StoneBridge Research - Sandfire Resources NL (SFR $3.93) -...

StoneBridge Research - Sandfire Resources NL (SFR $3.93) - Doolgunna offers significant upside

Initiating Coverage with a BUY recommendation and set a $5.60/share price target

Sandfire Resources NL (SFR) is focused on developing its 100% owned Doolgunna copper/gold project in Western Australia. SFR discovered VMS mineralisation at Doolgunna in May 2009 and since that time has defined three distinct zones of high grade copper/gold mineralisation.
The company is expected to release a maiden resource in Q1 2010 as well as completing a scoping study on the project.
Our analysis of drill results received to date suggests that SFR has discovered an 8-10Mt deposit containing around 500kt of copper.
We expect the scoping study will outline the robust economics of the project.
Doolgunna has the potential to produce 50-60ktpa of copper in concentrate over a seven year period with production starting in 2012.
Project capital costs are estimated at US$200M which we believe SFR will fund through a combination of debt and equity.
We are initiating coverage on SFR with a BUY recommendation and set a $5.60/share price target.
The release of a maiden resource is likely to provide a positive catalyst for the company in the short term while results from drilling, which recommenced on 4 January 2010, has the potential to provide continued positive news flow over the remainder of the year.