The Montana Department of Environmental Quality released the draft environmental impact statement, which outlines the final permitting steps required.

The draft EIS will now be subject to a 60-day comment period, after which the department can respond to any feedback and issue a final EIS, followed by a record of decision and mine operating permit.

Sandfire estimates that could happen as early as the September quarter.

It is expected the definitive feasibility study will be completed around the same time.

Sandfire managing director Karl Simich said the draft EIS was the culmination of three years of work.

"The draft EIS reflects our strong commitment to design a project that is capable of providing significant economic opportunities for the local communities and the state of Montana, while at the same time fully protecting the Smith River Watershed," he said.

"Black Butte will be a state-of-the-art underground mining operation that will set new standards for mine developments globally, incorporating world-class environmental standards and technologies - ensuring that it meets, or indeed exceeds, Montana's strict environmental standards.

"We are looking forward to seeing the Black Butte copper project advance towards development this year as a key part of our global copper growth pipeline."

Black Butte is owned by Toronto-listed Sandfire Resources America, of which Sandfire owns 86%.

Originally discovered by Teck Resources, Black Butte is considered one of the top 10 global undeveloped copper projects by grade with a resource of 18 million tonnes at 3.3% copper, 14 grams per tonne silver and 0.1% cobalt for 597,000t of copper, 7.98 million ounces of silver and 18,000t of cobalt.

Previous studies envisaged a 30,000t per annum operation over about 11 years with construction to start as early as late 2018, pending final approvals.

Construction is expected to take around two years, which could see Black Butte coming online as Sandfire's flagship DeGrussa mine in Western Australia is winding down.

RBC Capital Markets does not currently include Black Butte in its base case for Sandfire, but is awaiting the updated DFS.

"Pending approvals, Black Butte could provide visibility beyond DeGrussa, however, it would appear to be at a smaller scale in terms of copper output (as per the 2013 EIA parameters)," analyst Paul Hissey said.

"We retain our sector perform rating on Sandfire on the balance of medium-term strategic risks given current short mine life at DeGrussa, and estimated improvements in cashflow with the introduction of higher grade Monty ore."

Sandfire shares dropped 0.4% to A$6.75, below RBC's price target of $7.50.