WA-based Sandfire Resources has announced an increase in its debt facility to $390 million for construction and development of its flagship DeGrussa project. The increase in the facility, followed the completion of a Definitive Feasibility Study (DFS) for the project in June.
The funding will be used to underpin plant and infrastructure construction at DeGrussa, with Sandfire confirming that plant construction, along with open pit and underground development would all remain on, or ahead of, the DFS schedule. “The construction phase will employ over 600 personnel at peak construction, with long-term employment of around 400,” Sandfire managing director and chief executive officer Karl Simich said in a statement.
“We also believe that the execution of our project development plan will set a new benchmark for the efficient and rapid development of resources in Western Australia.”
About $267 million will be allocated for plant, equipment and infrastructure, with a total expenditure of $300 million expected during the financial year ending June 2012.
Sandfire reported that forecast life-of-mine revenue from DeGrussa was $4.2 billion across an initial seven-year life, based on the four lenses of copper-gold mineralisation discovered at the project to date.
DeGrussa is on track to produce its first high-grade DSO copper ore in the first quarter of 2012. Plant construction is expected to take 12 months, with practical completion and commissioning scheduled for the third quarter of 2012, and first production of high-grade copper concentrate in the fourth quarter of 2012. Sandfire reported that it wasadvancing discussions for the sale of high-grade shippable material, with first shipment expected in the second quarter of 2012.
The company reported that it was also in negotiations with multiple parties for the sale of concentrate.
Sandfire rose to prominence in April 2009 with the discovery of the DeGrussa deposit, considered to be one of the most significant mineral finds in Australia in recent history.
Initial drilling returned some of the best intersections seen in WA mining in recent times: Discovery hole DGDD-001 intersected a total of 78.3 metres of high-grade copper-gold mineralisation, including
53.2m at 17.3 per cent copper and 2.5 grams per tonne of gold. Production from DeGrussa will average 77,000t per annum of copper and 36,00 ounces of gold per year in the first three years of operation, with revenue set to average $730 million per year. Meanwhile, Sandfire has been the focus of attention as a potential takeover target after OZ Minerals bought a 19.9 per cent stake a year ago.
Speculation was reignited when OZ Minerals topped up its stake in late September of this year, making the most of the downbeat equity market conditions.
By Reuben Adams