HIGHLIGHTS - Australian Securities Exchange · QUARTERLY REPORT ENDED 31 MARCH 2010 Page | 3 Figure 1 – DeGrussa Project: 3D Geological Model and Preliminary Mine Design The completion

QUARTERLY REPORT FOR THE PERIOD ENDED 31 MARCH 2010

Sandfire Resources NL ABN 55 105 154 185

ASX Code: SFR Web Page: www.sandfire.com.au Issued Capital: Ordinary Shares 129.1M Options 10.8M Major Shareholders: POSCO 17% Institutions 19% Founders/Board 8% Directors: Karl M Simich Acting Chairman / Managing Director W. John Evans Executive Technical Director Jonghun Jong Non-Executive Director Management: Matthew Fitzgerald CFO/Company Secretary Martin Reed Project Manager

HIGHLIGHTS

DOOLGUNNA COPPER-GOLD PROJECT (Western Australia)

• Phase I JORC compliant resource calculated for the DeGrussa Project

(DeGrussa and Conductor 1 lenses only) comprising an Indicated and

Inferred Resource of 7.13Mt at 5.2% copper, 1.9g/t gold and 15g/t silver,

containing:

o 372,000t of copper, 439,000oz of gold, 3.4Moz of silver

• 94% or 6.7Mt of the Phase 1 Mineral Resource in the Indicated category

and available for conversion to Ore Reserves

• Outstanding intervals of shallow, high-grade chalcocite achieved in recent

drilling directly above the primary DeGrussa lens, highlighting the potential

for a significant zone of direct shipping material. Intercepts include:

o 27.4m of massive chalcocite (DGDD-126)


o 21.7m of massive chalcocite in separate layers (DGDD-134)


o 35.0m of chalcocite with minor sulphides (DGDD-148)

• Chalcocite is a copper sulphide mineral containing up to 79.8% Cu when

pure. Assay results for these and other intervals are awaited

• Three diamond rigs are currently completing an aggressive resource drill-

out of the chalcocite zone, focusing on a central 80-90m long central zone,

with a view to establishing an initial JORC resource

• Further significant intersections achieved in the Conductor 4 deposit some

60m east of the previous drilling. Hole DGDD-149 opens up the potential for

down-dip extensions of Conductor 4. Drilling is continuing:

o DGDD-149: 15.65m of massive sulphides from 589.5m and 3.3m of

massive sulphides from 631.2m

• 17km2 Mining Lease Application (MLA) lodged with the Western Australian

Department of Mines and Petroleum for the DeGrussa Project

• Scoping Study progressing with metallurgical core drilling completed and

metallurgical testwork program underway – first results expected in the

June 2010 Quarter

CORPORATE

• $67M raised through an institutional Share Placement and strongly

supported Share Purchase Plan

• Sandfire included in the S&P ASX 300 index of the Australian Securities

Exchange

• Project Manager and Chief Financial Officer appointed

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QUARTERLY REPORT ENDED 31 MARCH 2010

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OVERVIEW

Sandfire Resources NL (ASX: SFR – “Sandfire” or “the Company”) achieved several significant milestones

during the March 2010 Quarter, including estimation of a maiden Phase 1 JORC resource for its high-

grade DeGrussa Copper-Gold Project in Western Australia containing 372,000 tonnes of copper and

439,000 ounces of gold.

The achievement of this high-quality resource – within eight months from the commencement of the

resource drill-out – represents an outstanding achievement and underpins the value of the Company

and its growth strategy to become a leading mid-tier Australian mining company. Scoping Studies for a

potential mine development at DeGrussa progressed during the Quarter, with the lodgement of a

Mining Lease Application (MLA) marking the first critical milestone towards development.

Sandfire successfully raised $67 million on the back of the Phase 1 JORC resource announcement

through a strongly supported institutional share placement and Share Purchase Plan. This puts the

Company in a very strong position to fund both pre-development activities and continue to progress a

very aggressive 2010 exploration program both at DeGrussa and within the broader Doolgunna Project.

1. DOOLGUNNA COPPER-GOLD PROJECT, WESTERN AUSTRALIA (Sandfire 100%)

The Doolgunna Project is located 900km north of Perth and approximately 150km north of Meekatharra

in the Peak Hill mineral field of Western Australia. The Project comprises a dominant 395 square

kilometre tenement package within an emerging copper-gold mineralised belt. The Project area lies close

to a number of existing and historical gold mines and infrastructure including the Goldfields Gas Pipeline

and Great Northern Highway.

The DeGrussa Copper-Gold Project, which was discovered in mid-2010, lies in the north-eastern portion

of the Doolgunna tenements. A Phase 1 JORC compliant Indicated and Inferred Resource of 7.13 million

tonnes grading 5.2% copper, 1.9g/t gold and 15g/t silver was completed in February 2010. A Scoping

Study is currently underway on the DeGrussa Project.

Figure 1 – DeGrussa Project: Location

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1.1 Phase I JORC Resource – DeGrussa Copper-Gold Project

As reported last Quarter, Sandfire commissioned independent mining and resource consultants Coffey

Mining Pty Ltd to undertake an initial JORC resource estimate for the DeGrussa Project, encompassing

the DeGrussa and Conductor 1 lenses only. This Phase 1 resource was completed and announced during

the Quarter (see ASX Announcement, 22 February 2010 – “Phase 1 DeGrussa Resource: 372,000 tonnes

of copper and 439,000 ounces of gold” which includes the full Coffey Mining Report).

This resource, which was estimated using a cut-off grade of 1.0% Cu, was based on the results of 82

diamond drill holes and nine Reverse Circulation (RC) drill holes using mineralisation envelopes supplied

by Sandfire’s independent consulting geologist, Diederick Speijers, of McDonald Speijers.

The Phase 1 resource is summarized in Table 1 below:

Table 1 – DeGrussa Project, Phase I JORC Mineral Resource, February 2010

Lens Resource

Category

Tonnes

(Mt)

Copper

(%)

Gold

(g/t)

Silver

(g/t)

Contained

Copper

Metal

(tonnes)

Contained

Gold

(ounces)

Contained

Silver

(ounces)

DeGrussa Indicated 1.47 7.5 2.2 21 110,000 105,000 988,000

Inferred 0.15 5.1 2.5 13 8,000 12,000 62,000

Conductor 1

Indicated 5.20 4.6 1.8 13 239,000 306,000 2,219,000

Inferred 0.31 4.7 1.6 13 15,000 16,000 126,000

TOTAL –

2 lenses

Indicated 6.68 5.2 1.9 15 350,000 410,000 3,208,000

Inferred 0.46 4.8 1.9 13 22,000 28,000 188,000

TOTAL

7.13

5.2

1.9 15

372,000 439,000 3,396,000

Note: The resource was estimated by Coffey Mining Pty Ltd and is based on 82 diamond drill holes and 9 RC drill

holes completed prior to the end of December 2009. Drilling coverage is predominantly defined on a notional 40m

by 40m drill spacing on North-South orientated cross-sections. Statistical analyses on samples and 2m composites

were completed. Variography and search neighbourhood analysis were conducted as input into grade estimation.

Copper, gold and silver estimates have been generated by Ordinary Kriging. Values have been rounded and

differences may occur.

The Phase I resource – which was achieved within eight months of the discovery drill hole – is estimated

to contain 372,000 tonnes of copper metal, 439,000 ounces of gold and 3.4 million ounces of silver

within two major overlying lenses of coherent, uniform and steeply-dipping mineralisation commencing

approximately 120 metres below surface (see Figure 1 – DeGrussa Project: 3D Geological Model).

The Phase I resource encompasses all drilling up to the end of last year due to the large volume of assay

and geological data still to be processed. Therefore, it excludes the high-grade Conductor 4 lens and

significant resource potential within a high-grade chalcocite zone that lies directly above the DeGrussa

lode. These zones are currently being drill tested (see below).

The balance of drilling information for Conductor 4, extensions to the known lenses and the chalcocite

zone will be incorporated in the Phase II resource due by mid-2010.

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Figure 1 – DeGrussa Project: 3D Geological Model and Preliminary Mine Design

The completion of the maiden JORC resource for the DeGrussa Project is a landmark event for Sandfire

which provides a strong foundation for what the Company believes will rapidly progress as a high

quality, long-life mining operation.

The standout feature is the high grade of the resource which, combined with the continuous and thick

nature of the lenses, is expected to underpin a very robust future mining operation.

Figure 2 – Preliminary Mine Design Level Plans Showing the Conductor 1 and DeGrussa Lodes

Over 90% of the maiden resource has already been classified in the JORC Indicated category, which is a

higher level of confidence. This material is available for conversion to Ore Reserves once economic

parameters are applied to the deposit.

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The maiden resource cements DeGrussa’s position as one of the most significant new mineral

discoveries in Western Australia in the past decade. The exceptional grade and metal content can be

expected to translate into a high value per tonne deposit which represents an outstanding asset for the

Company.

1.2 Exploration and Drilling Update – DeGrussa Project

Diamond drilling resumed at the DeGrussa Project on 4 January with the following key objectives:

• to in-fill high-grade portions of the resource to assist with completion of the Phase II resource

upgrade;

• to in-fill and extend the Conductor 4 deposit with a view to generating an initial JORC compliant

resource estimate; and

• to test the potential for additional mineralisation and VMS deposits in the immediate vicinity of

Conductor 1/DeGrussa.

Following completion of the Company’s capital raising during the Quarter (see Corporate Section below),

Sandfire expanded this program with the announcement of an $8 million-plus exploration initiative that

will see as many as 4-6 drilling rigs operating concurrently at Doolgunna over the next six months. The

objectives of this program are threefold:

1. Resource extension drilling within the immediate environment of the DeGrussa and Conductor 1

lenses to increase the Phase 1 JORC resource, including:

o The near-surface, high-grade chalcocite zone which lies immediately above the

DeGrussa lens. This zone was intersected by initial drilling last year which led to the

discovery of the deeper sulphide mineralisation;

o The Conductor 4 deposit, which lies approximately 200m east and stratigraphically below

the DeGrussa and Conductor 4 deposits. Previous intersections in this zone include 17.7m

@ 5.5% copper and 2g/t gold and 5.1m @ 15% copper and 3.7g/t gold.

2. A major program of deep diamond drilling in the near-mine environment, with a fence of five,

wide-spaced diamond holes of up to 2,000 metres each to be drilled targeting extensions of the

mineralisation or new lenses both along strike and down-dip of DeGrussa, Conductor 1 and

Conductor 4 lodes. These holes will provide a platform to conduct sophisticated directional down-

hole electromagnetic (DHEM) surveys targeting new sulphide lodes; and

3. Expanded regional RC and diamond drilling targeting previously defined VTEM targets within the

broader 395 square kilometre Doolgunna Project area as well as new targets defined by the

recently completed second airborne VTEM survey.

This aggressive exploration program forms part of Sandfire’s planned company-wide exploration

expenditure of $15-20 million for calendar 2010.

If required, the Company will secure additional drilling capacity over and above the four diamond drill

rigs currently on site to deliver this program and expects at different times to have a further 1-2

diamond rigs and up to two Reverse Circulation (RC) drilling rigs operating.

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Up to the time of this report, a total of approximately 160 diamond drill holes have been completed at

the DeGrussa Project, as shown in the updated drilling plan in Figure 3 below:

Figure 3 – DeGrussa Project: Diamond Drilling to 18 April 2010

Significant new assay results received since the December 2009 Quarterly Report which were

incorporated in the Phase I resource estimate (released to the ASX on 18 January 2010) are summarised

below:

Interval (down hole) Copper Gold Zinc Silver

Hole Number Lens From

(m)

To

(m)

Total

(m)

(Cu)

(%)

(Au)

(g/t)

(Zn)

(%)

(Ag)

(g/t)

DGDD-056 Conductor 1 111.0 117.3 6.3 3.5 4.0 1.2 13.0

DGDD-057 Conductor 1 238.0 243.0 5.0 5.8 1.3 8.0 1.5

DGDD-065 Conductor 1

Conductor 1

180.4

185.0

183.0

191.0

2.6

6.0

3.0

3.2

1.0

0.3

-

-

6.0

5.0

DGDD-069 DeGrussa

Conductor 1

275.5

407.5

277.6

424.0

2.1

16.5

17.8

2.2

7.5

1.8

2.0

0.8

37.0

10.0

DGDD-072 Conductor 1 135.9 153.0 17.4 5.0 2.0 0.8 13.0


Conductor 1

Conductor 1

255.3

266.9

294.5

257.1

290.6

296.6

1.8

23.7

2.1

2.7

5.4

5.9

1.0

1.9

0.5

-

0.8

-

6.0

13.0

12.0

DGDD-074 Conductor 1 413.0 417.8 4.8 2.7 3.1 3.2 22.0

DGDD-075 Conductor 1 319.1 345.0 25.9 4.7 2.2 1.0 15.0

DGDD-076 Conductor 1 381.6 413 31.4 4.6 2.1 1.9 13.0

DGDD-077 Conductor 1 294.6 298.0 3.4 2.2 0.4 - 6.0

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Interval (down hole) Copper Gold Zinc Silver


(m)

To

(m)

Total

(m)

(Cu)

(%)

(Au)

(g/t)

(Zn)

(%)

(Ag)

(g/t)

Conductor 1 328.2 350.1 21.9 6.3 0.9 0.6 13.0

DGDD-079 Conductor 1 361.0 387.0 26.0 3.8 1.4 1.2 14.0


Conductor 1

353.0

363.0

361.9

377.0

8.9

14.0

10.6

1.6

3.0

0.2

1.9

-

29.0

5.0

DGDD-081A Conductor 1

Conductor 1

Conductor 1

336.0

359.0

369.4

356.0

364.0

384.3

20.0

5.0

14.9

4.8

3.6

4.7

0.8

0.2

1.9

0.7

-

1.9

7.0

4.0

21.0


Conductor 1

Conductor 1

127.6

144.9

264.0

129.6

149.3

283.3

2.0

4.4

19.3

3.3

12.7

4.6

3.9

1.9

1.8

-

-

1.6

11.0

19.0

18.0

DGDD-084 Conductor 1 431.0 434.1 3.1 3.0 0.8 - 12.0

DGDD-085 Conductor 1 427.2 434.0 6.8 14.8 1.7 - 31.0


Conductor 1

378.7

396.9

387.0

424.0

8.3

27.1

7.2

2.9

0.2

1.3

-

1.8

3.0

14.0

(All intervals are downhole)

Assay results received recently and not included in the Phase I JORC resource estimate are summarized

below:


(m)

To

(m)

Total

(m)

(Cu)

(%)

(Au)

(g/t)

(Ag)

(g/t)

DGDD-090 Conductor 1 346.4 375.5 29.1 4.7 1.1 7.0

DGDD-093 DeGrussa

Conductor 1

306.0

386.0

311.0

397.0

5.0

11.0

10.8

2.1

1.1

2.3

16.8

16.1


Conductor 1

490.2

511.8

498.0

518.5

7.9

6.7

2.2

1.2

0.4

1.7

9.0

8.9


Conductor 1

180.4

185.0

183.0

191.0

2.6

6.0

3.0

3.2

1.0

0.3

6.0

5.0

DGDD-117 Conductor 1 376.0 397.0 21.0 13.1 2.8 29.0

DGDD-118 Conductor 1 229.0 253.0 24.0 7.7 2.7 16.8

DGDD-120 DeGrussa

Conductor 1

197.0

328.0

256.0

351.0

59.0

23.0

5.1

3.2

1.5

2.0

17.6

18.1

In addition, further significant mineralised intercepts continue to be recorded from the DeGrussa

Project, as summarized in Table 1 attached to this Quarterly Report.

One diamond drill rig is currently focusing on drilling out the Conductor 4 deposit with a view to

establishing an initial JORC compliant resource for inclusion in the Phase II resource update.

Of particular note, hole DGDD-149 recent returned two significant intercepts approximately 60 metres

east of the easternmost intersections:

• Hole DGDD-149 15.65m of massive sulphides from 589.5m

3.3m of massive sulphides from 631.2m

This hole indicates that the Conductor 4 system remains open to the east and north, despite previous

indications from down-hole electromagnetic (EM) surveys that it had limited extensions in these

directions. Drilling is continuing.

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Final assay results from a large number of drill holes are pending, including a large number of additional

mineralized intercepts as summarized in Table 1 attached. These results are expected to become

available during the June 2010 Quarter.

All of these results plus ongoing drilling data will be incorporated into the Phase II resource estimate for

release either late in the June 2010 Quarter or early in the September 2010 Quarter. Aggressive drilling

will continue until a notional cut-off point in Mid-May, to enable timely review and processing of assay

results before handing over the updated database to Coffey Mining for preparation for the Phase II JORC

resource.

1.3 Drilling Update – Chalcocite Zone

Towards the end of the March Quarter, Sandfire commenced a program of shallow diamond drilling to

test a zone of shallow, chalcocite-rich copper mineralisation located directly above the primary

DeGrussa deposit. This zone was originally intersected in RC drilling targeting oxide gold deposits which

resulted in the discovery of the deeper primary sulphide mineralisation at DeGrussa.

As reported to the ASX on 6 April, this drilling has intersected thick intervals of shallow, chalcocite-rich

copper mineralisation above the primary DeGrussa lens, highlighting the potential for a significant zone

of exceptionally high-grade, near-surface material.

The chalcocite evaluation program initially consisted of a series of vertical pre-collared diamond holes

drilled central to the line of the DeGrussa mineralisation to test the thickness of the oxide and residual

chalcocite cap of mineralisation overlying the primary chalcopyrite copper mineralisation, targeted by

Sandfire’s earlier evaluation program.

While assay results are awaited, geological logging of the core and field Niton analysis indicates that five

of the eight holes intersected thick intervals of chalcocite-rich massive sulphides overlying the primary

sulphide lode, as summarised below (see Table 2 attached for a full list of mineralised intercepts):

• Hole DGDD-126 27.4m of massive chalcocite from 89.0m


• Hole DGDD-133 10.0m of siliceous chalcocite from 40.0m

• Hole DGDD-134 21.8m of massive chalcocite in three separate layers from 57.3m to

100.6m


• Hole DGDD-148 35.0m of chalcocite with minor sulphides from 104.4m

Note: Chalcocite is a copper sulphide mineral containing up to 79.8% Cu when pure. It is formed locally

by the leaching by surface ground water of the primary chalcopyrite-rich mineralisation (chalcopyrite

contains 34.5% Cu).

Chalcocite has been intersected over a strike length of approximately 80 metres of the DeGrussa lode

and drilling is continuing to extend this and determine the width and thickness of the near-surface

mineralisation. Table 2 attached contains a full list of mineralized intercepts from this program.

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The location of the diamond drill holes targeting the chalcocite zone is shown in Figure 4 below:

Figure 4 – DeGrussa Project: Chalcocite Resource Definition Drilling Program

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Holes DGDD137 and 141, located in the south western end of the DeGrussa lode interested deep

primary chalcopyrite-rich massive sulphides below the depth of chalcocite formation. Hole DGDD 139,

located further south, did not intersect the chalcocite zone or primary DeGrussa lens but did intersect

the deeper Conductor 1 primary sulphide lode.

The near-surface, high-grade chalcocite zone lies directly above the DeGrussa lens, for which Sandfire

has reported a JORC compliant Indicated and Inferred Resource of 1.62Mt grading 7.2% copper, 2.2g/t

gold (containing 118,000 tonnes of copper metal and 117,000oz of gold).

Since the time of that announcement, a total of 17 chalcocite intersections of varying significance have

been achieved. The eastern end of this zone appears to comprise mainly chalcocite residual stringer

zones while the 80-90m thick solid central zone appears to comprise strong intersections of high-grade

chalcocite mineralisation.

Since establishing the presence of thick chalcocite intervals, Sandfire has commenced selective drilling

of inclined core holes and additional vertical holes aimed at establishing JORC compliant resources for

this higher-grade copper mineralisation.

The presence of an enriched chalcocite cap to the DeGrussa deposit, located directly above the primary

chalcopyrite sulphide lode, is considered to be a very significant and encouraging development. The

new results highlight the potential for a starter open pit operation based on extraction of a high-grade

direct shipping product before extraction of the primary underground sulphide resources commences.

1.4 Mine Development

Excellent progress was made during the Quarter with the Scoping Study for the DeGrussa Project,

including preparations for regulatory approvals, metallurgical test work and the lodgment of a Mining

Lease Application (MLA).

The Scoping Study is expected to transition seamlessly into a Pre-Feasibility Study (PFS) which will

commence by mid-CY 2010. This in turn will lead directly to a Definitive Feasibility Study commencing

later in the second half of CY 2010, which will provide a strong foundation for a potential mine

development process commencing in CY 2011.

Sandfire has continued to progress its Scoping Study to assess potential mine development options for

the DeGrussa Project and commenced the project approvals process. This includes:

• commencement of the process for obtaining key environmental and project approvals including

the appointment of environmental consultants and initial meetings with key regulators. Baseline

flora, fauna, archaeology and hydrological studies have commenced in preparation for

submissions to regulators;

• submission of a Mining Lease Application (MLA) and implementation of a process to address

Native Title and Heritage;

• completion of the first phase of mineralogical examination of the ore to support the

metallurgical testwork program. Also, a program of large-diameter metallurgical core drilling

has been completed within the resource envelope to provide some 5 tonnes of samples for

metallurgical test work. These samples have been submitted to the metallurgical test laboratory

and comminution testwork has commenced. Flotation testwork will commence in the next few

weeks, with first results expected in the June 2010 Quarter;

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• a preliminary underground mine design and schedule has been completed (see Figures 1 and 2

above). Open pit design work will commence once the current chalcocite drilling has been

completed; and

• other studies that have commenced include identification of water supply, geotechnical, gas and

power supply.

During the Quarter, Sandfire lodged an application with the Department of Mines and Petroleum of

Western Australia for a Mining Lease over the DeGrussa Copper-Gold Project.

The Mining Lease Application (MLA) process is integral to the current Scoping Study and the

advancement of the DeGrussa Project towards development as part of the Definitive Feasibility Study

due to commence in late September/early October 2010.

The area of the Mining Lease Application is approximately 17km2 and covers the known mineralisation at

DeGrussa, Conductor 1 and Conductor 4.

1.5 Regional Exploration – Emerging VMS Camp

While the principal focus of activity during the Quarter was resource drilling within the main DeGrussa

Project area, Sandfire did commence an initial program of regional diamond drill testing to progressively

test a series of VTEM targets within the host sequence of the Narracoota Volcanics, the stratigraphic

package which hosts the mineralisation at DeGrussa.

The targets tested during the Quarter were from the original package of 17 targets identified from the

first 150 square kilometre regional airborne EM surveys completed over Sandfire’s 395 square kilometre

tenement package at Doolgunna (see Figure 5 below).

The objective of Sandfire’s regional program is to test the potential for the Doolgunna Project to emerge

as a new VMS Camp with multiple deposits.

Drilling of the first VTEM target of the year was completed during the Quarter without intersecting

sulphide mineralisation. This drilling did encounter encouraging geology within the host rocks of the

Narracoota Volcanics, providing valuable geological information which will be applied across the

exploration program.

Sandfire has now received the results of a second very detailed, low-level 250km2 airborne magnetic

survey which was completed over the Doolgunna tenements last Quarter. While interpretation of these

survey data is still being completed, preliminary indications are that they will provide important new

directions in the Company’s regional exploration program.

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Figure 5 – Doolgunna Project: Geology and Initial Series of VTEM Targets

The new information is assisting Sandfire to prioritise areas within the stratigraphic sequences running

through its tenement holdings, with several exciting new targets identified. Ground EM surveys are

currently being undertaken over several priority airborne VTEM anomalies.

Programs of work have been submitted for drilling programs in up to 14 areas with drilling scheduled to

commence as clearances are obtained during the June 2010 Quarter.

Systematic drill testing of a series of VTEM targets will be progressively undertaken over the coming

months to provide a definitive test of the Doolgunna Project as a potential emerging VMS province.

The mineralisation style, chemistry and regional setting of the Conductor 1/DeGrussa Deposits are

consistent with Volcanogenic Massive Sulphide (VMS) style deposits. This type of mineralisation typically

occurs in clusters of deposits or occurrences, often with multiple centres of mineralisation across a

region or province.

Examples of major VMS deposits globally include Bathurst, Abitibi and Noranda in Canada, which

contain multiple deposits ranging in size from less than 1 million tonnes up to super-giant deposits of

over 100 million tonnes.

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1.6 Iron Ore Exploration

Sandfire has located and mapped seven separate zones of iron mineralisation within the Robinson Range

at Doolgunna. The total area of low phosphorus, hematite-goethite mineralisation is approximately

200,000 square metres contained in two moderate sized deposits and five small deposits. There are

several areas where the mineralisation extends under cover. The Doolgunna Project straddles the Great

Northern Highway and is ideally located for a small mining operation, trucking to either railheads or

export ports.

In light of the Company’s focus on the copper-gold discoveries at Doolgunna, no significant activity was

carried out on the Doolgunna iron ore prospects during the Quarter. However, the Company continues

to receive expressions of interest in the iron ore potential of its tenements from other operators in the

iron ore industry, particularly following the recent increase in iron ore prices.

2. BORROLOOLA PROJECT: NORTHERN TERRITORY (SANDFIRE 100%)

The Borroloola Project comprises a total area of 13,400 square kilometres of granted tenements and

tenements under application in the Northern Territory. The Project encloses a significant proportion of

the Batten Fault Zone, host to the giant McArthur River lead and zinc mine deposit. This deposit is the

second largest SEDEX base metal deposit in the world. The Project also covers near-coastal areas of

Cretaceous rocks considered to be highly prospective for sedimentary manganese mineralisation, similar

to the world-class Groote Eylandt manganese deposits north of the Borroloola Project in the Gulf of

Carpentaria.

2.1 Manganese Exploration

Last Quarter, Sandfire entered into an agreement with the ASX-listed mining services and contracting

company, Mineral Resources Limited (ASX: MIN), to fund the ongoing exploration and development of

its highly prospective Borroloola Manganese Project.

The agreement will see Mineral Resources – through its wholly-owned subsidiary, Process Minerals

International (PMI), which has a successful track record in the manganese industry – solely fund and

operate an exploration and development program at the Borroloola Project.

Mineral Resources/PMI will also solely fund the full cost of any mining operation (including all capital

costs) established at Borroloola as well as meeting all associated operating expenses of any manganese

operations. In return, Mineral Resources/PMI will be entitled to 70% of profits (before interest and tax)

flowing from the future sale of manganese products.

Essentially, under the agreement Sandfire will receive 30% of the profit (before interest and tax) from all

manganese operations undertaken by Mineral Resources/PMI and importantly at no risk or cost to

Sandfire. The deal also provides for full accommodation of Sandfire’s agreement with Korean steel

maker POSCO, under which POSCO is entitled to buy 30% of all manganese produced from any

operation. POSCO is Sandfire’s largest shareholder with a stake of 17.5%.

2.2 Base Metal Exploration

Sandfire’s original exploration objective at Borroloola was the discovery of high grade, large tonnage

SEDEX-style zinc, lead and silver mineral deposits within the McArthur Basin and in close proximity to

the Emu Fault Zone (EFZ) that is the eastern boundary of the Batten Fault Zone.

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This deposit type and geological setting is similar to that of the giant McArthur Mine (HYC Deposit) that

is located west of the EFZ and south of Sandfire’s Borroloola Project. Sandfire’s 13,400 square kilometre

Project encompasses a 100 km length of the EFZ that has been sparsely tested for repetitions of the

SEDEX style base metal mineralisation.

Sandfire’s regional program to date, including extensive airborne electromagnetic surveys has resulted

in the definition of two key target areas for drilling in 2010. The easternmost target lies directly within

the EFZ while the western target area includes a very strong EM conductor. Preparations are currently

underway to drill both of these target areas in the July-October 2010 period.

2.3 Iron Ore Exploration In light of the Company’s focus on the Doolgunna Project, no significant activity was carried out at

Borroloola during the Quarter.

However, exploration activities for iron ore in this region are gathering momentum with the recent

acquisition of the nearby Roper River Iron Ore Project (North Australian Iron Ore) by ASX-listed Batavia

Mining Limited and continued progress on the large-scale iron ore project being explored and developed

by a joint venture of Itochu and ASX-listed Western Desert Resources Limited.

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

The Urandy Project is located in the West Pilbara region some 80 km southeast of the coastal town of

Onslow. The property is prospective for gold and basemetals, hosted in the Paleoproterozoic Ashburton

Formation.

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

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

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

Field reconnaissance work was carried out on the Yannarie Project during the Quarter, checking the

surface geology of the previously identified prominent magnetic bullseye anomaly.

5. CORPORATE

5.1 $67 million Equity Raising

During the Quarter, Sandfire launched an equity raising comprising a fully underwritten institutional

share placement to raise approximately $51.6 million and a non-underwritten Share Purchase Plan

(“SPP”) capped at $15 million. Goldman Sachs JB Were were sole lead manager and sole bookrunner

and Bell Potter was co-lead manager to the institutional share placement.

The share placement was completed on 26 February, raising $42.5 million through the issue of 13.3

million shares to institutional and sophisticated investors at a price of $3.20. In addition, Sandfire

conducted a conditional placement comprising 2.8 million shares at $3.20 per share to Sandfire’s largest

shareholder, Posco Australia, to raise $9.1 million.

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Following the Placement, Sandfire offered eligible shareholders the opportunity to participate in a non-

underwritten SPP. The SPP provided eligible shareholders the opportunity, without incurring brokerage

or other transaction costs, to subscribe for up to $15,000 of new Sandfire ordinary shares.

The SPP was completed on 16 February 2010, raising $15 million at $3.20 per share. The SPP was

strongly supported by eligible shareholders, with applications totaling $22 million received. As a result,

applications were scaled back on a pro rata basis. The funds raised through the share placement and SPP

will be used to:

• Complete a Feasibility Study, approvals and other pre-development activities for a copper-gold

mine at the DeGrussa Project, part of its 100%-owned Doolgunna Project in Western Australia;

• Continue an aggressive exploration at Doolgunna and other regional exploration targets within

this emerging copper-gold mineralised province; and

• Progress exploration across its high quality portfolio of base metal and gold projects in the

Northern Territory and Western Australia.

5.2 New Appointments

During the Quarter, Sandfire appointed senior Australian mining executive Mr Martin Reed to the newly

created position of Project Manager, to lead the development of the DeGrussa Project.

Mr Reed is a qualified Mining Engineer with over 30 years experience across a range of commodities and

sizes of operations including most recently as Chief Operating Officer for a number of metals companies

including St Barbara Limited (2009 and 2004-07) and Windimurra Vanadium Limited (2008). In 2007, Mr

Reed was also General Manager Development & Operations for Paladin Energy Ltd during the final

ramp-up phase of its Langer Heinrich Uranium Mine in Namibia.

Prior to these appointments, Mr Reed held a number of senior executive positions in the mining

industry including roles where he was responsible for the planning and development of several large

mining operations in remote locations.

The Company also appointed highly experienced resource executive Mr Matthew Fitzgerald as Chief

Financial Officer and Company Secretary. Mr Fitzgerald is a Chartered Accountant who commenced his

career in the Assurance & Advisory Division of KPMG before joining ASX-listed diamond producer

Kimberley Diamond Company NL in 2003 as Chief Financial Officer and Director, a position he held until

June 2008.

W JOHN EVANS

TECHNICAL DIRECTOR

AUSIMM Competent Person

22 April 2010 Competent Person’s Statement The information in this public report that relates to Exploration Results and Mineral Resources is based on information compiled by Mr John Evans who is a Fellow of the Australasian Institute of Mining and Metallurgy. Mr Evans is a permanent employee and Director of Sandfire Resources NL. Mr Evans 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 Evans consents to the inclusion in the report of the matters based on his information in the form and context in which it appears.

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For further information, please contact:

Karl Simich – Managing Director

John Evans – Technical Director

Office: +61 8 6430 3800

Nicholas Read – Read Corporate:

Mobile: +61 419 929 046 (Nicholas Read)

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Table 1 Summary of All Mineralized Intercepts Recorded to Date for Diamond Core Drilling, Doolgunna

Project – Assay Results Awaited

Hole Number Purpose Deposit Interval (down hole)

Type From (m) To (m) Total (m)

DGDD087 Infill Conductor 1 247.9 248.2 0.3 Massive sulphides

248.8 248.9 0.1 Massive sulphides

DGDD043A Exploration Conductor 4 633.7 633.9 0.3 Massive sulphides


DGDD035A Exploration Conductor 4 647.0 664.6 17.6 Massive sulphides

DGDD081A Infill Conductor 1






DGDD089 Infill Conductor 1











DGDD093 Infill

DeGrussa 303.6 310.0 6.4 Massive sulphides


Conductor 1 376.6 378.8 2.2 Massive sulphides








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DGDD107 Infill

DeGrussa 121.6 150.0 28.4 Oxidised Massive

Sulphide






DGDD109 Infill



Conductor 1










DGDD114 Exploration Conductor 4 641.5 641.6 0.1 Sulphides

DGDD115 Exploration Conductor 4 594.0 597.4 3.4 Massive sulphides

DGDD116 Infill




DGDD117 Metallurgy Conductor 1 357.6 396.8 39.1 Massive sulphides

DGDD118

Metallurgy Conductor 1 229.0 253.0 24.0 Massive sulphides






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DGDD120 Metallurgy


Conductor 1




DGDD121 Infill


Conductor 1









DGDD043B Exploration Conductor 4 650.2 654.1 3.9 Massive sulphides










103.5 109.0 5.5 Sulphides


DGDD134 Exploration DeGrussa 101.5 130.5 29.1 Massive sulphides





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Table 2 Summary of Principal Chalcocite Intercepts for the DeGrussa Chalcocite Cap

Assessment

Hole

Number

Hole Details

(degrees,

direction)

Massive Chalcocite

Comment From (m) To (m) Total (m)

DGDD107 60, North 121.50 153.20 31.7 Massive chalcocite

DGDD126 Vertical

89.00 116.40 27.40 Massive chalcocite

133.00 146.40 13.40 Chalcocite and sulphides

DGDD131 Vertical


125.00 141.10 16.10 Chalcocite in clays

DGDD133 Vertical 40.00 50.00 10.00 Siliceous Chalcocite

DGDD134 Vertical




DGDD140 Vertical 99.85 139.83 39.98 Massive chalcocite

DGDD141 70, bearing

350 degrees 148.12 148.73 0.61 Chalcocite and sulphides

DGDD144 60, South



102.90 104.20 1.30 Massive chalcocite with minor

sulphides

DGDD145 60, South

110.00 115.00 5.00 Chalcocite with minor sulphides

117.40 119.70 2.30 Massive sulphides with minor

chalcocite

DGDD148 60, South

East 104.40 139.40 35.00 Chalcocite with minor sulphides

DGDD154 Vertical 106.80 109.40 2.60 Chalcocite, pyrite and chalcopyrite

DGDD156 Vertical

71.70 90.27 18.57 Massive chalcocite (>50%)

115.00 118.35 3.35 Massive chalcocite and chalcopyrite

(50:50, 100%)

DGDD158 Vertical

97.50 109.55 12.05 Massive chalcocite and pyrite

109.55 137.60 28.05 Clay, pyrite, chalcocite

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SCHEDULE OF MINING TENEMENTS 31 MARCH 2010

PROJECT TENEMENT NOTES

AREA (Graticule Blocks) Date of Grant

Borroloola MLN624 16.18ha 4/08/1971

EL24401 413 3/06/2005

EL25501 37 Application

EL25591 8 13/07/2007


EL26555 312 11/09/2008

EL26587 25 11/09/2008


EL26908 2 8/05/2009

EL26909 1 9/06/2009

EL26953 42 12/06/2009

SEL 26831 402 9/06/2009

SEL 26833 380 9/06/2009

SEL 26835 413 9/06/2009

SEL 26836 500 9/06/2009

SEL 26837 473 9/06/2009

SEL 26938 437 9/06/2009

SEL 26939 393 9/06/2009

Doolgunna E52/1698 7 1/08/2005

E52/1699 54 1/08/2005

E52/1715 54 22/06/2005

E52/2208 1 5/01/2009

E52/2209 1 5/01/2009

E52/2358 1 6/04/2009

E52/2401 1 7/07/2009

L52/120 129,254ha Application

M52/1046 1,791ha Application

Mt Anderson E04/1828 Granted 140 28/01/2010

E04/1829 Granted 187 25/03/2010

Mt Boggola E08/1433 15 11/10/2005

Sandfire E04/1344 35 20/10/2003

E04/1425 Surrendered

E04/1449 18 13/04/2005

E04/1451 17 13/04/2005

Urandy E08/1462 7 26/07/2005

E08/1463 6 26/07/2005

Yannarie E09/1111 18 22/06/2005

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Documents

HIGHLIGHTS - Australian Securities Exchange · QUARTERLY REPORT ENDED 31 MARCH 2010 Page | 3 Figure 1 – DeGrussa Project: 3D Geological Model and Preliminary Mine Design The completion