Sandfire Resources NL : Doolgunna Project - Monty Update

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ASX Announcement 20 January 2016

DOOLGUNNA PROJECT - MONTY DRILLING UPDATE

Highlights

• Diamond drilling continuing at Monty copper-gold discovery with four diamond rigs and one RC rig operating

• High-grade bornite zone extended up-dip and along strike with significant new intercepts including (down-hole widths, not true widths):
  • 25.8m grading 24.1% Cu and 0.5g/t Au from 299.0m down-hole including 14.9m grading 36.7% Cu and 0.4g/t Au from 309.0m (TLDD0061); and
  • 9.6m grading 14.1% Cu and 1.5g/t Au from 292.3m (TLDD0036)

• Drilling continues to support interpretations of the Monty mineralisation with the overall program on track to generate a maiden Mineral Resource estimate by the end of the March 2016 Quarter. Other significant new intercepts from recent in-fill drilling include (down-hole widths, not true widths):
  • 20.8m grading 14.9% Cu and 1.3g/t Au from 372.7m (TLDD0042);
  • 11.3m grading 6.7% Cu and 2.9g/t Au from 392.2m down-hole (TLDD0043); and
  • 13.9m grading 7.2% Cu and 2.3g/t Au from 332.7m down-hole (TLDD0046)

• Drilling of the Homer trend at Springfield has continued with an initial diamond hole completed targeting the C5 host stratigraphic horizon along strike from DeGrussa.

Sandfire Resources NL (ASX: SFR; "Sandfire") is pleased to provide an update on resource drilling at the Monty copper-gold discovery, located 10km east of the DeGrussa Copper-Gold Mine on the Springfield Project, part of its joint venture with Talisman Mining Limited (ASX: TLM; "Talisman") (see Figures 1 and 4).

Monty Drilling Update

Diamond drilling resumed at Monty in early January 2016 and is continuing with four diamond drill rigs on double shift and one Reverse Circulation drill rig on single shift.

Since the last Monty exploration update (ASX Announcement - 17 December 2015), approximately 4,310m of drilling has been completed. This drilling has focused on resource definition within the lower massive sulphide zone to generate sufficient information to support an initial Mineral Resource estimate for Monty, which is on track to be completed during the March 2016 Quarter.

Of note are drill holes TLDD0061 and TLDD0036, which have intersected massive sulphides containing bornite mineralisation both up-dip and along strike from the previously reported high- grade bornite-rich intersections in TLDD0026 (7.3m grading 6.2% Cu and 2.8g/t Au from 325.6m down-hole and 21.6m grading 34.4% Cu and 0.4g/t Au from 339.4m down-hole).

TLDD0061, which is located approximately 22 metres up-dip of TLDD0026, reflecting an apparent flattening of the dip of the mineralisation in this area, has returned the following intersections:

• 1.6 metres grading 7.9% Cu and 2.5g/t Au from 227.0m - 228.6m (down-hole width, top of intercept is 199m vertically below surface);

• 1.5 metres grading 7.2% Cu and 0.2g/t Au from 231.0m - 232.5m (down-hole width, top of intercept is 202m vertically below surface);

• 1.4 metres grading 3.5% Cu and 0.1g/t Au from 273.6m - 275.0m (down-hole width, top of intercept is 241m vertically below surface); and

• 25.8 metres grading 24.1% Cu and 0.5g/t Au from 299.0m - 324.8m

  (down-hole width, top of intercept is 263m vertically below surface), including:

  o 14.9 metres grading 36.7% Cu and 0.4g/t Au from 309.0m - 323.9m

  
  

  TLDD0036, which is located approximately 43 metres to the north-east along strike from TLDD0026, returned the following intersections:

  
  

• 1.1 metres grading 3.8% Cu and 0.7g/t Au from 260.3m - 261.4m (down-hole width, top of intercept is 231m vertically below surface);

• 9.6 metres grading 14.1% Cu and 1.5g/t Au from 292.3m - 301.9m (down-hole width, top of intercept is 258m vertically below surface);

• 1.1 metres grading 1.2% Cu and 0.4g/t Au from 305.4m - 306.5m (down-hole width, top of intercept is 269m vertically below surface);

• 3.9 metres grading 5.6% Cu and 1.4g/t Au from 312.2m - 316.1m (down-hole width, top of intercept is 275m vertically below surface); and

• 0.6 metres grading 1.8% Cu and 0.3g/t Au from 320.0m - 320.6m (down-hole width, top of intercept is 282m vertically below surface)

  
  

  The recent drilling results continue to substantiate initial interpretations of the orientation, grade and extent of the mineralisation at Monty that were based on the initial wide-spaced exploration holes. As can be seen, the morphology of the Monty mineralisation is evolving with the closer spaced drilling (see Figure 2 for the updated Monty long section).

  
  

  A number of significant intercepts continue to be generated by the resource in-fill drilling program, with some of the more notable down-hole intercepts including:

  
  

• TLDD0042 - 20.8 metres grading 14.9% Cu and 1.3g/t Au from 372.7m - 393.5m

• TLDD0043 - 11.3 metres grading 6.7% Cu and 2.9g/t Au from 392.2m - 403.5m

• TLDD0040 - 5.0 metres grading 9.8% Cu and 2.9g/t Au from 334.7m - 339.7m

• TLDD0046 - 13.9 metres grading 7.2% Cu and 2.3g/t Au from 332.7m - 346.6m

Exploration drilling at Springfield outside of Monty will continue as rigs become available with the progression of the resource definition drilling programme.

Drilling of the Homer trend at Springfield re-commenced following the Christmas break with a diamond drill hole testing the C5 host stratigraphic horizon along strike from drilling which had previously intersected exhalite sediments. Drill hole TLDD0068 is located 3.4km and 2.8km ENE of drill-holes TLDD0001 and TLDD0003 respectively, and was targeted at a base and trace metal geochemical anomaly identified from earlier drilling by Talisman.

No base metal sulphides were observed and assays are awaited. The drill hole has been PVC cased in preparation for down-hole EM surveying prior to further drilling in this emerging area.

Management Comment

Sandfire's Managing Director, Mr Karl Simich, said the Company was pleased with the progress being made as part of the resource drill-out at Monty, which was continuing to confirm the exceptional grade, consistency and tenor of the massive sulphide mineralisation in the lower massive sulphide zone.

"Monty is without doubt one of the most significant new high-grade copper discoveries in Australia, and our exploration team is continuing to make excellent progress towards establishing a maiden Mineral Resource estimate - which represents our first priority this year," he said.

"We are also continuing to develop a greater understanding of the potential of the Monty trend, where we believe there is excellent potential to discover new lenses and we have also re-commenced drilling at the Homer area, where we are targeting strike extensions of the highly prospective C5 stratigraphy.

"I am confident we will see further exploration success during the course of the year, building on the Monty discovery and reinforcing the potential of this district to host multiple VMS deposits."

ENDS

For further information contact:

Sandfire Resources NL

Karl Simich - Managing Director/CEO Office: [phone]

Read Corporate

Mobile: [phone] (Nicholas Read)

Mobile: [phone] (Paul Armstrong)

Figure 1: Monty Prospect showing drill-hole collar locations and interpreted schematic geology