The Montana Department of Environmental Quality (MTDEQ) released a positive record of decision (ROD) to grant a mine operating permit.

The preliminary air quality and Montana pollution discharge elimination system permits were also received.

The issue of the ROD now requires the MTDEQ to finalise a financial bond calculation within 40 days.

Once the bond is accepted, Sandfire is free to start construction.

However, the company, through its Toronto-listed subsidiary Sandfire Resources America, still needs to complete the final feasibility study and financing, both of which could be impacted by the COVID-19 pandemic.

Sandfire managing director Karl Simich said the ROD was a major achievement after years of patience and hard work.

"This positive outcome is testament both to the vision of the Sandfire America team and the support of the Montana authorities to work collaboratively to design and permit a modern, state-of-the-art new mine development that safeguards and protects our environment, while offering the potential to deliver significant economic benefits to local communities," he said.

"With this final permit now in place, we can move to complete the final elements of the Black Butte project feasibility study and financing considerations.

"The final timing of that will be advised in due course once we have a clearer insight into the potential impact of the COVID-19 pandemic on our work programs."

Black Butte's Johnny Lee deposit represents one of the highest copper grade undeveloped projects in the world with a measured and indicated undiluted resource of 10.9 million tonnes at 2.9% copper for 311,000 tonnes of contained copper, including the higher grade Lower Copper Zone at 6.8% copper, and an inferred resource of 2.7Mt at 3% copper for 80,000t of contained copper, at a 1.0% copper cut-off. 

Sandfire is planning a relatively shallow underground mine to be accessed via a 1700m decline.

Argonaut Securities analyst Matthew Keane expects a final investment decision by mid-year, which is also when an FID is expected for the Tshukudu copper project in Botswana.

"Argonaut expects Sandfire to commence early works on Black Butte as soon as possible, however development in earnest is likely to commence after its Botswana project is well advanced," he said.

"The company is well-funded for pipeline project development with A$201 million cash at December 31 and strong free cash generation even at the current suppressed copper prices (plus-$200 million per annum)."

Argonaut has a buy rating and $6 price target on Sandfire.

Sandfire shares opened 3.3% higher at $4.06, pushing the company's market capitalisation back through $700 million.