SANDFIRE RESOURCES LIMITED — Interim / Quarterly Report 2017

Feb 20, 2017

==> picture [595 x 89] intentionally omitted <==

21 February 2017

ASX Limited Level 40, Central Park 152-158 St Georges Terrace Perth WA 6000

FINANCIAL REPORT FOR THE HALF YEAR ENDED 31 DECEMBER 2016 AND APPENDIX 4D

I am pleased to attach the following items for immediate release to the market:

1. ASX release on the Company’s financial results for the 6 months ended 31 December 2016.

2. December 2016 Half Year Report and Appendix 4D.

3. December 2016 Half Year Results Presentation.

4. Appendix 3A.1 Notification of Dividend / Distribution.

In addition, Sandfire’s Chief Financial Officer, Matthew Fitzgerald, is hosting an investor teleconference and live webcast on the December 2016 half year financial results at 10.00am (AWST) / 1.00pm (AEST) , Tuesday 21 February 2017.

The webcast and synchronised slide presentation is available through the Company’s website or through BRR Media.

Live date: Tuesday, 21 February 2017 Access this website at: http://webcasting.brrmedia.com/broadcast/589d21fd8a8dbf84280acb26 http://www.sandfire.com.au

Yours sincerely,

Matthew Fitzgerald Chief Financial Officer and Joint Company Secretary

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

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

==> picture [595 x 36] intentionally omitted <==

21 February 2017

==> picture [595 x 89] intentionally omitted <==

ASX Release

APPENDIX 4D Half year ended 31 December 2016

Results for Announcement to the Market $’000	Up/Down Movement
Revenue from ordinary activities 247,989 Net profit for the period 35,929 Net profit for the period attributable to members 37,334	Up 9% Up 129% Up 132%
Dividend information	Amount per share Franked amount per share
Interim dividend per share (cents per share) Conduit foreign income (CFI) component Interim dividend dates Record date for determining entitlements to the interim dividend Payment date for the interim dividend	5.0 5.0 Nil 7 March 2017 21 March 2017
Net tangible assets Net tangible assets per ordinary security	2016 2015
	$2.60 $2.25

Additional Appendix 4D disclosure requirements can be found in the Director’s Report and the 31 December 2016 financial statements and accompanying notes.

This information should be read in conjunction with Sandfire’s auditor reviewed Half-year Financial Report which is enclosed.

For further information contact:

Sandfire Resources NL

Matthew Fitzgerald – CFO and Joint Company Secretary Office: +61 8 6430 3800

==> picture [595 x 36] intentionally omitted <==

==> picture [595 x 86] intentionally omitted <==

Half-Year Financial Report

For the six months ended 31 December 2016

ASX Code: SFR

HALF-YEAR FINANCIAL REPORT FOR THE SIX MONTHS ENDED 31 DECEMBER 2016 CONTENTS

CORPORATE INFORMATION	1
IMPORTANT INFORMATION AND DISCLAIMER	2
DIRECTORS’ REPORT	3
AUDITOR INDEPENDENCE DECLARATION	9
INTERIM CONSOLIDATED INCOME STATEMENT	11
INTERIM CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME	12
INTERIM CONSOLIDATED BALANCE SHEET	13
INTERIM CONSOLIDATED STATEMENT OF CHANGES IN EQUITY	14
INTERIM CONSOLIDATED STATEMENT OF CASH FLOWS	15
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS	16
DIRECTORS’ DECLARATION	23
INDEPENDENT AUDITOR’S REVIEW REPORT	24

HALF-YEAR FINANCIAL REPORT FOR THE SIX MONTHS ENDED 31 DECEMBER 2016 CORPORATE INFORMATION

ABN 55 105 154 185

ABN 55 105 154 185
Directors
Derek La Ferla	Independent Non-Executive Chairman
Karl Simich	Managing Director and Chief Executive Officer
Robert Scott	Independent Non-Executive Director
Paul Hallam	Independent Non-Executive Director
Maree Arnason	Independent Non-Executive Director
Roric Smith	Independent Non-Executive Director
Company Secretary
Matthew Fitzgerald	Chief Financial Officer and Joint Company Secretary
Robert Klug	Chief Commercial Officer and Joint Company Secretary
Registered Office and	Principal Place of Business
Level 1, 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

- 1 -

HALF-YEAR FINANCIAL REPORT FOR THE SIX MONTHS ENDED 31 DECEMBER 2016

IMPORTANT INFORMATION AND DISCLAIMER

Competent Person’s Statement – Exploration Results

The information in this report that relates to Exploration Results is based on information compiled by Mr Shannan Bamforth who is a Member of The Australasian Institute of Mining and Metallurgy. Mr. Bamforth is a permanent employee of Sandfire Resources and has sufficient experience that is relevant to the style of mineralisation and type of deposit under consideration and to the activity which he is undertaking to qualify as Competent Person as defined in the 2012 Edition of the Australasian Code for Reporting of Exploration Results, Mineral Resources and Ore Reserves. Mr Bamforth 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 Mineral Resources is based on information compiled by Mr Ekow Taylor who is a Member of The Australasian Institute of Mining and Metallurgy. Mr. Taylor is a permanent employee of Sandfire Resources NL and has sufficient experience that is relevant to the style of mineralisation and type of deposit under consideration and to the activity which he is undertaking to qualify as Competent Person as defined in the 2012 Edition of the Australasian Code for Reporting of Exploration Results, Mineral Resources and Ore Reserves. Mr Taylor 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 – Ore Reserves

The information in this report that relates to Ore Reserves is based on information compiled by Mr Neil Hastings who is a Member of The Australasian Institute of Mining and Metallurgy. Mr Hastings is a permanent employee of Sandfire Resources NL and has sufficient experience that is relevant to the style of mineralisation and type of deposit under consideration and to the activity which he is undertaking to qualify as Competent Person as defined in the 2012 Edition of the Australasian Code for Reporting of Exploration Results, Mineral Resources and Ore Reserves. Mr Hastings consents to the inclusion in the report of the matters based on his information in the form and context in which it appears.

Exploration and Resource Targets

Any discussion in relation to the potential quantity and grade of Exploration Targets 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 Mineral Resource inventory and it is uncertain if further exploration will result in the determination of additional JORC compliant Mineral Resources.

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.

- 2 -

HALF-YEAR FINANCIAL REPORT FOR THE SIX MONTHS ENDED 31 DECEMBER 2016 DIRECTORS’ REPORT

The directors present their report together with the consolidated financial report of the consolidated entity (referred to as the Group) consisting of the parent entity, Sandfire Resources NL (the Company or Sandfire), and the entities it controlled, for the six months ended 31 December 2016 and the independent auditor’s review report thereon.

1 Directors

The directors of the Company in office during the half-year and until the date of this report 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 Officer since 1 July 2009
Mr Robert N Scott	Appointed 30 July 2010
Independent Non-Executive Director
Mr Paul Hallam	Appointed 21 May 2013
Independent Non-Executive Director
Ms Maree Arnason	Appointed 18 December 2015
Independent Non-Executive Director
Dr Roric Smith	Appointed 31 December 2016
Independent Non-Executive Director
Mr W John Evans	Appointed 2 October 2007
Non-Executive Director	Resigned 31 December 2016

2 Dividends

Since the end of the financial period, the Board of Directors have resolved to pay a fully franked dividend of 5 cents per share, to be paid on 21 March 2017. The record date for entitlement to this dividend is 7 March 2017. The financial impact of this dividend amounting to $7,887,000 has not been recognised in the Financial Statements for the half year ended 31 December 2016 and will be recognised in subsequent Financial Statements.

Details in relation to dividends announced or paid since 1 July 2015, other than as above, are set out below.

Record date Date ofpayment Period Amount per share (cents)	Franked amount per share (cents) Total dividends $000
12 September 2016 26 September 2016 2016 FY Final 9 10 March 2016 24 March 2016 2016 FY Interim 2 10 September 2015 24 September 2015 2015 FY Final 10	9 14,191 2 3,147 10 15,685

3 Review and results of operations

3.1 Project review, strategies and future prospects

Sandfire Resources NL is a dynamic mid-tier Australian mining and exploration company based in Perth, Western Australia, which is listed on the Australian Securities Exchange (ASX:SFR). Sandfire joined the ranks of Australian copper producers in 2012 following the successful construction and commissioning of its flagship 100%-owned DeGrussa Copper Mine, located 900km north of Perth.

Review of results

• Net profit after tax of $35.9 million;

• Profit before net finance expense, income tax and depreciation and amortisation of $106.8 million;

• Operating cash flow of $96.7 million;

• Net assets of $410.1 million, with cash of $107.1 million as at 31 December 2016;

• Total Recordable Injury Frequency Rate (TRIFR) of 6.3 at half-year;

• Copper production of 33,740 contained tonnes and gold production of 19,914 contained ounces.

- 3 -

HALF-YEAR FINANCIAL REPORT FOR THE SIX MONTHS ENDED 31 DECEMBER 2016 DIRECTORS’ REPORT

3 Review and results of operations (continued)

3.1 Project review, strategies and future prospects (continued)

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

The DeGrussa Copper Project is located within Sandfire’s 100%-owned Doolgunna Project, a 400 square kilometre tenement package in WA’s Bryah Basin mineral province, approximately 900km north-east of Perth. The Project is located within an established mining district, approximately 150km north of the regional mining hub of Meekatharra and includes the DeGrussa Copper Mine. Including 100%-owned ground and tenements held in joint venture, Sandfire controls a total contiguous exploration portfolio covering a total area of 4,180 square kilometres, including a 65km strike length of prospective VMS horizon.

DeGrussa Copper Mine

Overview

A summary of copper and gold production and sales for the half year is provided below:

FY 2017 Production Statistics to 31 December 2016 Tonnes Grade (% Cu) Grade (g/t Au)	Contained Copper (t) Contained Gold (oz)
Concentrator Mined 734,231 4.8 1.7	35,012 39,696
Milled 806,656 4.6 1.8	37,262 45,827
Production 138,048 24.5 4.5 Concentrate sales 136,893 24.0 4.5	33,740 19,914
	32,893 19,790

Note: Mining and production statistics are rounded to the nearest 0.1% Cu grade and 0.1 g/t Au grade. Errors may occur due to rounding.

Underground Mining

Production was sourced from all lenses at DeGrussa with the mine remaining in balance between production and backfill.

Development of the mine and the primary ventilation system is largely complete with the contractor decreasing its development equipment. Work also commenced on the main underground pump station that is targeted for completion in the June 2017 Quarter.

Processing

Mill throughput for the period was impacted by a campaign to treat stockpiled scats through the pebble crushing circuit, which required a series of shutdowns to implement a reduction in the open area of the SAG mill grates to free up capacity in the pebble crusher.

Copper recovery for the half year was in line with the predicted recovery based on the resource copper grade and Cu:S ratio. Sandfire continues to pursue opportunities for further improvements in copper recovery, including the installation of additional rougher flotation capacity planned for mid-2017.

Production Guidance

Targeted copper production for FY2017 is expected to be in the range of 65-68,000 tonnes of contained copper metal with gold production within the range of 35-40,000 ounces. Headline C1 cash operating costs are expected to be within the range of US$0.95-1.05 per lb. C1 unit costs are expected to report marginally higher in 2HFY2017 (to around ~US$1.00 per lb) due to the planned reduction in underground development capital work and reducing gold production (impacting by-product credits).

Mine production is forecast at 1.53Mt with the processing of 1.63Mt of ore achieved via the pull-down of ROM stocks in 1HFY2017.

Feasibility Studies and Metallurgy

Monty Copper-Gold Project

The Springfield Unincorporated Joint Venture comprises participating interests of Sandfire (70%) and Talisman Mining Limited (ASX: TLM; “Talisman”) (30%).

The Feasibility Study on the Monty Project continued during the half year with several work streams continuing as part of this Feasibility Study, with a number of components now complete including:

• Metallurgical testwork on comminution and flotation;

• Geotechnical and hydrological studies;

• A final mine design and schedule with stoping, ore access and ventilation designs;

• Proposed box-cut and decline locations;

- 4 -

HALF-YEAR FINANCIAL REPORT FOR THE SIX MONTHS ENDED 31 DECEMBER 2016 DIRECTORS’ REPORT

3 Review and results of operations (continued)

• 3.1 Project review, strategies and future prospects (continued)

• Design of the surface layout of infrastructure, stockpile locations and other facilities; and

• The design of the haul road route between the DeGrussa operations and the Monty Project.

Following completion of the haul road design, a Miscellaneous Licence was submitted to the DMP.

The scenario to be used as the base case for the Feasibility Study involves the acceleration of mining at Monty given its high grades. The study will investigate mining rates at the DeGrussa underground mine being adjusted to match the overall capacity of the DeGrussa processing plant (currently 1.6Mtpa). This will allow both mines to be scheduled to complete mining around the same time, based on the current DeGrussa Mine Plan, which optimises the use of the existing DeGrussa processing plant.

Given the proximity of Monty to the existing DeGrussa Copper Mine, it is envisaged that a number of mining, administrative and support services will be provided by the existing mining and infrastructure services and facilities at DeGrussa.

In parallel with the Feasibility Study, negotiations are continuing to progress formal agreements between Sandfire and Talisman relating to Monty construction and mining activities, as well as potential ore process routes and terms.

Oxide copper

An alternative process route for the Oxide Copper Project at DeGrussa is the use of glycine. This processing route will be further investigated when the terms of an agreement with the holders of glycine technology are agreed.

DOOLGUNNA EXPLORATION

The Greater Doolgunna Project, which includes the Talisman Joint Venture and the Ned’s Creek Project, provides an aggregate contiguous exploration area of 4,180km2. This includes over 65km of strike extent in VMS lithologies. Much of this stratigraphy is obscured beneath transported cover and requires systematic aircore (AC) drilling to test the bedrock geochemistry and identify prospective areas.

Overview

Sandfire continues to progress a tightly focused, multi-disciplinary exploration campaign to test for extensions to the known cluster of VMS deposits at DeGrussa and Monty, and to unlock the broader potential of the Doolgunna region for additional VMS and structurally-hosted copper deposits.

Key components of the Company’s exploration activity at Doolgunna during the half-year included:

• Diamond and RC drilling to test for potential extensions to the oxide copper mineralisation at the Monty deposit;

• Completion of structural and regolith modelling at Monty;

• Continuation of down-hole electromagnetic (DHEM) surveying across the Doolgunna and Springfield Project areas;

• AC drilling of prospective areas for geological interpretation and identification of geochemical anomalies for targeting purposes;

• Review and collation of data relating to Enterprise Metals Ltd’s (Enterprise) Doolgunna Project, which adjoins Sandfire’s Doolgunna tenements to the south, under the Farm-in Agreement signed with Enterprise in October 2016;

• RC drilling to test geochemically anomalous areas in the Doolgunna Project; and

• AC drilling at the Ned’s Creek Project targeting shear-hosted epigenetic copper mineralisation.

Springfield Joint Venture

The Springfield JV Project comprise the Springfield, Halloween and Halloween West Projects, which abut Sandfire’s DeGrussa-Doolgunna tenements. The projects are being explored under a Joint Venture agreement with Talisman Mining Limited (ASX: TLM) under which Sandfire has earned 70%. All exploration expenditure at the Talisman Projects is now being jointly funded by Sandfire and Talisman on a 70:30 basis.

Exploration programs planned or currently in progress in the Springfield Joint Venture area include:

• Diamond drilling targeting potential depth extensions to the Monty Deposit;

• Ongoing DHEM surveying of deep RC and DDH holes; and

• Continued systematic AC drilling over the Southern Volcanics.

The discovery of the high-grade Monty deposit bolsters the eastern Bryah Basin as a highly prospective exploration district with excellent potential for additional VMS discoveries.

- 5 -

HALF-YEAR FINANCIAL REPORT FOR THE SIX MONTHS ENDED 31 DECEMBER 2016 DIRECTORS’ REPORT

3 Review and results of operations (continued)

3.1 Project review, strategies and future prospects (continued)

AUSTRALIAN AND INTERNATIONAL EXPLORATION

Sandfire has a number of exploration joint ventures around Australia including the Borroloola Project; Altia Project; Breena Plains Project; Temora & Currumburrama Project; Wingrunner and Wilga Hill Project; and the Alford Project. The Group also has an investment in Tintina Resource’s Black Butte Copper Project located in USA and an investment in WCB Resources (Misima Copper Project located PNG).

Details of these projects can be found on Company’s website www.sandfire.com.au and the Company’s Sandfire December 2016 Quarterly Report ASX announcement, released on 24 January 2017.

3.2 Review of financial results

	DeGrussa
	Copper Mine	**OtherA **	Group
6 months ended 31 December 2016	$ million	$ million	$ million
Sales revenue	248.0	-	248.0
Profit (loss) before net finance and income tax	76.4	(22.7)	53.7
Profit before income tax			52.9
Net profit			35.9
Basic and diluted earnings per share			22.8 cents

A Includes the Exploration & Evaluation segment and Other Activities as detailed in note 5 to the consolidated financial statements.

The DeGrussa Copper Mine contributed profit before net finance and income tax of $76.4 million (2015: $50.2 million) from underground mining and concentrator operations. Other includes the Exploration and Evaluation segment and the Group’s corporate expenses that cannot be directly attributed to the Group’s operating segments, and contributed a loss before net finance and income tax of $22.7 million (2015: loss of $24.2 million).

Dividends of $14.2 million were paid during the period in respect of the final 2016 financial year dividend. Since the end of the financial period, the Board of Directors has resolved to pay a fully franked dividend of 5 cents per share, to be paid on 21 March 2017. The record date for entitlement to this dividend is 7 March 2017. The financial impact of this dividend amounting to $7,887,000 has not been recognised in the Financial Statements for the half-year ended 31 December 2016 and will be recognised in subsequent Financial Statements.

Sales revenue

DeGrussa Copper Mine	31 Dec 2016 $ million 31 Dec 2016 %
Revenue from sales of copper in concentrate Revenue from sales of gold in concentrate Revenue from sales of silver in concentrate	213.7 86.2
	30.7 12.4
	3.6 1.4
	248.0 100.0

A total of 13 shipments were completed from Port Headland and Geraldton during the period.

From time to time the Group may utilise QP hedging to either fix the price of sales at the time of shipment or to reduce the length of the QP, therefore reducing the short and medium term exposure to the market price of metal for completed or imminent shipments. 12,450 tonnes of copper sales subject to QP were hedged under vanilla USD copper swaps during the period ended 31 December 2016. A gain of $1.5 million has been recognised as part of other income with respect to closed hedges and a further $2.1 million has been recognised within finance income, representing the fair value of open hedges at 31 December 2016. The hedges are considered to be economic hedges, however were not designated into a hedging relationship for accounting purposes.

Operations costs

DeGrussa Copper Mine 6 months ended 31 December 2016	31 Dec 2016 $ million 31 Dec 2015 $ million
Mine operations costs Employee benefit expenses Freight, treatment and refining expenses Changes in inventories of finished goods and work in progress	57.2 57.6 16.5 19.5 41.9 43.7 5.1 (13.4)
	120.7 107.4

- 6 -

HALF-YEAR FINANCIAL REPORT FOR THE SIX MONTHS ENDED 31 DECEMBER 2016 DIRECTORS’ REPORT

3 Review and results of operations (continued)

3.2 Review of financial results (continued)

Royalties

Royalties are levied at 5.0% for copper sold as concentrate and 2.5% for gold, plus native title payments. As DeGrussa’s production value is heavily weighted towards copper production, the combined royalty rate approximates the 5% level (net of allowable deductions).

Exploration and evaluation

Significant exploration and evaluation activities continued in and around the DeGrussa Copper Mine with the objective of discovering further ore bodies and lenses to establish a copper-gold VMS camp. For the period ended 31 December 2016, the Group’s Exploration and Evaluation segment contributed a loss before net financing expense and income tax of $16.9 million (2015: $18.9 million). In accordance with the Group’s accounting policy, exploration and evaluation expenditure is expensed as incurred.

Exploration and evaluation expenditure comprises expenditure on the Group’s projects, including:

• Near-mine and Doolgunna regional exploration, which include a number of joint venture earn-in arrangements, most significantly the Springfield Joint Venture with Talisman Mining Ltd;

• Other Australian exploration projects;

• Expenditure arising on the consolidation of the Group’s controlled entities, including the Group’s investment in Tintina Resources Inc; and

• Losses arising on the Group’s equity accounted investments, including the Group’s investment in WCB Resources Ltd.

Depreciation and amortisation

			Depreciation and
	WDV	WDV	amortisation
	December 2016	June 2016	during the period
	$ million	$ million	$ million
Mine development	209.3	209.2	34.2
Property, plant and equipment	185.1	198.0	18.9
Total depreciation and amortisation			53.1

Investments – Tintina Resources Inc (“Tintina”; TSX-V: TAU)

The Group increased its stake in North American copper development company Tintina Resources Inc (“Tintina”; TSX-V: TAU) to 61% from 57%. The additional shareholding, comprising 70,691,163 shares at an average price of C$0.06 per share, was acquired by Sandfire executing its subscription privileges to purchase their pro rata share of common shares offered under Tintina’s rights offer, which closed on 19 October 2016. Total consideration for the purchase amounted to C$4,241,000 ($4,250,000).

Tintina contributed $3.5 million (2015: $1.0 million) in losses to the Group’s result for the period ended 31 December 2016. $2.1 million (2015: $0.6 million) of these losses are attributable to the members of the parent entity.

Income tax expense

Income tax expense of $17.0 million for the period is based on the corporate tax rate of 30% on taxable income of the Group, adjusted for differences in tax and accounting treatments. Cash tax payments during the period amounted to $14.0 million. As at 31 December 2016, the Group had $8.5 million current tax payable with respect to the 2017 financial year.

Financial Position

Net assets of the Group have increased by $26.5 million to $410.1 million during the reporting period.

Cash balance

Group cash on hand was $107.1 million as at 31 December 2016 (the Company $100.7 million).

Trade and other receivables

Trade and other receivables include remaining funds from the sale of concentrate subject to provisional pricing and quotational periods at the time of sale.

Exploration and evaluation assets

Exploration and evaluation assets have increased by $2.7 million since 30 June 2016 predominantly due to the acquisition of the Thaduna/Green Dragon Copper Project from Ventnor Resources Limited ($2.2 million).

- 7 -

HALF-YEAR FINANCIAL REPORT FOR THE SIX MONTHS ENDED 31 DECEMBER 2016 DIRECTORS’ REPORT

3 Review and results of operations (continued)

3.2 Review of financial results (continued)

Mine properties

Further investment of $33.1 million has been made in underground mine development to establish decline and development access to the sulphide ore bodies ahead of stoping activities.

Property, plant and equipment

Property, plant and equipment at cost has increased by $5.7 million to $338.7 million at the end of the period.

Current and deferred tax liabilities

Taxable profit on operations during the period exceeded the tax credits resulting in the Group booking a current income tax liability of $8.5 million at period end. In addition the Group has booked a net deferred tax liability position of $55.5 million at balance date which predominantly relates to the differing tax depreciation and amortisation rates of mining assets and equipment compared to accounting rates.

Interest bearing liabilities – finance facilities

The Company’s total outstanding debt as at 31 December 2016 was $50 million under its Revolver Facility.

In light of its strong cash position (Group cash on hand as at 31 December 2016: $107 million) and the improvement in the Australian Dollar copper price over the past six months, the Company elected to repay the $50 million outstanding balance in its Revolver Facility subsequent to period end, on 31 January 2017. The Company retains access to the $85 million Revolver Facility, which can be redrawn if necessary.

This marks a significant milestone for the Company, with the original $380 million DeGrussa Finance Facility, which was secured in 2011 to fund the DeGrussa Copper Project, fully repaid nearly 12 months ahead of the scheduled repayment.

The Company also retains a $25 million working capital facility with ANZ, currently undrawn, which can be drawn down against the value of saleable copper concentrate inventories held by the Company at the mine and ports.

Cash Flows

Operating activities

Net cash inflow from operating activities was $96.7 million for the year. Net cash flow from operating activities prior to exploration and evaluation activities was $112.8 million for the year.

Investing activities

Net cash outflow from investing activities was $41.6 million for the period. This included payments for property, plant and equipment purchases ($6.5 million) and payments for mine development ($34.9 million).

Financing activities

Net cash outflow from financing activities of $14.3 million for the period includes the payment of interest and other costs of finance ($1 million) and dividend payments ($14.4 million).

3.3 Corporate

Investment in Tintina Resources Inc

The Group increased its stake in North American copper development company Tintina Resources Inc (“Tintina”; TSX-V: TAU) from 57% to 61%. The additional shareholding, comprising 70,691,163 shares at an average price of C$0.06 per share, was acquired by Sandfire executing its subscription privileges to purchase their pro rata share of common shares offered under Tintina’s rights offer, which closed on 19 October 2016. Total consideration for the purchase amounted to C$4,241,000 ($4,250,000).

Acquisition of Thaduna/Green Dragon Copper Project

The Company executed an agreement with Ventnor Resources Limited (“Ventnor”) and its wholly-owned subsidiary Delgare Pty Ltd on 19 August 2016 to acquire the remaining 65% of the Thaduna/Green Dragon Copper Project, located 40km east of DeGrussa. Under the terms of the agreement, which settled on 22 August 2016, Sandfire issued Ventnor’s nominee 352,423 ordinary fully paid shares as consideration for the acquisition.

Farm-in agreement with Enterprise Metals

Sandfire entered into a Farm-in Agreement with Enterprise Metals Limited (“Enterprise”) to earn up to a 75% interest in Enterprise’s Doolgunna Project, which adjoins Sandfire’s Doolgunna tenements to the south.

Under the terms of the agreement, Sandfire issued Enterprise 58,431 ordinary fully paid shares at commencement and must spend a minimum of $1.5 million on exploration within two years. Sandfire may withdraw at any time after it has satisfied the Minimum Expenditure Condition without penalty. Sandfire then has the option to sole fund exploration to define a JORC 2012 compliant Mineral Resource of 50,000 tonnes of contained copper or copper equivalent resource, to earn a 75% interest in the Tenements. There is no time limit for Sandfire to satisfy the earn-in.

- 8 -

HALF-YEAR FINANCIAL REPORT FOR THE SIX MONTHS ENDED 31 DECEMBER 2016 DIRECTORS’ REPORT

3 Review and results of operations (continued)

3.3 Corporate (continued)

Board and management

The Company announced the resignation of Mr Michael Spreadborough as Chief Operating Officer with effect from 30 September 2016. Mr Martin Reed was appointed interim Chief Operating Officer.

On 30 December 2016, the Company announced:

• the appointment of Dr Roric Smith as independent non-executive director; and

• the resignation or Mr W John Evans as non-executive director.

4 Significant events after the balance date

Dividends

Since the end of the financial period, the Board of Directors has resolved to pay a fully franked dividend of 5 cents per share, to be paid on 21 March 2017. The record date for entitlement to this dividend is 7 March 2017. The financial impact of this dividend amounting to $7,887,000 has not been recognised in the Financial Statements for the half year ended 31 December 2016 and will be recognised in subsequent Financial Statements.

5 Rounding

The amounts contained in this report and in the financial report have been rounded to the nearest $1,000 (unless otherwise noted) under the option available to the Company under ASIC Corporations (Rounding in Financial/Director’s Reports) Instrument 2016/191. The entity is a Company to which the instrument applies.

6 Auditor independence declaration

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

==> picture [454 x 402] intentionally omitted <==

- 9 -

HALF-YEAR FINANCIAL REPORT FOR THE SIX MONTHS ENDED 31 DECEMBER 2016 DIRECTORS’ REPORT

Signed in accordance with a resolution of the directors:

==> picture [126 x 45] intentionally omitted <==

Derek La Ferla Non-Executive Chairman

==> picture [175 x 42] intentionally omitted <==

Karl Simich Managing Director and Chief Executive Officer

Dated at West Perth this 20[th] day of February 2017.

- 10 -

INTERIM CONSOLIDATED INCOME STATEMENT

FOR THE SIX MONTHS ENDED 31 DECEMBER 2016

		31 Dec 2016	31 Dec 2015
	Note	$000	$000
Sales revenue	5	247,989	228,322
Realised and unrealised price adjustment gains (losses)		11,920	(16,392)
Other income		1,547	501
Changes in inventories of finished goods and work in progress		(5,119)	13,440
Mine operations costs		(57,233)	(57,593)
Employee benefit expenses		(24,239)	(26,369)
Freight, treatment and refining expenses		(41,893)	(43,746)
Royalties expense		(11,396)	(9,631)
Exploration and evaluation expenses		(11,516)	(14,613)
Depreciation and amortisation expenses		(53,140)	(44,923)
Share of net loss of equity accounted investments		(72)	(1,438)
Impairment expense		(135)	(1,171)
Reversal of impairment		-	2,045
Administrative expenses		(3,006)	(2,465)
Profit before net finance expense and income tax		53,707	25,967
Finance income		2,688	1,047
Finance expense		(3,481)	(4,051)
Net finance expense		(793)	(3,004)
Profit before income tax		52,914	22,963
Income tax expense	6	(16,985)	(7,289)
Net profit for the period		35,929	15,674
Attributable to:
Equity holders of the parent		37,334	16,106
Non-controlling interests		(1,405)	(432)
		35,929	15,674
Earnings per share (EPS):
Basic and diluted EPS attributable to ordinary equity holders of the parent (cents)		22.8	10.0

The interim consolidated income statement should be read in conjunction with the accompanying notes.

- 11 -

INTERIM CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME

FOR THE SIX MONTHS ENDED 31 DECEMBER 2016

	31 Dec 2016 $000 31 Dec 2015 $000
Net profit for the financial period Other comprehensive income Items that may be reclassified to profit or loss in subsequent periods: Foreign currency translation differences – net of income taxes Gain on revaluation of available-for-sale financial assets net of income tax	35,929 15,674 121 (1,482) 26 -
Other comprehensive income for the period, net of tax	147 (1,482)
Total comprehensive income for the period, net of tax	36,076 14,192
Attributable to: Equity holders of the parent Non-controlling interests	37,378 14,430 (1,302) (238)
	36,076 14,192

The interim consolidated statement of comprehensive income should be read in conjunction with the accompanying notes.

- 12 -

INTERIM CONSOLIDATED BALANCE SHEET

AS AT 31 DECEMBER 2016

Note	31 Dec 2016 $000 30 Jun 2016 $000
ASSETS Cash and cash equivalents 7 Trade and other receivables Inventories Other current assets	107,087 66,223 23,002 20,467 26,129 30,070 1,190 3,405
Total current assets	157,408 120,165
Receivables Inventories Exploration and evaluation assets Mine properties Property, plant and equipment Investments accounted for using the equity method Other financial assets	187 200 11,698 11,698 21,121 18,489 209,337 209,167 185,127 198,019 618 856 2,245 157
Total non-current assets	430,333 438,586
TOTAL ASSETS	587,741 558,751
LIABILITIES Trade and other payables Interest bearing liabilities 8 Income tax payable Provisions	32,929 30,885 50,306 1,767 8,533 7,222 3,175 3,563
Total current liabilities	94,943 43,437
Trade and other payables Interest bearing liabilities 8 Provisions Deferred tax liabilities	114 117 228 50,094 26,888 27,675 55,498 53,822
Total non-current liabilities	82,728 131,708
TOTAL LIABILITIES	177,671 175,145
NET ASSETS	410,070 383,608
EQUITY Issued capital Reserves Retained profits	230,236 228,014 2,778 2,369 170,821 147,602
Equity attributable to equity holders of the parent Non-controlling interest	403,835 377,985 6,235 5,623
TOTAL EQUITY	410,070 383,608

The interim consolidated balance sheet should be read in conjunction with the accompanying notes.

- 13 -

INTERIM CONSOLIDATED STATEMENT OF CHANGES IN EQUITY

FOR THE SIX MONTHS ENDED 31 DECEMBER 2016

			Share	Foreign
			based	currency					Non-
		Issued	payments	translation	Fair value	Capital	Retained		controlling	Total
		capital	reserve	reserve	reserve	reserve	profits	Total	interests	equity
	Note	$000	$000	$000	$000	$000	$000	$000	$000	$000
For the six months
ended 31 Dec 2016
At 1 Jul 2016		228,014	2,760	415	-	(806)	147,602	377,985	5,623	383,608
Profit for the period		-	-	-	-	-	37,334	37,334	(1,405)	35,929
Other comprehensive
income		-	-	18	26	-	-	44	103	147
Total comprehensive
income for the period		-	-	18	26	-	37,334	37,378	(1,302)	36,076
Issue of shares		2,300	-	-	-	-	-	2,300	-	2,300
Capital raising costs		(78)	-	-	-	-	-	(78)	(44)	(122)
Share based payments
recognised		-	542	-	-	-	-	542	28	570
Share based payments
lapsed		-	(76)	-	-	-	76	-	-	-
Dividends	9	-	-	-	-	-	(14,191)	(14,191)	-	(14,191)
Rights issue in controlled
entity		-	-	-	-	(101)	-	(101)	1,930	1,829
At 31 Dec 2016		230,236	3,226	433	26	(907)	170,821	403,835	6,235	410,070

		Share	Foreign
		based	currency					Non-
	Issued	payments	translation	Fair value	Capital	Retained		controlling	Total
	capital	reserve	reserve	reserve	reserve	profits	Total	interests	equity
	$000	$000	$000	$000	$000	$000	$000	$000	$000
For the six months
ended 31 Dec 2015
At 1 Jul 2015	225,520	5,801	1,779	-	-	114,678	347,778	-	347,778
Profit for the period	-	-	-	-	-	16,106	16,106	(432)	15,674
Other comprehensive
income	-	-	(1,676)	-	-	-	(1,676)	194	(1,482)
Total comprehensive
income for the period	-	-	(1,676)	-	-	16,106	14,430	(238)	14,192
Share based payments
recognised	-	385	-	-	-	-	385	-	385
Warrants reserve	-	-	-	-	(784)	-	(784)	-	(784)
Dividends	-	-	-	-	-	(15,685)	(15,685)	-	(15,685)
Acquisition of subsidiary	-	-	-	-	-	-	-	7,293	7,293
At 31 Dec 2015	225,520	6,186	103	-	(784)	115,099	346,124	7,055	353,179

The interim consolidated statement of changes in equity should be read in conjunction with the accompanying notes.

- 14 -

INTERIM CONSOLIDATED STATEMENT OF CASH FLOWS

FOR SIX MONTHS ENDED 31 DECEMBER 2016

Note	31 Dec 2016 $000 31 Dec 2015 $000
Cash flows from operating activities Cash receipts Cash paid to suppliers and employees Income tax paid Payments for exploration and evaluation Interest received	258,687 217,473 (132,468) (146,585) (13,995) (5,509) (16,166) (18,552) 625 800
Net cash inflow from operating activities	96,683 47,627
Cash flows from investing activities Payments for exploration and evaluation assets Proceeds from sale of property, plant and equipment Payments for property, plant and equipment Payments for mine properties Acquisition of subsidiary, net of cash acquired Refund of security deposits and bonds	(159) (68) 5 403 (6,505) (8,780) (34,944) (35,137) - 3,696 13 22
Net cash outflow from investing activities	(41,590) (39,864)
Cash flows from financing activities Proceeds from share issue – Tintina Share issue costs Repayment of borrowings Repayment of finance lease liabilities Interest and other costs of finance paid Cash dividendpaid to equityholders	1,829 - (122) - - (45,000) (544) (971) (997) (1,810) (14,421) (15,851)
Net cash outflow from financing activities	(14,255) (63,632)
Net increase (decrease) in cash and cash equivalents Net foreign exchange differences Cash and cash equivalents at the beginning of the period	40,838 (55,869) 26 (91) 66,223 107,154
Cash and cash equivalents at the end of the period 7	107,087 51,194

The interim consolidated statement of cash flows should be read in conjunction with the accompanying notes.

- 15 -

NOTES TO THE HALF-YEAR FINANCIAL REPORT

FOR THE SIX MONTHS ENDED 31 DECEMBER 2016

1 Corporate information

The interim consolidated financial statements of Sandfire Resources NL and its subsidiaries (the Group) for the six months ended 31 December 2016 were authorised for issue in accordance with a resolution of the directors on 20 February 2017.

Sandfire Resources NL (the Company or Sandfire) is a for profit 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. Information on the Group’s structure is provided in note 4.

2 Basis of preparation and changes to the Group’s accounting policies

Basis of preparation

The interim consolidated financial statements for the six months ended 31 December 2016 have been prepared in accordance with AASB 134 Interim Financial Reporting and the Corporations Act 2001 and have been prepared on a going concern basis which contemplates the continuity of normal business activities and the realisation of assets and the settlement of liabilities in the ordinary course of business.

The interim consolidated financial statements do not include all the information and disclosures required in the annual financial statements, and should be read in conjunction with the Group’s annual financial statements as at 30 June 2016. The annual report of the Group as at and for the year ended 30 June 2016 is available on request from the Company’s registered office or at www.sandfire.com.au.

Accounting policies, accounting standards and interpretations

The accounting policies applied by the Group in the preparation of the interim consolidated financial statements are consistent with those applied by the Group in the preparation of the annual consolidated financial statements for the year ended 30 June 2016, except for the adoption of new and amended standards and interpretations as of 1 July 2016.

New standards, interpretations and amendments thereof, adopted by the Group

From 1 July 2016 the Group has adopted all Australian Accounting Standards and Interpretations effective for annual periods beginning on or before 1 July 2016. The adoption of new and amended standards and interpretations had no impact on the financial position or performance of the Group.

Early adoption of standards

The Group did not early adopt any accounting standards, interpretations or amendments, issued and available for early adoption, during the half-year.

3 Critical accounting estimates and judgements

The preparation of 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 the interim consolidated financial statements, the significant judgements made by management in applying the Group’s accounting policies and the key sources of estimation uncertainty were consistent with those that applied to the annual consolidated financial statements as at and for the year ended 30 June 2016.

4 Information about subsidiaries

The interim consolidated financial statements of the Group include:

The interim consolidated financial statements of the Group include:
Country of incorporation Name Note	% equity interest
	31 Dec 2016 31 Dec 2015
Tintina Resources Inc (i) Canada Sandfire BC Holdings (Australia) Pty Ltd Australia Sandfire BC Holdings Inc Canada SFR Copper & Gold Peru S.A. Peru	61.18 57.19 100.00 100.00 100.00 100.00 100.00 100.00

(i) The Group increased its stake in North American copper development company Tintina Resources Inc (“Tintina”; TSX-V: TAU) from 57% to 61%. The additional shareholding, comprising 70,691,163 shares at an average price of C$0.06 per share, was acquired by Sandfire executing its subscription privileges to purchase their pro rata share of common shares offered under Tintina’s rights offer, which closed on 19 October 2016. Total consideration for the purchase amounted to C$4,241,000 ($4,250,000).

Associates

The Group has a 38.28% interest in WCB Resources Ltd (31 Dec 2015: 38.38%).

- 16 -

NOTES TO THE HALF-YEAR FINANCIAL REPORT FOR THE SIX MONTHS ENDED 31 DECEMBER 2016

5 Segment information

The Group has two operating segments as follows:

• The DeGrussa Copper Mine, a copper-gold mine located in the Bryah Basin mineral province of Western Australia, approximately 900 kilometres north-east of Perth and 150 kilometres north of Meekatharra. The DeGrussa Copper Mine generates revenue from the sale of copper-gold products to customers in Asia; and

• Exploration and evaluation, which includes exploration and evaluation of the mineral tenements in Australia and overseas, including exploring for potential repeats of the DeGrussa Volcanogenic Massive Sulphide (VMS) mineralised system at the Doolgunna Project and the Group’s investment in Tintina Resources Inc (Tintina) and WCB Resources Ltd (WCB).

Other activities include the Group’s corporate office, which includes all corporate expenses that cannot be directly attributed to the operation of the Group’s operating segments.

Segment information that is evaluated by key management personnel is prepared in conformity with the accounting policies adopted for preparing the financial statements of the Group.

policies adopted for preparing the financial statements of the Group.
DeGrussa Mine $000	Exploration & evaluation $000 Other activities $000 Group $000
Income statement for the six months ended 31 Dec 2016 Sales revenue 247,989 Realised and unrealised price adjustment loss 11,920 Other income 1,547 Changes in inventories of finished goods and work in progress (5,119) Mine operations costs (57,233) Employee benefit expenses (16,456) Freight, treatment and refining expenses (41,893) Royalties expense (11,396) Exploration and evaluation expenses - Depreciation and amortisation expenses (52,926) Share of net loss of equity accounted investments - Impairment expense - Administrative expenses -
	- - 247,989
	- - 11,920
	- - 1,547
	- - (5,119)
	- - (57,233)
	(5,024) (2,759) (24,239)
	- - (41,893)
	- - (11,396)
	(11,516) - (11,516)
	(109) (105) (53,140)
	(72) - (72)
	(135) - (135)
	- (3,006) (3,006)
Profit (loss) before net finance and income tax 76,433 Finance income Finance expense	(16,856) (5,870) 53,707
	2,688
	(3,481)
Profit before income tax Income tax expense	52,914
	(16,985)
Net profit for the period	35,929

- 17 -

NOTES TO THE HALF-YEAR FINANCIAL REPORT

FOR THE SIX MONTHS ENDED 31 DECEMBER 2016

5 Segment information (continued)

5 Segment information (continued)
	DeGrussa	Exploration &	Other
	Mine	evaluation	activities	Group
	$000	$000	$000	$000
Income statement for the six months ended 31 Dec 2015
Sales revenue	228,322	-	-	228,322
Realised and unrealised price adjustment loss	(16,392)	-	-	(16,392)
Other income	-	501	-	501
Changes in inventories of finished goods and work in progress	13,440	-	-	13,440
Mine operations costs	(57,593)	-	-	(57,593)
Employee benefit expenses	(19,485)	(4,072)	(2,812)	(26,369)
Freight, treatment and refining expenses	(43,746)	-	-	(43,746)
Royalties expense	(9,631)	-	-	(9,631)
Exploration and evaluation expenses	-	(14,613)	-	(14,613)
Depreciation and amortisation expenses	(44,712)	(102)	(109)	(44,923)
Share of net loss of equity accounted investments	-	(1,438)	-	(1,438)
Impairment expense	-	(1,171)	-	(1,171)
Reversal of impairment	-	2,045	-	2,045
Administrative expenses	-	-	(2,465)	(2,465)
Profit (loss) before net finance and income tax	50,203	(18,850)	(5,386)	25,967
Finance income				1,047
Finance expense				(4,051)
Profit before income tax				22,963
Income tax expense				(7,289)
Net profit for the period				15,674

Adjustments and eliminations

Finance income, finance costs and taxes are not allocated to individual segments as they are managed on a Group basis.

Segment assets

The Group does not separately disclose assets for its operating segments, as a majority of Group assets are attributable to the DeGrussa Copper Mine segment and the Group does not consider assets attributable to the exploration and other activities segments to be material.

Information about geographical areas and products

The Group’s sales revenue arises from sales to customers in Asia. For the 6 month period ended 31 December 2016, a majority of the product was sent to China for processing (69%), and a portion was sent to Philippines (31%). During the six month period ended 31 December 2015, a majority of the product was sent to China for processing (92%) and a portion was sent to Philippines (8%). The revenue information is based on the location of the customer’s operations.

Four customers (2015: three customers) individually accounted for more than ten percent of total revenue during the period. Sales revenue from these major customers ranged from 14% to 31% (2015 17% to 26%) of total revenue, contributing approximately 84% of total revenue (2015: 67%).

As at 31 December 2016 and 30 June 2016, no material assets or liabilities were located outside Australia.

- 18 -

FOR THE SIX MONTHS ENDED 31 DECEMBER 2016

NOTES TO THE HALF-YEAR FINANCIAL REPORT

6 Income tax

The Group calculates the period income tax expense using the tax rate that would be applicable to expected total annual earnings, that is, the estimated average annual effective income tax rate applied to the pre-tax income of the interim period. The major components of income tax expense in the consolidated interim income statement are:

	31 Dec 2016	31 Dec 2015
	$000	$000
Income taxes
Current income tax expense	15,564	5,876
Deferred income tax expense related to origination and reversal of temporary
differences	1,650	1,551
Over provision in prior periods	(229)	(138)
Income tax expense	16,985	7,289
Income tax expense (benefit) recognised in other comprehensive income	-	-
Total income tax	16,985	7,289
	31 Dec 2016	30 Jun 2016
	$000	$000
7 Cash and cash equivalents
Cash at bank and on hand	106,587	59,923
Debt service reserve account	500	6,300
	107,087	66,223
	31 Dec 2016	30 Jun 2016
	$000	$000
8 Interest bearing liabilities
Current interest bearing loans and borrowings
Obligations under finance leases and hire purchase contracts	243	344
Insurance premium funding	203	1,423
Secured bank loan
DeGrussa Project Loan Facility	50,000	-
Capitalised finance establishment costs (net of amortisation) offset	(140)	-
Total current interest bearing loans and borrowings	50,306	1,767
Non-current interest bearing loans and borrowings
Obligations under finance leases and hire purchase contracts	228	306
Secured bank loan
DeGrussa Project Loan Facility	-	50,000
Capitalised finance establishment costs (net of amortisation) offset	-	(212)
Total non-current interest bearing loans and borrowings	228	50,094

- 19 -

NOTES TO THE HALF-YEAR FINANCIAL REPORT

FOR THE SIX MONTHS ENDED 31 DECEMBER 2016

8 Interest bearing liabilities (continued)

8 Interest bearing liabilities (continued)
	31 Dec 2016	30 Jun 2016
	$000	$000
The Group has access to the following facilities:
DeGrussa Project Loan Facility	85,000	85,000
Working Capital Facility	25,000	25,000
Bond Facility	100	100
	110,100	110,100
Facilities utilised at reporting date:
DeGrussa Project Loan Facility	50,000	50,000
Working Capital Facility	-	-
Bond Facility	28	28
	50,028	50,028
Facilities not utilised at reporting date:
DeGrussa Project Loan Facility	35,000	35,000
Working Capital Facility	25,000	25,000
Bond Facility	72	72
	60,072	60,072

Finance facilities

The Group’s financing arrangements are provided under a secured loan facility with ANZ and are secured by a fixed and floating charge over the Group’s assets, including the DeGrussa Project and the broader Doolgunna Project, and a mining mortgage over the Project tenements.

DeGrussa Project Loan Facility

The Company elected to repay the $50 million outstanding balance in its Revolver Facility subsequent to period end, on 31 January 2017, and retains access to the $85 million available facility.

Working Capital Facility

The Company also retains a $25 million working capital facility with ANZ, which can be drawn down against the value of saleable copper concentrate inventories held by the Company at the mine and ports. The facility is designed to reduce the potential cash flow impact of timing of concentrate shipments and cash receipts. The facility remained undrawn at the date of this report.

			31 Dec 2016	31 Dec 2015
		Note	$000	$000
9	Dividends paid and proposed
Dividends on ordinary shares declared and paid:
Final	dividend for 2016: 9 cents per share (2015: 10 cents per share)		14,191	15,685
Proposed dividends on ordinary shares:
First	dividend for 2017: 5 cents per share (2016: 2 cents per share)	(i)	7,887	3,147

(i) Since the end of the financial period, the Board of Directors has resolved to pay a fully franked dividend of 5 cents per share, to be paid on 21 March 2017. The record date for entitlement to this dividend is 7 March 2017. The financial impact of this dividend amounting to $7,887,000 has not been recognised in the Financial Statements for the half year ended 31 December 2016 and will be recognised in subsequent Financial Statements.

- 20 -

NOTES TO THE HALF-YEAR FINANCIAL REPORT FOR THE SIX MONTHS ENDED 31 DECEMBER 2016

10 Financial assets and liabilities

Risk management activities

The Group’s activities expose it to a variety of financial risks such as:

• Market risk including interest rate risk, foreign currency exchange risk, commodity price risk and equity price risk;

• Credit risk; and

• Liquidity risk.

The risk management activities of the Group are consistent with those of the previous financial year unless otherwise stated.

Market risk

Commodity price risk

The Group is exposed to commodity price volatility on concentrate sales made by its DeGrussa Copper Mine that arises from sale of metal in concentrate products such as copper and gold, which are priced on, or benchmarked to, open market exchanges, specifically the London Metal Exchange (LME).

For sales based on prevailing LME metal prices, the customer makes a provisional payment to Sandfire against a provisional invoice for the contained copper and precious metal credits (for gold and silver) in the shipment. Final settlement of the payment is based on the average LME metal price over a subsequent pricing period as specified by the terms of the sales contract. The period commencing on the date of shipment to the end of the pricing period is known as the Quotational Period (QP). The QP historically reflects the average time to elapse (generally 2 to 4 months) between the date of shipment and the date of processing by the smelter at final destination. This pricing methodology is normal for the industry.

In order to reduce the exposure to fluctuations in copper price during the QP period, the Group may from time to time enter into derivative financial instruments with various counterparties, principally financial institutions with investment grade credit ratings, in the form of QP hedging via copper swaps to either fix the price of sales at the time of shipment or to reduce the length of the QP, therefore reducing the short and medium term exposure to the market price of metal for completed or imminent shipments.

12,450 tonnes of copper sales subject to QP were hedged under USD copper swaps during the period. A gain of $1,547,000 has been recognised as part of other income with respect to closed hedges and a further $2,062,000 has been recognised within finance income, representing the fair value of open hedges as at 31 December 2016. These hedges were considered to be economic hedges, however were not designated into a hedging relationship for accounting purposes.

The Group did not use any form of derivatives to hedge its exposure to commodity price risk during the previous interim period ended 31 December 2015 or the previous financial year ended 30 June 2016.

Carrying amounts and fair value

The carrying amount of all financial assets and all financial liabilities, except for the Group’s secured bank loan, recognised in the balance sheet approximates their fair value. The fair value of the Group’s secured bank loan is represented by the face value of the liability, prior to capitalised finance establishment costs (see note 8 for details).

Fair value hierarchy

All financial instruments for which fair value is recognised or disclosed are categorised within the fair value hierarchy, based on the lowest level input that is significant to the fair value measurement as a whole, as follows:

• Level 1 - Quoted (unadjusted) market prices in active markets for identical assets or liabilities.

• Level 2 - Valuation techniques for which the lowest level input that is significant to the fair value measurement is directly or indirectly observable.

• Level 3 - Valuation techniques for which the lowest level input that is significant to the fair value measurement is unobservable.

For financial instruments that are recognised at fair value on a recurring basis, the Group determines whether transfers have occurred between Levels in the hierarchy by re-assessing categorisation (based on the lowest level input that is significant to the fair value measurement as a whole) at the end of each reporting period.

There were no transfers between Level 1 and Level 2 fair value measurements and no transfers into or out of Level 3 fair value measurements during the period ended 31 December 2016 or the comparative period.

- 21 -

FOR THE SIX MONTHS ENDED 31 DECEMBER 2016

NOTES TO THE HALF-YEAR FINANCIAL REPORT

10 Financial assets and liabilities (continued)

The following table shows the fair values of financial assets and financial liabilities, other than cash and cash equivalents, including their levels in the fair value measurement hierarchy as at 31 December 2016.

		Level 1	Level 2	Level 3		Total
	Note	$’000	$’000	$’000		$’000
Financial assets measured at fair value
Available for sale investments – listed investments		183	-		-	183
Trade receivables	(i)	-	18,095		-	18,095
Other financial assets – commodity QP copper swaps	(ii)	-	2,062		-	2,062
		183	20,157		-	20,340

• (i) Trade receivables relate to concentrate sale contracts that are still subject to price adjustments where the final consideration to be received will be determined based on prevailing London Metals Exchange (LME) metal prices at the final settlement date. Sales that are still subject to price adjustments at balance date are fair valued by estimating the final settlement price using the LME forward metals prices at balance date. The receivables represent the present value of expected proceeds to be received.

• (ii) The fair value of the Company’s commodity QP copper swaps are determined based on the LME copper forward price curve.

The fair value of the financial instruments as at 30 June 2016 are summarised in the table below:

	Level 1	Level 2	Level 3		Total
	$’000	$’000	$’000		$’000
Financial assets measured at fair value
AFS quoted equity shares	157	-		-	157
Trade receivables	-	12,848		-	12,848
	157	12,848		-	13,005
Financial liabilities measured at fair value
Trade payables	-	232		-	232

11 Events subsequent to reporting date

Dividends

Since the end of the financial period, the Board of Directors has resolved to pay a fully franked dividend of 5 cents per share, to be paid on 21 March 2017. The record date for entitlement to this dividend is 7 March 2017. The financial impact of this dividend amounting to $7,887,000 has not been recognised in the Financial Statements for the half year ended 31 December 2016 and will be recognised in subsequent Financial Statements.

- 22 -

DIRECTORS’ DECLARATION FOR THE SIX MONTHS ENDED 31 DECEMBER 2016

In accordance with a resolution of the directors of Sandfire Resources NL, I state that:

In the opinion of the directors:

• (a) The financial statements and notes of Sandfire Resources NL for the half-year ended 31 December 2016 are in accordance with the Corporations Act 2001, including:

• (i) Giving a true and fair view of the consolidated entity’s financial position as at 31 December 2016 and of its performance for the half-year ended on that date; and

• (ii) Complying with AASB 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:

==> picture [126 x 45] intentionally omitted <==

Derek La Ferla Non-Executive Chairman

==> picture [175 x 42] intentionally omitted <==

Karl Simich Managing Director and Chief Executive Officer

Dated at West Perth this 20[th] day of February 2017.

- 23 -

INDEPENDENT AUDITOR’S REVIEW REPORT FOR THE SIX MONTHS ENDED 31 DECEMBER 2016

==> picture [483 x 683] intentionally omitted <==

- 24 -

INDEPENDENT AUDITOR’S REVIEW REPORT FOR THE SIX MONTHS ENDED 31 DECEMBER 2016

==> picture [483 x 683] intentionally omitted <==

- 25 -