Sandfire inks DSO sale

THE BOURSE WHISPERER: Sandfire Resources has entered into a sales contract with international trading company MRI Trading AG where the latter will purchase 50 per cent of the Direct Shipping Ore to be produced from the former’s 100 per cent-owned DeGrussa copper-gold project in Western Australia.

DeGrusa project location. Source: Company announcement

Swiss based MRI is a subsidiary of Singapore-listed company, CWT Ltd.

The contract entails MRI purchasing 50 per cent of DSO production from DeGrussa, up to a maximum of 75,000 dry metric tonnes of DSO, for a one-year period commencing March 2012.

This is the first product sales agreement to be concluded by Sandfire for the DeGrussa project as it moves closer to production, which is anticipated to happen early next year.

The DSO will be produced as part of the initial open pit mining operation, which is well underway.

The open pit is scheduled to extract a total of 143,000 tonnes of DSO ore reserves grading 25.6 per cent copper and 2.5 grams per tonne gold containing approximately 37,000 tonnes of copper.

Sandfire said it is currently in advanced stage discussions with other parties regarding the sale of the remaining 50 per cent of the DeGrussa DSO and that it expects to conclude further sales arrangements in the near future.

The company has also commenced marketing discussions in relation to sales agreements for the sale of its copper concentrate.

“With the shipment of our first high-grade DSO expected during the second quarter of next year, it is appropriate that we have sales arrangements in place first for this aspect of the project,” Sandfire Resources managing director Karl Simich said in the company’s announcement to the Australian Securities Exchange.

“We are very pleased to have entered into this arrangement with one of the world’s leading commodity trading houses in MRI and we are looking forward to working closely with them as we commence production of DSO next year.”