Sandfire Resources NL : December 2016 Quarterly Report

24 January 2017

ASX Limited

Level 40, Central Park

152-158 St George's Terrace Perth WA 6000

LODGEMENT OF DECEMBER 2016 QUARTERLY REPORT, QUARTERLY UPDATE PRESENTATION AND INVESTOR CONFERENCE CALL AND WEBCAST

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

1. December 2016 Quarterly Activities Report

2. December 2016 Quarterly Update Powerpoint Presentation

In addition, a teleconference and live webcast on the December 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: Tuesday, 24 January 2017

Access this webcast at: http://webcasting.boardroom.media/broadcast/587d3d20691f35760202e2ba http://www.sandfire.com.au

Yours sincerely,

Matt Fitzgerald Chief Financial Officer and Company Secretary

ASX Announcement 24 January 2017

QUARTERLY REPORT For the period ended 31 December 2016 Production & Operations

Highlights

Contained metal production	September 2016 Quarter	December 2016 Quarter	December 2016 Half Year	FY2017 Guidance
Copper (t)	15,610	18,130	33,740	65,000 - 68,000
Gold (oz)	9,731	10,183	19,914	35,000 - 40,000
C1 cost (US$/lb)	1.06	0.81	0.92	0.95 - 1.05

 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 the mine and primary ventilation system largely complete, with the mining contractor decreasing its development equipment.

Development & Exploration

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

• Multi-pronged exploration programs continuing at both Sandfire's Doolgunna Project and within the Springfield JV.

   First reconnaissance AC drilling commenced at the Ned's Creek Project.

   Data compilation and targeting commenced on the Enterprise Metals farm-in project.

  Corporate

• Sandfire to be debt-free following the planned repayment of the $50M balance in its Revolver Facility on 31 January 2017, nearly 12 months ahead of schedule (see separate ASX Announcement today, 24 January 2017).

• Retirement of long-serving Director, Mr John W Evans, from the Sandfire Board after nearly a decade with the Company. Effective from 31 December 2016, highly experienced and strongly-credentialed mining executive, Dr Roric Smith, will join the Board as an independent Non-Executive Director.

   Group cash on hand as at 31 December 2016: $107 million.

  1.0 SAFETY PERFORMANCE

  The Total Recordable Injury Frequency Rate (TRIFR) for the Sandfire Group at the end of December was 6.3. Recordable injuries include those that result in any days away from work (Lost Time Injuries), of which there was one in the Quarter, 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 continues to focus on prevention of incidents and improving the culture of employees and contractors, with Principal hazard management a key theme.

  Figure 1: Diamond drilling, Conductor 5 East (left); Massive sulphides in Conductor 5 stope (centre); Monty diamond drill core (right)

  2.0 OPERATIONS OVERVIEW

  Copper production for the December Quarter was 18,130 tonnes (September Quarter: 15,610 tonnes). C1 cash operating costs for the Quarter were US$0.81/lb (September Quarter: US$1.06/lb), driven by higher production, lower costs and higher by-product credits.

  Mine production for the Quarter was 389,087 tonnes grading 4.8% Cu. During the Quarter, ore was sourced from all lenses at DeGrussa.

  A total of 413,625 tonnes of ore grading 4.8% Cu was milled for the December Quarter, with copper recovery averaging 91.3%.

• MINING & PRODUCTION
• Overview

  December 2016 Quarter -

  Production Statistics Tonnes

  Grade (% Cu)

  Grade (g/t Au)

  Contained Copper (t)

  Contained Gold (oz)

  Concentrator Mined 389,087 4.8 1.6 18,841 20,513

  Milled 413,625 4.8 1.7 19,849 22,847

  Production 73,763 24.6 4.3 18,130 10,183

  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

  During the Quarter, production was sourced from all lenses at DeGrussa with the mine remaining in balance between production and back-fill. The majority of stopes performed as planned during the Quarter and there are now sufficient work fronts that allow flexibility in the schedule.

  Development of the mine and the primary ventilation system is largely complete with the contractor decreasing its development equipment. The focus will now turn to stoping as the primary source of ore.

  Work also commenced on the main underground pump station that is targeted for completion in the June 2017 Quarter.

• Processing

  Key processing metrics for the December 2016 Quarter included:

  • 413,625 tonnes milled at an average feed grade of 4.8% Cu (September Quarter: 393,031 tonnes at 4.4% Cu);

  • Overall copper recovery of 91.3% (September Quarter: 89.6%);

  • Concentrate production of 73,763 tonnes (September Quarter: 64,285 tonnes); and

  • Metal production of 18,130 tonnes of contained copper and 10,183 ounces of contained gold (September Quarter: 15,610 tonnes of contained copper and 9,731 ounces of contained gold).

Mill throughput in the December Quarter was impacted by a 40-hour unplanned outage to conduct a full replacement of a torn conveyor belt and a number of planned shutdowns to complete other scheduled corrective and preventative maintenance works.

Further optimisation of the primary grinding circuit is scheduled for implementation in the January 2017 planned maintenance shut.

Copper recovery for the December Quarter 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.

1. Guidance - FY2017

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.

C1 unit costs are expected to report marginally higher in 2HFY2017 (to around ~US$1.00 per lb) due to the planned and guided reduction in underground development capital work. This will result in increased mining overheads per unit of copper production.

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.

1. SALES AND MARKETING
2. Copper Concentrate Shipments

A total of 83,929 dry metric tonnes of concentrate containing 20,456 tonnes of copper (19,613 tonnes payable) and 12,309 ounces of gold (11,374 ounces payable) was sold for the Quarter. 8 shipments were completed from Port Hedland and Geraldton.

1. FEASIBILITY STUDIES & METALLURGY
2. 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 Quarter.

   Several work streams are continuing as part of this Feasibility Study, with a number of components now completed 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;

   • 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.