa concentrator will have sufficient capacity to process the sulphidised intermediate oxide material in addition to the 1.5Mtpa of underground massive sulphide ore during the early years of operations.

Subject to final engineering studies, it is estimated that the construction of the Oxide Copper Processing Plant, infrastructure and integrating modifications to the DeGrussa concentrator required to integrate the new processing circuit will incur a capital cost in the order of $15-$17 million.

Scoping level estimates indicate an operating cost of around $10-$12 per tonne of Oxide Copper Ore Reserves and completed initial testwork indicates an overall metallurgical recovery to saleable concentrate of 73% of the contained copper of this material.

7.0 EXPLORATION

7.1 DeGrussa / Doolgunna Project

Sandfire has a targeted annual exploration expenditure of $20-25 million, predominantly for the Doolgunna Project, where exploration activity is aimed at identifying additional volcanogenic massive sulphide (VMS) mineralised systems similar to DeGrussa.

A total of 44,269 metres of aircore, RC and diamond drilling was completed at DeGrussa during the June Quarter.

Key areas of activity included:

• Further strike extensions of the favourable host stratigraphy have been identified by aircore drilling, extending the host stratigraphy to 30km.

• RC drilling of geochemical anomalism has identified a zone of mineralised stratigraphy

some 6km SW of DeGrussa in a favourable structural setting, additional follow up to be completed in Q3 CY2012; and

• Mapping of the open pit and underground to increase understanding of the structural setting of DeGrussa and develops additional near mine exploration targets.

7.2 Borroloola Project

The Borroloola Project comprises a total area of over 10,000 square kilometres of tenements and tenements under application in the Northern Territory. The tenements are located near McArthur River, the second largest SEDEX base metal deposit in the world with a primary resource of approximately 230 million tonnes at a grade of +13% combined lead and zinc. The tenements are also prospective for sedimentary manganese mineralisation, similar to the world-class Groote Eylandt manganese deposits in the Gulf of Carpentaria, uranium and iron ore.

During the quarter, Sandfire completed a review of the Borroloola Project and the results of the last dry season exploration campaign.

This work has highlighted a priority target area along the Emu Fault Corridor that Sandfire considers to be prospective for SEDEX lead-zinc mineralisation. Deep diamond core drilling of this locality will be the focus of the Company’s 2012 field season due to commence during the September quarter.

7.3 Kennedy Highway Project

Sandfire holds an interest in five exploration licences in The Eastern Succession of the Mount Isa Block, south of Cloncurry. One granted licence is held in a joint venture with Global Resources Corporation Ltd, whereby Sandfire can earn up to an 80 per cent interest by funding exploration. The other four tenement applications are 100%-owned by Sandfire.

The Project covers a number of magnetic and gravity targets prospective for Broken Hill Type mineralisation. The project includes three prominent magnetic and gravity anomalies. related to large magnetite-rich deposits considered to be prospective for copper and gold mineralisation.

During the Quarter, a drill rig was mobilised to site and drilling commenced within the Joint Venture tenement on 18 June. The drilling program will comprise two holes each of 1,200m

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which will utilise rotary mud drilling from surface to basement and then diamond drilling thereafter. The two holes will test separate targets, for lead-zinc and copper-gold mineralisation.

7.4 Bland Creek Project

Sandfire holds an interest in three exploration licences in the Lachlan Fold Belt of New South Wales, located approximately 50 km south-east of West Wyalong. One granted license EL 5792 is held under a farm-in Joint Venture agreement with Straits Resources (ASX: SRQ).

The exploration licences covers intrusive centres of Ordovician Volcanic rocks, prospective for porphyry-related gold and copper mineralisation.

Under the terms of the agreement, Sandfire has the right to earn up to 80% of the project area by sole funding $8 million over six years with the following terms:

• Sandfire may earn a 65% interest by sole funding $4 million on exploration in respect to the tenement within a period of three and a half years;

• After earning the minimum interest, Sandfire may elect to continue to sole fund (a further $4 million) and gain exclusive control by earning a further 15% interest.

Drilling is planned to commence as soon as ground conditions allow.

7.5 South America

Sandfire has initiated project generation in South America, focused on Chile and Peru targeting

large scale mineralisation systems prospective for copper.

In the Lima Province of Peru, Sandfire has applied for ten continuous tenements totalling 55 square kilometres through a wholly owned Peruvian registered company. The applications cover areas of potential large scale alteration systems identified on Aster spectral imagery and occur within a known belt of mineralisation, southerly of the large Toromocho porphyry copper system. Sandfire’s applications are prospective for porphyry copper and hydrothermal polymetallic systems.

8.0 CORPORATE

8.1 Cash Position and Funding

Sandfire’s cash position at the end of the June 2012 Quarter was $100 million. $350 million has been drawn down to date under the Company’s $380 million project finance facility.

KARL M. SIMICH MANAGING DIRECTOR AND CEO

27 July 2012

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)

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Figure 1 – DeGrussa Copper-Gold Project location

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Appendix 1: DeGrussa Copper-Gold Project – Mineral Resource Statement stated as at 31 March 2012

Total in situ Mineral Resources stated as at 31 March 2012:

	Resource	Tonnes	Copper	Gold	Contained	Contained	Competent
Zone - in situ	Category	(mt)	(%)	(g/t)	Copper (t)	Gold (oz)	Person
Au Laterite	Measured	0.04	-	1.2	-	2,000	1
Copper Oxides	Measured Indicated	0.23 1.06	0.8 1.6	0.1 0.5	2,000 17,000	1,000 16,000	1 1
Supergene Chalcocite	Indicated Inferred	0.23 0.19	17.9 4.4	2.6 1.2	42,000 8,000	19,000 7,000	2 1
Primary Massive	Indicated	7.84	5.8	2.0	456,000	502,000	1
Sulphides	Inferred	2.31	4.4	2.0	102,000	146,000	1
	Total	11.91	5.3	1.8	627,000	693,000

Total Stockpiles stated as at 31 March 2012:

	Resource	Tonnes	Copper	Gold	Contained	Contained
Stockpile	Category	(mt)	(%)	(g/t)	Copper (t)	Gold (oz)
Laterite Gold	Measured	0.17	0.2	2.2	-	12,000
Copper Oxide	Measured	1.42	1.1	0.3	16,000	16,000
Supergene Chalcocite	Measured	0.01	34.2	2.7	2,000	-
Total	Measured	1.59	4.4	1.2	18,000	28,000

Resources are stated inclusive of Ore Reserves.

Note: Refer to the Competent Person’s Statements – Mineral Resources below:

• 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.

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Appendix 2 – DeGrussa Copper-Gold Project – Ore Reserve Statement stated at 31 March 2012*

			Tonnes	Copper	Gold	Contained	Contained
Deposit	Reserve Category	Mining Method	(Mt)	(%)	(g/t)	Copper (t)	Gold (oz)
Laterite Gold	Proved	Open Pit	0.10	-	3.0	-	9,000
Copper Oxide	Proved	Open Pit	0.52	2.0	0.7	10,000	11,000
Copper Oxide	Probable	Open Pit	0.52	2.5	0.4	13,000	7,000
DeGrussa	Probable	Open Pit - DSO	0.15	25.9	2.5	38,000	12,000
DeGrussa/C1/ Chalcocite	Probable	Open Pit	0.34	5.3	2.2	18,000	25,000
DeGrussa	Probable	Underground	1.50	6.6	1.9	99,000	90,000
Conductor 1	Probable	Underground	5.70	4.9	1.8	281,000	333,000
Conductor 4	Probable	Underground	0.76	4.4	1.2	33,000	30,000
Total	Proved		0.62	1.7	1.0	10,000	20,000
Total	Probable		8.97	5.4	1.7	482,000	497,000
Total	Proved & Probable		9.59	5.1	1.7	492,000	517,000

**Note *** Ore Reserves contained in this table have been updated from the Ore Reserve Statement disclosed by the Company on 29 March 2011. Mining activities, including stockpiling, and sale of product have continued since 31 March 2012.

• Note 1 A cut-off grade of 8.5% Cu is applied on the Chalcocite to provide a targeted 26% Cu direct sale product. 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. The in-situ Ore Reserves occur within an open pit design containing 14Mt of total material, resulting in a waste to ore strip ratio of 12:1. Low grade laterite gold stockpiles not included in reserve.

• Note 2 A 1.0% Cu lower cut-off grade has been applied to the copper oxide open pit in-situ Ore Reserves. The reported copper oxide stockpiles only include existing stockpiles with an estimated average grade above 1.0 % Cu.

• Note 3 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 Statements – Ore Reserves at the end of this release.

• Note 4 These Ore Reserves are stated as at 31 March 2012.

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 – 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.

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

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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.

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.

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