SANDFIRE RESOURCES LIMITED — Interim / Quarterly Report 2012

Mar 7, 2012

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Interim Financial Report

For the six months ended 31 December 2011

ASX Code: SFR

INTERIM FINANCIAL REPORT FOR THE SIX MONTHS ENDED 31 DECEMBER 2011 CONTENTS

CORPORATE INFORMATION	1
IMPORTANT INFORMATION AND DISCLAIMER	2
DIRECTORS’ REPORT	3
AUDITOR INDEPENDENCE DECLARATION	7
INTERIM STATEMENT OF COMPREHENSIVE INCOME	9
INTERIM STATEMENT OF FINANCIAL POSITION	10
INTERIM STATEMENT OF CHANGES IN EQUITY	11
INTERIM STATEMENT OF CASH FLOWS	12
NOTES TO THE INTERIM FINANCIAL STATEMENTS	13
DIRECTORS’ DECLARATION	22
INDEPENDENT AUDITOR’S REVIEW REPORT	23

INTERIM FINANCIAL REPORT FOR THE SIX MONTHS ENDED 31 DECEMBER 2011 CORPORATE INFORMATION

ABN 55 105 154 185

ABN 55 105 154 185
Directors
Derek La Ferla	Non-Executive Chairman
Karl M Simich	Managing Director and Chief Executive Officer
W John Evans	Executive Technical Director
Soocheol Shin	Non-Executive Director
Robert N Scott	Non-Executive Director
Management and Company Secretary
Matthew L Fitzgerald	Chief Financial Officer and Company Secretary
Martin Reed	Project Manager
Robert Klug	Commercial Manager - Legal Counsel
Registered Office and	Principal Place of Business
Level 2, 31 Ventnor Avenue
West Perth WA 6005
Tel: +61 8 6430 3800
Fax: +61 8 6430 3849
Email: admin@sandfire.com.au
Web: www.sandfire.com.au
Share registry
Security Transfer Registrars Pty Ltd
770 Canning Highway
Applecross WA 6153
Tel: +61 8 9315 2333
Fax: +61 8 9315 2233
Email: registrar@securitytransfer.com.au
Auditors
Ernst & Young
Ernst & Young Building
11 Mounts Bay Road
Perth WA 6000
Home Exchange
Australian Securities Exchange Limited
Exchange Plaza
2 The Esplanade
Perth WA 6000
ASX Code: Ordinary fully paid shares: SFR

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INTERIM FINANCIAL REPORT FOR THE SIX MONTHS ENDED 31 DECEMBER 2011

IMPORTANT INFORMATION AND DISCLAIMER

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 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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INTERIM FINANCIAL REPORT FOR THE SIX MONTHS ENDED 31 DECEMBER 2011 DIRECTORS’ REPORT

The directors present their report together with the interim financial report of Sandfire Resources NL (the Company or Sandfire) for the six months ended 31 December 2011 and the independent auditor’s review report thereon.

1. Directors

The directors of the Company at any time during or since the end of the interim period are set out below. Directors were in office for the entire period unless otherwise stated.

Name	Period of Directorship
Mr Derek La Ferla	Appointed 17 May 2010
Independent Non-executive Chairman
Mr Karl M Simich	Appointed Director 27 September 2007, Managing Director and Chief Executive Officer
Managing Director and Chief Executive	since 1 July 2009
Officer
Mr W John Evans	Appointed 2 October 2007
Executive Technical Director
Mr Soocheol Shin	Appointed 28 February 2012
Non-Executive Director
Mr Robert N Scott	Appointed 30 July 2010
Independent Non-Executive Director
Mr Jonghun Jong	Appointed 24 July 2008, resigned 28 February 2012
Non-Executive Director

2. Review and results of operations

The principal activity of the Company during the six months ended 31 December 2011 was the exploration, evaluation and development of mineral tenements.

Project review, strategies and future prospects

- DeGrussa Copper Gold Project, Western Australia (100%)

The DeGrussa Copper-Gold Project, the Company’s flagship asset, is located within Sandfire’s 100%-owned Doolgunna Project, a 400 square kilometre tenement package in Western Australia’s emerging Bryah Basin mineral province. The Project is located within an established mining district, approximately 900km north-east of Perth and 150km north of the regional mining hub of Meekatharra. Construction and development of the DeGrussa Project commenced in April 2011 and is scheduled to be completed during Q3 of 2012, paving the way for Sandfire’s transition to become a leading midtier Australian copper-gold producer.

Construction & Development Overview

Sandfire is undertaking concurrent development of an open pit and longer term underground mine at DeGrussa, based on the Definitive Feasibility Study (DFS) completed in June 2011. Construction and development activities ramped up at the DeGrussa Project during the half-year, with the project over 60 per cent complete as at 31 December 2011.

The Stage 1 open pit is on schedule, with a total of 5.0 million bcm (bank cubic metres) of material mined to the end of the reporting period (5.7 million bcm to the end of February 2012), while the “Evans Decline” progressed 1,000m from the portal (1,150m by the end of February 2012 to extract the first underground ore on 29 February 2012). Total underground development passed the 1.5km mark during the reporting period.

Significant progress was also achieved on construction of the 1.5Mtpa DeGrussa concentrator with construction of major concrete foundations for the SAG mill, ball mill and crushed ore bin completed and first steel fabrication underway. The concentrator was over 40 per cent complete as at 31 December 2011. By the end of February 2012, over 60 per cent of all concrete had been poured, with structural steel work continuing.

Sandfire remains on target to achieve its key project milestones of:

• First direct shipping ore (DSO) mined from the open pit – 17 February 2012;

• First underground ore on the ROM stockpile – 29 February 2012;

• First shipment of DSO from the open pit in Q2 of CY 2012; and

• First ore in the SAG mill – Q3 CY 2012.

Construction & Infrastructure Development

Significant progress was achieved during the half-year towards construction of the DeGrussa Project and establishment of key infrastructure to support the project, with the status of key items outlined below at 31 December 2011:

• The installation of the 200-room Construction Camp and 400-room Permanent Mine Village was completed, bringing the total rooms to 600, with installation of landscaping and facilities for the Permanent Mine Village underway;

• The Next G mobile phone service was commissioned and fibre optic communications linked to Telstra’s network were installed and fully operational across site;

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INTERIM FINANCIAL REPORT FOR THE SIX MONTHS ENDED 31 DECEMBER 2011 DIRECTORS’ REPORT

2. Review and results of operations (continued)

• Construction of the DeGrussa Aerodrome was well advanced, with earthworks completed and the aerodrome on schedule to be operational in February 2012;

• All major bulk earthworks for the plant site were completed with the pads, settlement and water ponds completed. The engineering, procurement and construction (EPC) contractor, Abesque, mobilised to site during the December Quarter for the start of plant construction;

• Construction of the Tailings Storage Facility was underway, with contractor Watpac well advanced in the placement of clay material on the embankments and floor, which should allow early mobilisation to install the HDPE liner;

• Installation of infrastructure was progressing well, with all office buildings in place and operational by 31 December 2011. The power station is scheduled to be commissioned in February 2012 and construction of the workshop and warehouse facilities was well advanced;

• Construction of the sealed access road to the Great Northern Highway was nearing completion, with final finishing now underway;

• Construction of the process plant was well underway, with major concrete foundations for the SAG mill, ball mill and crushed ore bin completed. Concrete foundations for the crusher pocket, thickeners, concentrate shed and filter were nearing completion with over 70 per cent of all concrete placed. Plant construction is expected to take approximately 12 weeks, with practical completion and commissioning scheduled for Q3 of CY 2012;

• Manufacture of all major long-lead items was complete with all overseas items now in transit or in Perth. Locally manufactured items are being progressively delivered to site;

• The contracts for underground diamond drilling and laboratory management were awarded, with both contractors mobilising to site in January 2012; and

• The Port Hedland Port Authority confirmed its intention to lease a parcel of land to Sandfire in close proximity to common user berths 1 and 2 to accommodate exports of DeGrussa product. A lease agreement is now being finalised, with a preliminary design for a container storage facility and baseline environmental surveys completed.

Open Pit & Underground Mining

Following commencement of the open pit pre-strip and box-cut development in April 2011, mining continued in the DeGrussa Stage 1 open pit and in the “Evans Decline” during the half-year, with excellent progress being achieved.

By the end of the interim period, a total of 5.0Mbcm had been excavated from the Stage 1 open pit, with the Company mining first chalcocite DSO on 17 February 2012. By the end of February 2012, a total of 5.7 million bcm of material had been mined.

Underground mine development is proceeding well, with the Evans Decline advanced to over 1,000m from the portal. First underground sulphide ore was intersected and mined on 29 February 2012.

Off-take Agreements

During the half-year, Sandfire secured product sales contracts covering 100 per cent of the Direct Shipping Ore (DSO) to be produced from the DeGrussa Project during 2012 and 2013, on commercial terms in line with normal concentrate agreements. These agreements build on the strong relationships and strategic partnerships Sandfire already has in place globally.

The first off-take agreement was signed on 4 November 2011 with international trading company MRI Trading AG (MRI) to purchase 50 per cent of DSO production, up to a maximum of 75,000 dry metric tonnes (dmt), for a 1-year period. MRI will purchase the DSO on a CIF (Cost, Insurance and Freight) basis with the remaining commercial terms of the contract being confidential.

A second agreement was signed with Yunnan Copper Corporation Ltd (Yunnan Copper) on 15 December 2011 for the remaining 50 per cent of DSO production. This contract is for the purchase of a minimum of 70,000dmt of DSO between April 2012 and March 2013. Yunnan Copper will purchase the DSO on a CIF basis with the remaining commercial terms of the contract being confidential. The first shipment under these contracts is scheduled for Q2 of CY2012.

Discussions are continuing with several parties regarding the sale of concentrate from the underground operation, with sales agreements to be concluded in 2012.

Exploration - Doolgunna Project, Western Australia (100%)

As part of ongoing regional drilling to test priority copper and gold anomalies within the Doolgunna Project, drilling at the DGAC1042 gold anomaly, located 11km south-west of DeGrussa, continued during the December Quarter and returned further significant widths and grades of gold mineralisation.

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INTERIM FINANCIAL REPORT FOR THE SIX MONTHS ENDED 31 DECEMBER 2011 DIRECTORS’ REPORT

2. Review and results of operations (continued)

Significant results received to date from this drilling include:

• 26m @ 2.3g/t Au from 19m

• Including 9m @ 4.75gt Au (DGRC507)

• 7m @ 4.67g/t Au from 108m (DGRC508)

• 13m @ 14.31g/t Au from 215m (DGRC509)

• 8m @ 5.97g/t Au from 91m (DGRC560)

• 4m @ 7.21g/t Au from 146m (DGRC563)

• 6m @ 6.35g/t Au from 156m (DGRC563)

• Including 1m @ 30.00g/t Au

• 9m @ 6.90g/t Au from 89m (DGRC574)

• Including 1m @ 28.70g/t Au

• 4m @ 7.46g/t Au from 127m (DGRC575)

• Including 1m @ 26.30g/t Au

The mineralisation is hosted by silicified fine grained sediments with minor sulphides and quartz carbonate veining. Structural overprinting was also evident.

Interpretation, preliminary modelling and initial economic analysis of the anomaly is being conducted, with further drilling to be conducted subject to the results of this review.

Other targets tested during the half-year included an interpreted EM conductor to the north of the DeGrussa deposit and a new target north-west of Noonyeerena Hill. While no economic mineralisation was intersected, the drilling confirmed the presence of favourable host rocks and intersected disseminated pyrite and chalcopyrite at the DeGrussa North target.

Borroloola Project, Northern Territory (100%)

The Borroloola Project comprises a total area of 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. Sandfire’s tenements cover a strike length of approximately 100km of the Emu Fault Zone, which is the controlling structure of the McArthur River deposit. The Borroloola 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.

The exploration programs undertaken at the Borroloola Project during the half-year included drilling at the Rosie Creek, Tawallah One and Yiyintyi prospects, as well as airborne geophysical surveys on the Yiyintyi and Bing Bong areas.

Lead-zinc Exploration

Diamond drilling was undertaken during the half-year along the Emu Fault zone in the vicinity of Rosie Creek, targeting McArthur River-style lead and zinc mineralisation under 30-50m of sand cover. Drilling identified minor disseminated pyrite (2-10%) with associated anomalous base metals in black shale units, but no significant results have been returned. The results of this Program are being assessed and will guide the planned 2012 field program.

Copper Exploration

RC drilling to the west of the Tawallah One copper anomaly (greater than 1,000ppm Cu) returned best intercepts of 16m at 1,700ppm Cu (11BLRC0134, from 84m, in dolomitic siltstones) including 4m at 3,900ppm Cu (from 92m), and 16m at 1,500ppm Cu (11BLRC0136, from 40m) in weathered siltstone.

The Tawallah One copper mineralisation consists of malachite “blebs‟ in a host sequence of dolomitic siltstone. No primary sulphide source has been identified and further work will focus on drill core samples of the copper mineralisation.

Uranium Exploration

The McArthur Basin is one of the great depositories of high-grade uranium mineralisation and Sandfire’s Yiyintyi Prospects are highly prospective for uranium discoveries. Two target zones have been identified along the basal contact of the basin, each of which is between 2 and 2.5km long.

RC drilling focused on the Yiyintyi East uranium target. Drilling intersected a thick quartzite unit, the basal clastic of the McArthur Basin, without recording significant results. The results of a detailed airborne magnetic and coincident helicopter EM survey over the Yiyintyi East and West targets are awaited.

Yannarie Project, Western Australia (100%)

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

A deep drilling program to test coincident lead and zinc geochemical and induced polarisation (IP) resistivity anomalies was completed during the half-year. There were no significant results from the RC phase of drilling and the diamond core samples are being processed, although no mineralisation was identified.

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INTERIM FINANCIAL REPORT FOR THE SIX MONTHS ENDED 31 DECEMBER 2011

DIRECTORS’ REPORT

2. Review and results of operations (continued)

Urandy Project, Western Australia (100%)

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

A field reconnaissance trip was completed during the half-year without identifying any causal surface feature to explain the previously identified IP anomalies.

Corporate

Project Finance Facilities

On 29 September 2011, the Company announced that it had executed final documentation for a $390 million fully underwritten and secured project financing facility to underpin the Company’s construction and development of the DeGrussa Project.

Sandfire completed its first draw-down of funding from the facility on 10 November 2011, drawing down a total of $190 million, with funds to be used for the following purposes:

• $122 million to fund estimated project development and construction costs at DeGrussa into Q1 2012;

• $60 million to repay the funds drawn down under the initial $75 million mine development facility, which has subsequently been closed; and

• $8 million to fund the establishment of debt service reserve accounts and transaction costs.

Cash Position

Sandfire’s cash position at the end of the half-year was $97 million, with the second draw-down under the Company’s Project Finance Facility, totalling $100 million, completed during February 2012.

Farm-in to Kennedy Highway Project

During the half-year, Sandfire entered into an agreement with Global Resources Corporation Limited (ASX: GRM) under which Sandfire has the right to earn up to an 80% interest in the Kennedy Highway Project, in north Queensland.

The Kennedy Highway Project is a single tenement, EPM15948, located approximately 230km south of Cloncurry in North Queensland. Exploration will target a potential Broken Hill base metal type geophysical target, under cover approximately 100km south of the Cannington mine.

Under the terms of the Agreement:

• Sandfire must spend a minimum of A$400,000 in the first year on the Project, of which no less than half must be spent on drilling;

• Sandfire may withdraw without liability at any time after it has met this minimum expenditure;

• Sandfire must spend a minimum of A$3M (in total), in the first 3 years to earn 60% equity (Minimum Interest) in the Project, no less than half of which must be spent on drilling;

• Sandfire has the option to spend a further A$5M, over an additional 2 years, to earn 80% equity (Further Interest) in the Project; and

• After the Minimum Interest has been earned, and any time before the Further Interest has been earned, GRM and Sandfire will form an unincorporated Joint Venture (JV) to manage the Project.

Sandfire will be the manager of the Joint Venture and the partners will fund as per their respective ownership percentage, or be diluted.

Investment in White Star Resources (ASX: WSR)

On 8 July 2011, the Company announced that it had subscribed for a 17.4% stake in junior explorer White Star Resources Ltd (ASX: WSR), formerly Whinnen Resources Ltd (ASX: WWW), a South American-focused copper-gold explorer. The Company was issued 26.5 million shares at $0.07 per share, for a total cost of $1.855 million, as part of the $7.28 million share placement undertaken by White Star to sophisticated investors. In addition, the Company was issued with 17 million White Star shares and 14.5 million options with an exercise price of $0.20 per share and an expiry date of 30 April 2014 as part of Technical Services Agreement between the companies.

During the half-year, White Star completed the acquisition of Mystic Sands Pty Ltd, a privately owned company which holds an extensive portfolio of high-quality copper-gold and gold projects in the Atacama region of Chile and commenced exploration activities at its Nany-Varas gold project and established its exploration team and infrastructure in Chile.

Investment by Oz Minerals Ltd (ASX: OZL)

During the half-year, Sandfire’s largest shareholder, Oz Minerals Limited (ASX: OZL), increased its shareholding to 19.8 per cent of the Company through on-market purchases of Sandfire shares.

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INTERIM FINANCIAL REPORT FOR THE SIX MONTHS ENDED 31 DECEMBER 2011

DIRECTORS’ REPORT

2. Review and results of operations (continued)

Annual General Meeting

The Company’s Annual General Meeting was held on 28 November 2011, with all resolutions passed on a show of hands.

3. Events subsequent to reporting date

Issued capital

Subsequent to 31 December 2011, the Company has announced the following issue of ordinary shares resulting from the conversion of options:

Number	Exercise price		Expiry date
6,000	$1.40		6 July 2012
161,000	$3.00	30	September 2012

Project Finance Facilities

The Company completed the second draw-down under the Project Finance Facility, totalling a $100 million, during February 2012. See note 9 of the Interim Financial Report for more details.

Corporate

On 28 February 2012, the Company announced the appointment of Mr Soocheol Shin to the position of non-executive Director and announced the resignation of Mr Jonghun Jong as non-executive Director on that same day.

4. Rounding

The amounts contained in this report and in the financial report have been rounded to the nearest $1,000 (where rounding is applicable and where noted ($’000)) under the option available to the Company under ASIC CO 98/0100.

5. Auditor independence declaration

We have obtained the following independence declaration from our auditors Ernst & Young.

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INTERIM FINANCIAL REPORT FOR THE SIX MONTHS ENDED 31 DECEMBER 2011 DIRECTORS’ REPORT

Signed in accordance with a resolution of the directors:

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Derek La Ferla Non-executive Chairman

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Karl M. Simich Managing Director and Chief Executive Officer

Dated at West Perth this 7[th] day of March 2012.

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INTERIM STATEMENT OF COMPREHENSIVE INCOME

FOR THE SIX MONTHS ENDED 31 DECEMBER 2011

Note Other revenue Exploration and evaluation expenses Administrative expenses Loss from operating activities Finance income Finance costs Loss before income tax Income tax benefit 5 Net loss for the period Other comprehensive income Loss on revaluation of available-for-sale financial assets Other comprehensive income for the period, net of tax Total comprehensive income for the period, net of tax Loss per share Basic and diluted loss per share attributable to ordinary equity holders (cents)	31 Dec 2011 $000 31 Dec 2010 $000 1,483 - (23,919) (33,052) (5,593) (3,709)
	(28,029) (36,761) 624 1,558 (251) -
	(27,656) (35,203) 8,152 -
	(19,504) (35,203)
	(913) -
	(913) -
	(20,417) (35,203)
	(12.97) (26.25)

The interim statement of comprehensive income is to be read in conjunction with the accompanying notes.

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INTERIM STATEMENT OF FINANCIAL POSITION AS AT 31 DECEMBER 2011

Note ASSETS Cash and cash equivalents 6 Trade and other receivables Inventories Other current assets Total current assets Receivables Mine properties 7 Property, plant and equipment 8 Other financial assets 2(b) Deferred tax assets Total non-current assets TOTAL ASSETS LIABILITIES Trade and other payables Interest bearing liabilities 9 Provisions Total current liabilities Trade and other payables Interest bearing liabilities 9 Provisions Total non-current liabilities TOTAL LIABILITIES NET ASSETS EQUITY Issued capital 10 Reserves Accumulated losses TOTAL EQUITY	31 Dec 2011 $000 30 Jun 2011 $000 96,995 74,041 4,465 1,456 3,171 - 1,180 656
	105,811 76,153
	11 3,168 78,352 23,856 124,040 37,588 2,236 - 40,055 31,881
	244,694 96,493
	350,505 172,646
	43,069 30,289 1,278 660 612 363
	44,959 31,312
	1,135 350 182,006 996 2,879 1,536
	186,020 2,882
	230,979 34,194
	119,526 138,452
	211,948 210,325 5,047 6,092 (97,469) (77,965)
	119,526 138,452

The interim statement of financial position is to be read in conjunction with the accompanying notes.

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INTERIM STATEMENT OF CHANGES IN EQUITY

FOR THE SIX MONTHS ENDED 31 DECEMBER 2011

Note For the six months ended 31 December 2011 At 1 July 2011 Loss for the period Other comprehensive income Total comprehensive income for the period Transactions with owners in their capacity as owners Share issue costs net of income tax benefit Exercise of options 10 Transfer from share-based payments reserve on exercise of options Share based payments recognised at fair value At 31 December 2011 For the six months ended 31 December 2010 At 1 July 2010 Loss for the period Other comprehensive income Total comprehensive income for the period Transactions with owners in their capacity as owners Shares issued Share issue costs Exercise of options Transfer from share-based payments reserve on exercise of options Share based payments recognised at fair value At 31 December 2010	Issued capital $000 Share based payments reserve $000 Available for sale reserve $000 Accumulated losses $000 Total equity $000
	210,325 6,092 - (77,965) 138,452
	- - - (19,504) (19,504)
	- - (913) - (913)
	- - (913) (19,504) (20,417)
	(51) - - - (51)
	1,240 - - - 1,240
	434 (434) - - -
	- 302 - - 302
	211,948 5,960 (913) (97,469) 119,526
	105,096 2,570 - (50,914) 56,752
	- - - (35,203) (35,203) - - - - -
	- - - (35,203) (35,203) 103,259 - - - 103,259 (4,792) - - - (4,792) 2,954 - - - 2,954 565 (565) - - - - 723 - - 723
	207,082 2,728 - (86,117) 123,693

The interim statement of changes in equity is to be read in conjunction with the accompanying notes.

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FOR SIX MONTHS ENDED 31 DECEMBER 2011

INTERIM STATEMENT OF CASH FLOWS

Note Cash flows from operating activities Cash paid to suppliers and employees Payments for exploration and evaluation Interest received Income tax – research and development tax offset Net cash inflow (outflow) from operating activities Cash flows from investing activities Payments for property, plant and equipment Payments for mine properties Payments for available for sale investments Receipts of security deposits and bonds Payments for security deposits and bonds Net cash inflow (outflow) from investing activities Cash flows from financing activities Proceeds from issue of shares Proceeds from issue of options Share issue costs Proceeds from borrowings 9 Repayment of finance lease liabilities Finance establishment costs Interest and other costs of finance paid Net cash inflow (outflow) from financing activities Net increase (decrease) in cash and cash equivalents Cash and cash equivalents at the beginning of the period Cash and cash equivalents at the end of the period 6	31 Dec 2011 $000 31 Dec 2010 $000 (10,853) (2,355) (24,724) (30,147) 1,434 1,606 212 -
	(33,931) (30,896)
	(77,570) (1,138) (47,060) - (1,855) - 3,158 - - (953)
	(123,327) (2,091)
	- 103,259 1,240 2,954 (73) (4,792) 190,000 - (172) (38) (9,524) - (1,259) -
	180,212 101,383
	22,954 68,396 74,041 55,834
	96,995 124,230

The interim statement of cash flows is to be read in conjunction with the accompanying notes.

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NOTES TO THE INTERIM FINANCIAL REPORT

FOR THE SIX MONTHS ENDED 31 DECEMBER 2011

1 Corporate information

Sandfire Resources NL (the Company or Sandfire) is a company domiciled and incorporated in Australia whose shares are publicly traded on the Australian Stock Exchange (ASX). The nature of the operations and principal activities of the Company are described in the directors’ report.

The interim financial report of the Company for the six months ended 31 December 2011 was authorised for issue in accordance with a resolution of the directors on 7 March 2012.

2 Basis of preparation and accounting policies

Basis of preparation

This interim financial report for the six months ended 31 December 2011 has been prepared in accordance with AASB 134 Interim Financial Reporting and the Corporations Act 2001.

The interim financial report does not include all the information and disclosures required in the annual financial report, and should be read in conjunction with the Company’s annual financial report as at 30 June 2011.

The annual report of the Company as at and for the year ended 30 June 2011 is available on request from the Company’s registered office or at www.sandfire.com.au.

Accounting policies

The accounting policies applied by the Company in this interim financial report are the same as those applied by the Company in its financial report as at and for the year ended 30 June 2011, except as listed below.

Certain comparative amounts have been reclassified to conform to the current year’s presentation.

(a) Inventories

Inventories are valued at the lower of cost and net realisable value. Net realisable value is the estimated selling price in the ordinary course of business, less estimated costs of completion and the estimated costs necessary to make the sale.

Costs incurred in bringing each product to its present location and condition, are accounted for as follows:

• The cost of mining inventories is determined using a weighted average basis. Costs include direct material, overburden material, mining, labour, related transportation costs, and other fixed and variable overhead costs directly related to mining activities.

• The cost of other inventories is based on their purchase cost on a first in, first out basis.

(b) Financial assets – investments in equity securities

Listed equity securities

Listed equity securities held by the Company are classified as available-for-sale financial assets and are recognised initially at fair value plus transaction costs. After initial measurement, available-for-sale financial investments are subsequently measured at fair value with unrealised gains or losses recognised as other comprehensive income in the available-for-sale reserve until the investment is derecognised, at which time the cumulative gain or loss is recognised in other operating income, or the investment is determined to be impaired, when the cumulative loss is reclassified from the available-for-sale reserve to the income statement in finance costs.

For available-for-sale financial investments, the Company assesses at each reporting date whether there is objective evidence that an investment is impaired. In the case of equity investments classified as available-for-sale, objective evidence would include a significant or prolonged decline in the fair value of the investment below its cost. ”Significant” is evaluated against the original cost of the investment and ”prolonged” against the period in which the fair value has been below its original cost. When there is evidence of impairment, the cumulative loss – measured as the difference between the acquisition cost and the current fair value, less any impairment loss on that investment previously recognised in the income statement – is removed from other comprehensive income and recognised in the income statement. Impairment losses on equity investments are not reversed through the income statement; increases in their fair value after impairment are recognised directly in other comprehensive income.

The fair value of listed equity securities classified as available-for-sale is determined by reference to quoted market prices at reporting date.

Other financial assets as at 31 December 2011 include an amount for investments in listed equity securities, the fair value of which is determined by reference to quoted market prices. The fair value is considered to be level 1 in the fair value hierarchy under IFRS 7.

Unlisted equity securities

The Company holds unlisted equity securities in the form of unlisted options over ordinary shares. These financial assets are classified as financial assets at fair value through profit or loss. Financial assets at fair value through profit or loss are carried in the statement of financial position at fair value with net changes in fair value recognised in finance costs in the income statement. The fair value of unlisted equity securities is determined at each reporting date using the Black-Scholes option pricing model.

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NOTES TO THE INTERIM FINANCIAL REPORT FOR THE SIX MONTHS ENDED 31 DECEMBER 2011

2 Basis of preparation and accounting policies (continued)

(c) New standards, interpretations and amendments thereof, adopted by the Company

The Company has adopted the following new and amended Australian Accounting Standards and AASB Interpretations as of 1 July 2011.

AASB 124 Related Party Transactions (Amendment)

The AASB has issued an amendment to AASB 124 that clarifies the definitions of a related party. The new definitions emphasise a symmetrical view of related party relationships as well as clarifying in which circumstances persons and key management personnel affect related party relationships of an entity. Secondly, the amendment introduces an exemption from the general related party disclosure requirements for transactions with a government and entities that are controlled, jointly controlled or significantly influenced by the same government as the reporting entity. The adoption of the amendment did not have any impact on the financial position or performance of the Company.

AASB 132 Financial Instruments: Presentation (Amendment)

The amendment alters the definition of a financial liability in AASB 132 to enable entities to classify rights issues and certain options or warrants as equity instruments. The amendment is applicable if the rights are given pro rata to all of the existing owners of the same class of an entity’s non-derivative equity instruments, to acquire a fixed number of the entity’s own equity instruments for a fixed amount in any currency. The amendment has had no effect on the financial position or performance of the Company.

Improvements to AASB (issued May 2010)

In May 2010, the AASB issued its third omnibus of amendments to its standards, primarily with a view to removing inconsistencies and clarifying wording. There are separate transitional provisions for each standard. The adoption of the following amendments resulted in changes to accounting policies, but did not have any impact on the financial position or performance of the Company.

AASB 7 Financial Instruments — Disclosures : The amendment was intended to simplify the disclosures provided by reducing the volume of disclosures around collateral held and improving disclosures by requiring qualitative information to put the quantitative information in context.

AASB 101 Presentation of Financial Statements : The amendment clarifies that an option to present an analysis of each component of other comprehensive income may be included either in the statement of changes in equity or in the notes to the financial statements.

AASB 134 Interim Financial Statements : The amendment requires additional disclosures for fair values and changes in classification of financial assets, as well as changes to contingent assets and liabilities in interim condensed financial statements.

Accounting standards and interpretations issued but not yet effective

The Company has not elected to early adopt any other new Standards or amendments that are issue but not yet effective.

3 Estimates

The preparation of interim financial reports requires management to make judgements, estimates and assumptions that affect the application of accounting policies and the reported amounts of assets and liabilities, income and expense. Actual results may differ from these estimates.

In preparing this interim financial report, the significant judgements made by management in applying the Company’s accounting policies and the key sources of estimation uncertainty were the same as those that applied to the annual financial report as at and for the year ended 30 June 2011.

4 Operating segments

An operating segment is a component of an entity that engages in business activities from which it may earn revenues and incur expenses (including revenues and expenses relating to transactions with other components of the same entity), whose operating results are regularly reviewed by the entity's chief operating decision makers to make decisions about resources to be allocated to the segment and assess its performance and for which discrete financial information is available. This includes start up operations which are yet to earn revenues. Management will also consider other factors in determining operating segments such as the existence of a line manager and the level of segment information presented to the Board of directors.

Operating segments have been identified based on the information provided to the chief operating decision makers – being the executive management team and the Board of directors.

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NOTES TO THE INTERIM FINANCIAL REPORT FOR THE SIX MONTHS ENDED 31 DECEMBER 2011

4 Operating segments (continued)

The Company continuously reviews the progress of its various projects and allocates the projects to operating segments as to their relevant stage of development, that is, whether the project is in:

• Exploration, evaluation and development phase; or

• Production phase.

It is on this basis that the executive management team and the Board of directors makes decisions about the allocation of resources and assesses the Company’s performance.

The Company’s most significant project, the DeGrussa Copper-Gold Project located within the Doolgunna tenement area, is considered to be in the exploration, evaluation and development phase as at 31 December 2011 and accordingly the Company effectively operates as one segment as at that date, being the exploration, evaluation and development of mineral resources in Australia. The Company will review its operating segment classification at the next reporting date, with the DeGrussa Copper-Gold Project moving into a production phase. As at 31 December 2011, all revenue and noncurrent assets of the Company are domiciled in Australia.

5 Income tax

The major components of income tax (benefit) in the interim income statement are:

Income taxes Current income tax expense (benefit) Deferred income tax expense related to origination and reversal of temporary differences Income tax expense (benefit) Income tax expense (benefit) recognised in other comprehensive income Total income tax (benefit)	31 Dec 2011 $000 31 Dec 2010 $000
	(16,972) - 8,820 -
	(8,152) - - -
	(8,152) -

6 Cash and cash equivalents

Cash and cash equivalents
Note Cash at bank and on hand Short-term deposits Debt service reserve account (i) Cost overrun account (ii)	31 Dec 2011 $000 30 Jun 2011 $000
	67,495 14,397 5,500 59,644 4,000 - 20,000 -
	96,995 74,041

Under the terms and conditions of the Company’s Project Loan Facility (see note 9), the Company must maintain:

• (i) a cash debt service reserve amount equal to the next quarter’s scheduled amortisation payment and projected interest payment; and

• (ii) a balance of $20 million in the cost overrun account, to only be withdrawn and used as a contingency in the event of a cost overrun to achieve project (DeGrussa Copper-Gold) completion.

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NOTES TO THE INTERIM FINANCIAL REPORT

FOR THE SIX MONTHS ENDED 31 DECEMBER 2011

7 Mine properties

Mine property and development assets include costs incurred in accessing the ore body and costs to develop the mine to the production phase, once the technical feasibility and commercial viability of a mining operation has been established.

Reconciliation of the carrying amounts for each class of mine properties is set out below

At 1 July 2011 net of accumulated amortisation Additions Amortisation At 31 December 2011 net of accumulated amortisation At 31 December 2011 Cost Accumulated amortisation Net carrying amount	Mine development $000 Deferred stripping $000 Total $000
	19,448 4,408 23,856
	36,469 18,027 54,496
	- - -
	55,917 22,435 78,352
	55,917 22,435 78,352
	- - -
	55,917 22,435 78,352

The Company has not incurred any amortisation expense to 31 December 2011, with amortisation of mine property and development assets to commence when the DeGrussa open pit and underground mines start commercial production.

At 1 July 2010 net of accumulated amortisation Additions Amortisation At 30 June 2011 net of accumulated amortisation At 30 June 2011 Cost Accumulated amortisation Net carrying amount	Mine development $000 Deferred stripping $000 Total $000
	- - - 19,448 4,408 23,856 - - -
	19,448 4,408 23,856
	19,448 4,408 23,856 - - -
	19,448 4,408 23,856

8 Property, plant and equipment

Reconciliation of the carrying amounts for each class of property, plant and equipment is set out below

At 1 July 2011 net of accumulated depreciation Additions Disposals Depreciation At 31 December 2011 net of accumulated d i i At 31 December 2011 Cost Accumulated depreciation Net carrying amount	Plant and equipment $000 Buildings and Infrastructure $000 Motor vehicles $000 Office furniture and equipment $000 Leased equipment $000 Assets under construction $000 Total $000
	537 513 718 1,008 1,274 33,538 37,588
	216 395 8 261 494 85,856 87,230
	- - - - - - -
	(123) (54) (156) (269) (176) - (778)
	630 854 570 1,000 1,592 119,394 124,040
	1,090 1,038 1,381 1,795 1,881 119,394 126,579
	(460) (184) (811) (795) (289) - (2,539)
	630 854 570 1,000 1,592 119,394 124,040

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NOTES TO THE INTERIM FINANCIAL REPORT

FOR THE SIX MONTHS ENDED 31 DECEMBER 2011

8 Property, plant and equipment (continued)

At 1 July 2010 net of accumulated depreciation Additions Disposals Transfers Depreciation At 30 June 2011 net of accumulated depreciation At 30 June 2011 Cost Accumulated depreciation Net carrying amount	Plant and equipment $000 Buildings and Infrastructure $000 Motor vehicles $000 Office furniture and equipment $000 Leased equipment $000 Assets under construction $000 Total $000
	354 353 1,007 840 320 - 2,874 351 248 112 546 1,067 33,538 35,862 - - - - - - - 34 9 (72) 29 - - - (202) (97) (329) (407) (113) - (1,148)
	537 513 718 1,008 1,274 33,538 37,588
	874 642 1,373 1,535 1,387 33,538 39,349 (337) (129) (655) (527) (113) - (1,761)
	537 513 718 1,008 1,274 33,538 37,588

9 Interest bearing liabilities

Note Current interest-bearing loans and borrowings Obligations under finance leases and hire purchase contracts Insurance premium funding Total current interest-bearing loans and borrowings Non-current interest-bearing loans and borrowings Obligations under finance leases and hire purchase contracts Secured bank loan DeGrussa Project Loan Facility (i) Capitalised finance establishment costs (net of amortisation) offset against Project Loan Facility Total non-current interest-bearing loans and borrowings (i) Finance facilities The Company has access to the following facilities: DeGrussa Project Loan Facility Bond Facility Facilities utilised at reporting date: DeGrussa Project Loan Facility Bond Facility Facilities not utilised at reporting date: DeGrussa Project Loan Facility Bond Facility	31 Dec 2011 $000 30 Jun 2011 $000
	441 339 837 321
	1,278 660
	1,217 996 190,000 - (9,211)
	182,006 996
	380,000 - 10,000 -
	390,000 -
	190,000 - 4,290 -
	194,290 -
	190,000 - 5,710 -
	195,710 -

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NOTES TO THE INTERIM FINANCIAL REPORT FOR THE SIX MONTHS ENDED 31 DECEMBER 2011

9 Interest bearing liabilities (continued)

Project Loan Facility

The Company’s financing arrangements are provided under a secured loan facility with the Company’s bankers and are secured by a fixed and floating charge over the Company’s assets, including the DeGrussa Project and the broader Doolgunna Project, and a mining mortgage over the Project tenements. The full $390 million facility, which includes $10 million relating to bonding, is designed to underpin the Company’s construction and development of its DeGrussa Copper-Gold Project in Western Australia and follows the Definitive Feasibility Study (DFS) completed in June 2011.

The facility was finalised and executed on 29 September 2011, with the first drawdown of $190 million completed on 10 November 2011. The facility is repayable in set quarterly instalments, with the first repayment due on 31 March 2013, and is to be fully repaid by 31 December 2015.

The bond facility is drawn in the form of bank guarantees to the relevant State Government for environmental restoration and property managers for security deposits and does not involve the provision of project funds.

The Company completed the second draw-down under the Project Finance Facility, totalling a $100 million, during February 2012.

10 Issued capital

Issued ordinary shares

The holders of ordinary shares are entitled to receive dividends from time to time and are entitled to one vote per share at meetings of the Company. All shares rank equally with regard to the Company’s residual assets. Ordinary shares have no par value.

have no par value.
On issue at 1 July Issue of shares for cash Exercise of options On issue at 31 December	2011 Number 2010 Number
	149,384,969 130,009,760 - 15,352,779 1,561,666 2,805,000
	150,946,635 148,167,539

Posco Australia Pty Ltd (POSA)

ASX has granted the Company a waiver from listing rule 6.18 to the extent necessary to permit the Company to give POSA the right to maintain its percentage interest in the issued capital of the Company by participating in any issue of shares or subscribing for shares (the “Top-Up Right”) in respect of a diluting event which occurs or is announced in the period of 5 years following completion of the subscription agreement entered into between the Company and POSA on 2 May 2008. The Top-Up-Right:

• (i) lapses if POSA’s percentage holding in the Company falls below 10%;

• (ii) lapses if the strategic relationship between the Company and POSA ceases or changes in such a way that it effectively ceases; and

(iii) may only be transferred to an entity in the wholly owned group of POSA.

Any securities issued under the Top-Up-Right are offered to POSA for cash consideration that is no more favourable than offered to third parties.

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NOTES TO THE INTERIM FINANCIAL REPORT

FOR THE SIX MONTHS ENDED 31 DECEMBER 2011

10 Issued capital (continued)

Movement in shares under option

Options expiring on or before Note 8 August 2011 30 September 2011 6 July 2012 (i) 30 September 2012 (ii) 12 July 2013 12 July 2013 12 July 2013 27 November 2014 27 November 2014 27 November 2014 15 June 2015 15 June 2015 15 June 2015 28 February 2016 28 February 2016 28 February 2016	Exercise Price On issue 1 Jul 11 Issued Exercised On issue 31 Dec 11
	$0.40 350,000 - (350,000) - $0.50 600,000 - (600,000) - $1.40 596,000 - (185,000) 411,000 $3.00 200,000 - - 200,000 $0.60 1,010,000 - - 1,010,000 $0.80 1,340,000 - (360,000) 980,000 $1.00 1,600,000 - - 1,600,000 $4.68 330,000 - - 330,000 $5.44 330,000 - - 330,000 $6.22 330,000 - - 330,000 $3.80 333,332 - (66,666) 266,666 $4.40 333,333 - - 333,333 $5.00 333,335 - - 333,335 $9.00 1,083,329 - - 1,083,329 $10.30 1,083,332 - - 1,083,332 $11.70 1,083,339 - - 1,083,339
	10,936,000 - (1,561,666) 9,374,334

(i) A further 6,000 of these options were exercised subsequent to 31 December 2011. Refer to note 13 for details.

(ii) 111,000 of these options were exercised subsequent to 31 December 2011. Refer to note 13 for details.

11 Share based payments

During the 2011 financial year, the Company’s Remuneration and Nomination Committee approved the Long-term Indexed Bonus Plan (long-term bonus plan) to align the objectives of executive directors with that of the Company.

The Company granted 1,000,000 rights to executive directors in July 2010 and granted a further 2,000,000 rights to executive directors in August 2011.

The Company sets an initial indexed notional value (INV) for rights issued under the bonus plan. Rights issued under the plan are long term in nature and have multiple vesting dates, with current rights vesting from 15 June 2011 to 15 December 2016.

On the first vesting date, the holder of the awards receives, at the Company’s sole discretion, either cash, or subject to any shareholder approval required under the Corporations Act 2001 and the ASX Listing Rules, ordinary shares in the Company for the difference between the 5-day volume weighted average ASX price of underlying Company shares prior to the vesting date (test price), and the INV set when the rights were initially granted. At each subsequent vesting date, the award is retested, whereby the holder receives the difference between the 5-day volume weighted average ASX price of underlying Company shares prior to the vesting date and the higher of the initial INV or the highest test price that occurred prior to that vesting date.

Termination and change of control provisions

(i) Participant initiated termination

Where a participant ceases to be an employee or contractor of the Company prior to vesting of their award, all outstanding rights will expire and cease to carry any rights or benefits.

(ii) Company initiated termination

Where the engagement or employment is terminated by the Company for reasons other than serious misconduct, the rights will continue to vest for 180 days following the end of the required notice period, with the final vesting date to be the date on which the 180 day notice period expires.

(iii) Change of control

In the event of a change of control of the Company, the vesting period will be brought forward to the date of the change of control and awards will automatically vest.

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NOTES TO THE INTERIM FINANCIAL REPORT FOR THE SIX MONTHS ENDED 31 DECEMBER 2011

11 Share based payments (continued)

Listed below are the terms and conditions of rights issued by the Company during the current period.

		Indexed
		notional	Initial vesting		Contractual
Grant date	Number	value	date	Test dates	life
Long-term bonus plan grant to	666,667	$9.00	15 June 2013	15 June and 15 December	5 years
executive directors of the Company				from 2013 to 2016
on 8 August 2011, expiring 15	666,667	$10.30	15 June 2014	15 June and 15 December	5 years
December 2016.				from 2014 to 2016
	666,667	$11.70	15 June 2015	15 June and 15 December	5 years
				from 2015 to 2016

The Company also modified the terms and conditions of existing rights granted under the long-term bonus plan during the year ended 30 June 2011. Listed below are the modified terms and conditions of the rights, initially granted on 2 July 2010, modified in August 2011.

		Indexed
		notional	Initial vesting		Contractual
Grant date	Number	value	date	Test dates	life
Long-term bonus plan grant to	333,334	$3.80	15 June 2011	15 June and 15 December	4 years
executive directors of the Company				from 2011 to 2015
on 2 July 2010, modified on 8 August	333,334	$4.40	15 June 2012	15 June and 15 December	4 years
2011, expiring 15 December 2015.				from 2012 to 2015
	333,334	$5.00	15 June 2013	15 June and 15 December	4 years
				from 2013 to 2015

For the six months ended 31 December 2011, the Company has recognised $1,044,000 (2010: $1,438,000) of sharebased payments expense in the income statement with respect to the grant and vesting of rights.

Pricing model

The ultimate cost of the rights issued and amended during the period will be equal to the actual cash paid to the participants, which will be the fair value at settlement date.

The cumulative cost recognised until settlement is a liability and the periodic determination of this liability is as follows:

• At each reporting date between grant and settlement, the fair value of the award is determined;

• During the vesting period, the liability recognised at each reporting date is the fair value of the award at that date multiplied by the expired portion of the vesting period;

• From the end of the vesting period until settlement, the liability recognised is the full fair value of the liability at the reporting date; and

• All changes in the liability are recognised in employee benefits expense for the period.

The fair value of the liability is determined, initially and at each reporting date until it is settled, by applying the BlackScholes option pricing model, taking into account the terms and conditions on which the award was granted.

The following table sets out the assumptions made in determining the fair value of the rights granted and modified during the six month period ended 31 December 2011.

Notional value or test price Dividend yield Expected volatility Risk-free interest rate Expected life (years) Share price at reporting date	Granted (2 Jul 2010) Modified (8 Aug 2011) Granted (8 Aug 2011)
	Tranche 1 Tranche 2 Tranche 3 Tranche 1 Tranche 2 Tranche 3
	(A)$7.08 $4.40 $5.00 $9.00 $10.30 $11.70
	0.00% 0.00% 0.00% 0.00% 0.00% 0.00%
	50.00% 50.00% 50.00% 50.00% 50.00% 50.00%
	3.16 – 3.29% 3.16 – 3.29% 3.16 – 3.29% 3.16 – 3.29% 3.14 - 3.29% 3.14 - 3.29%
	0.5 – 4.0 0.5 – 4.0 1.5 – 4.0 1.5 – 5.0 2.5 – 5.0 3.5 – 5.0
	$6.58 $6.58 $6.58 $6.58 $6.58 $6.58

• (A) Calculated as the 5-day volume weighted average ASX price of underlying Company shares prior to the initial vesting date of 15 June 2011.

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NOTES TO THE INTERIM FINANCIAL REPORT

FOR THE SIX MONTHS ENDED 31 DECEMBER 2011

12 Commitments

Contractual commitments

DeGrussa Copper Gold Project

The Company has entered into a number of key construction and development, as well as operations contracts, totalling $404,740,000, as part of its development and operation of the DeGrussa copper gold project located in Western Australia. A total of $139,143,000 of this contracted value has been incurred up to 31 December 2011. The Company expects to meet the remaining contractual commitments with respect to these contracts during the course of the financial year ended 30 June 2012 and 30 June 2013, with payments to be made only on satisfactory completion of contracted terms.

Other Contractual commitments

Posco Australia Pty Ltd (POSA)

On 2 May 2008, the Company entered into a commercial agreement with Posco Australia Pty Ltd (POSA), whereby POSA, or POSA nominated affiliates, has the right to purchase 30% of the Company’s future mineral production at fair market value excluding gold and diamond production. The rights under the commercial agreement remain for as long as POSA has at least a 10% holding of Sandfire ordinary shares and entitles POSA to a 7.5% discount on the first $100m of offtake.

13 Events subsequent to reporting date

Issued capital

Subsequent to 31 December 2011, the Company has announced the following issue of ordinary shares resulting from the conversion of options:

Number	Exercise price		Expiry date
6,000	$1.40		6 July 2012
161,000	$3.00	30	September 2012

Project Finance Facilities

The Company completed the second draw-down under the Project Finance Facility, totalling a $100 million, during February 2012. See note 9 of the Interim Financial Report for more details.

Corporate

On 28 February 2012, the Company announced the appointment of Mr Soocheol Shin to the position of non-executive Director and announced the resignation of Mr Jonghun Jong as non-executive Director on that same day.

- 21 -

DIRECTORS’ DECLARATION FOR THE SIX MONTHS ENDED 31 DECEMBER 2011

In accordance with a resolution of the directors of Sandfire Resources NL (“the Company”), I state that:

In the opinion of the directors:

• (a) The financial statements and notes of Sandfire Resources NL are in accordance with the Corporations Act 2001, including:

• (i) Giving a true and fair view of the financial position as at 31 December 2011 and the performance for the half-year ended on that date

• (ii) Complying with Accounting Standard 134 Interim Financial Reporting and the Corporations Regulations 2001

• (b) There are reasonable grounds to believe that the Company will be able to pay its debts as and when they become due and payable.

Signed in accordance with a resolution of the directors:

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Derek La Ferla Non-executive Chairman

Karl M. Simich Managing Director and Chief Executive Officer

Dated at West Perth this 7[th] day of March 2012.

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INDEPENDENT AUDITOR’S REVIEW REPORT FOR THE SIX MONTHS ENDED 31 DECEMBER 2011

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INDEPENDENT AUDITOR’S REVIEW REPORT FOR THE SIX MONTHS ENDED 31 DECEMBER 2011

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