Sandfire Resources NL : September 2016 Quarterly Report

27 October 2016

ASX Limited

Level 8, Exchange Plaza 2 The Esplanade

Perth WA 6000

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

1. September 2016 Quarterly Activities Report

2. September 2016 Quarterly Update Powerpoint Presentation

In addition, a teleconference and live webcast on the September 2016 Quarterly Report will be held for the investment community at 10.00am (AWST) / 1.00pm (AEST) today.

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

Live date: Thursday, 27 October 2016

Access this webcast at: http://webcasting.boardroom.media/broadcast/58000984cf09bc4a2cca66f8

http://www.sandfire.com.au

Yours sincerely,

ASX Announcement 27 October 2016

Highlights

 Strong mine production and milling rates maintained for the Quarter.

 FY2017 production guidance maintained: 65-68kt Cu and 35-40koz gold at C1 ~US0.95-1.05/lb.

• Development of Conductor 4 and 5 declines completed to current life-of-mine design, with development transitioning to accelerated level development in the C4 and C5 lenses.

• Feasibility Study continuing on the Monty Copper-Gold Project (Springfield JV), with the study on track for completion in the March 2017 Quarter.

• 16.42km2 Mining Lease Application (MLA) lodged with the Western Australian Department of Mines and Petroleum for the Monty Copper-Gold Project.

   Second phase of geotechnical drilling completed for proposed Monty box-cut and decline.

• Multi-pronged exploration programs continuing at both Sandfire's Doolgunna Project and within the Springfield JV along the Monty and Homer trends including systematic drilling and geophysical programs.

• 14,517m of AC drilling completed at the Homestead Prospect, enhancing the geological model for further targeting.

• Mine Operating Permit (MOP) Application responses submitted for Tintina Resources' Black Butte Copper Project in Montana, USA, marking the start of the next stage in the permitting process for Black Butte.

  Corporate

   Payment of final dividend of 9 cents per share (fully franked).

   Acquisition of remaining 65% stake in the Thaduna Copper Project from Ventnor Resources.

  • Farm-in agreement with Enterprise Metals (ASX: ENT) to earn up to a 75% interest in key tenements to the south of the Company's Doolgunna Project.

• Sandfire increased its stake in North American copper development company Tintina Resources (TSX.V: TAU) from 57% to 61%, after subscribing for its full entitlement as part of a rights issue (October 2016).

   Group cash on hand totalled $54.4M as at 30 September 2016.

  1.0 SAFETY PERFORMANCE

  The Total Recordable Injury Frequency Rate (TRIFR) for the Sandfire Group at the end of September was 5.0. Recordable injuries include those that result in any days away from work (Lost Time Injuries) and those where an employee or contractor cannot perform all or any part of their normal shift (Restricted Work Day Injuries), as well as any injury that requires services that only a medical practitioner can provide (Medical Treatment Injuries).

  Safety systems development and critical control management continues to improve with ongoing focus being applied to improved safety leadership and culture with particular emphasis being applied to assuring controls associated with principal hazards are in place and effective.

  Figure 1: Diamond drilling, Conductor 5 East (left); DeGrussa Solar Farm (middle); DeGrussa core yard (right).

  2.0 OPERATIONS OVERVIEW

  Copper production for the September Quarter was 15,610 tonnes (June Quarter: 17,827 tonnes). C1 cash operating costs for the Quarter were US$1.06/lb (June Quarter: US$0.85/lb).

  Mine production for the Quarter was 345,144 tonnes grading 4.7% Cu. During the Quarter, production was sourced from all lenses at DeGrussa.

  A total of 393,031 tonnes of ore grading 4.4% Cu was milled for the September Quarter, with copper recovery averaging 89.6%.

• MINING & PRODUCTION
• Overview

  September 2016 Quarter - Production Statistics	Tonnes	Grade (% Cu)	Grade (g/t Au)	Contained Copper (t)	Contained Gold (oz)
  Concentrator Mined	345,144	4.7	1.7	16,171	19,183
  Milled	393,031	4.4	1.8	17,413	22,980
  Production	64,285	24.3	4.7	15,610	9,731

  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. Production Statistics are subject to change following reconciliation and finalisation subsequent to the end of the Quarter.

• Underground Mining

  Mining performance reflects a continued focus on production scheduling, reliable stope design and excavation, as well as improving mining fleet productivity. Opportunities to further enhance mine production will continue to be explored.

  During the Quarter, production was sourced from all lenses at DeGrussa with the mine remaining in balance between production and back-fill. Opportunities to replace paste back-fill in some stopes with mine waste continue to be identified, thereby reducing overall waste haulage to the surface and allowing a focus on ore haulage. Cemented rock-fill is being used to supplement the paste-fill to ensure the production schedule is maintained, but is steadily being reduced in favour of the lower cost paste.

  Development of both the Conductor 4 and Conductor 5 declines was completed to current life-of-mine design during the Quarter. With these declines now complete, development will transition to accelerated level development in the C4 and C5 lens.

• Processing

  Key processing metrics for the September 2016 Quarter included:

  • 393,031 tonnes milled at an average head feed grade of 4.4% Cu (June Quarter: 406,237 tonnes at 4.9% Cu);

  • Overall copper recovery of 89.6% (June Quarter: 90.5%);

  • Concentrate production of 64,285 tonnes (June Quarter: 73,084 tonnes); and

  • Metal production of 15,610 tonnes of contained copper and 9,731 ounces of contained gold (June Quarter: 17,827 tonnes of contained copper and 11,227 ounces of contained gold).

Mill throughput in the September Quarter was impacted by a campaign to treat stockpiled scats through the pebble crushing circuit. This required a series of planned 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 September Quarter was in line with the predicted recovery based on the resource copper grade and Cu:S ratio. Each mining area undergoes geo-metallurgical laboratory testing prior to processing, including grinding simulation and copper liberation testing to understand the impact of primary grind and the downstream circuit parameters on copper recovery and copper grade. This work is used to predict copper recovery performance compared with what would be expected from global macro indicators such as copper grade and Cu:S ratio, and is used to optimise ROM blending and processing tactics.

Sandfire is continuing to investigate opportunities for further improvements in copper recovery. These include examining additional flotation capacity, further improvements in grind optimisation and operating tactic optimisation.

Targeted copper production for FY2017 remains unchanged with production 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.

Mine production is forecast at 1.55Mt with the processing of 1.63Mt of ore achieved via the pull-down of ROM stocks. First and third quarter production have and will be impacted by planned shuts to re-line the SAG mill and replace the trunnion liner. Refer to Sandfire's September 2016 Quarterly Presentation (released today) for further detail and guidance on operating parameters and unit costs.

A total of 52,665 dry metric tonnes of concentrate containing 12,437 tonnes of copper (11,913 tonnes payable) and 7,482 ounces of gold (6,891 ounces payable) was sold for the Quarter. Shipments were completed from Port Hedland and Geraldton.

In July 2016 Sandfire, as Manager of the Springfield Joint Venture, submitted a Mining Lease Application (MLA) to the Department of Mines and Petroleum of Western Australia (DMP) over the Monty VMS Copper-Gold Project, located 10km east of its DeGrussa Copper Mine. The Springfield Unincorporated Joint Venture comprises participating interests of Sandfire (70%) and Talisman Mining Limited (ASX: TLM; "Talisman") (30%).

A maiden JORC 2012 compliant Indicated and Inferred Resource of 1.05 million tonnes grading 9.4% copper and 1.6g/t gold was completed for the Monty copper-gold deposit in April 2016 (see ASX Announcement - 13 April 2016), providing the foundation for a potential new satellite mining operation located 10km east of the DeGrussa Copper-Gold Project.