The Perth-based junior explorer earlier this year made high-grade VMS (volcanic massive sulfide) copper-gold discoveries at its flagship Doolgunna project, which lies 900 kilometres north of Perth in Western Australia's North Murchison Goldfield.

The 395 square kilometre tenement package lies in the Peak Hill Mineral Field originally pegged by one of Australia's most successful prospecting geologists, the late Graeme Hutton, who established Sandfire and was the driving technical force behind Kimberley Diamond Company in the early 1990s.

The Sandfire story kicked off in April this year after the company discovered a zone of copper-gold sulfide mineralisation beneath a previously discovered 220m-long oxide gold zone at the DeGrussa prospect in the northeastern section of Doolgunna.

The company then decided to conduct an electro-magnetic (EM) survey over the area which identified a large and very strong conductor 160m north of the DeGrussa mineralisation. This has been named Conductor 1.

"Since then we have been running flat out," Sandfire Resources executive technical director John Evans told journalists during a site visit.

"This camp has grown like topsy and staff levels have risen dramatically with close to 50 people onsite."

Since April, Sandfire has been spitting out a large number of high-grade results from DeGrussa and Conductor 1, much to the delight of investors.

Assay results from DeGrussa have included 9.1m at 34.1% copper and 3.3gpt gold, 38.9m at 4.7% copper and 2.2gpt gold, and 30m at 8.6% copper and 2.8gpt gold, and 40.8m at 13.7% copper and 2.4gpt gold.

At Conductor 1, assay results included 8.9m at 5% copper and 1.5gpt gold, 26.1m at 7.3% copper and 3.1gpt gold, and 5.8m at 3.6% copper and 2.8gpt gold.

The company has also conducted step-out drilling to test a new massive sulfide lode, called Conductor 4, discovered some 200m east and 120m stratigraphically below Conductor 1.

So far at Conductor 4, assay results from diamond drilling have returned intersections of 17.7m at 5.4% copper and 1.9gpt gold, and 5.1m at 15% copper and 3.7gpt gold.

Sandfire is currently conducting further drilling to test down-plunge extensions of mineralisation.

The company expects to kick off 2010 with a maiden JORC compliant resource for Doolgunna in the first quarter.

Sandfire currently has three diamond rigs which are continuing infill drilling at Conductor 1 and DeGrussa to collect data for the maiden resource estimate.

To date, the company has drilled around 80 holes into the DeGrussa, Conductor 1 and Conductor 4 anomalies with some 90 holes targeted by Christmas.

Doolgunna is close to existing infrastructure with the Great Northern Highway running through the centre of the tenement package and the Goldfields gas transmission pipeline running some 20km to the east.

The bigger picture

Recently, the company carried out an airborne EM survey over the strike length of the prospective Narracoota Volcanics Horizon, revealing up to 17 conductive features that provide multiple targets for future exploration.

The company is currently working through the process of clearances and government approvals so it can proceed to drill these targets.

Sandfire Resources managing director Karl Simich said that following the survey, DeGrussa-Conductor 1 was ranked third in terms of priority EM targets at Doolgunna.

"We have got a number of other exciting targets," he said.

"After the EM survey, it would appear on assessment of all those discoveries from the independent experts that DeGrussa-Conductor 1 is the third high-prioritised EM target.

"The follow-up work the company will be embarking on is ground EM to define all those targets and then we will drill those targets.

"What those better targets turn out to be we will know when we start to drill, but gee it looks exciting."

According to a Geological Survey of Canada research report, an analysis of eight VMS districts in Canada and Japan revealed each district had an average diameter of 32km and contained on average 12 deposits each.

Simich said this research boded well for the junior explorer as there was a high likelihood of multiple VMS deposits at Doolgunna.

"We have always said that it is good anecdotal evidence that you never get one [VMS deposit] and we are hoping to get more than one," he said.

"I think what you got here is that it is early days ... it looks fantastic, but what is important to note is that any target might be significant.

"What if it turns out that this is not the monster and there is another monster? We might see something quite interesting, so watch this space.

"We are in for a very exciting period ahead with lots of great news flow."

Sandfire caught the imagination of punters earlier this year when its shares leapt from around 16c at the start of May to $1.10 by the end of June, peaking at $4.39 in mid-October.

In May, the company received backing from the world's fourth-largest steel producer, Korean-based POSCO, which took a strategic 19.99% stake in the junior explorer through a $7.2 million share placement.

Sandfire currently has cash on hand of $9.3 million, issued share capital of 107.1 million shares and a market capitalisation of around $380 million.

Shares in Sandfire closed yesterday at $3.60, down 9c.