Arizona Smelter for Precious Metals Recovery

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ALBUQUERQUE, N.M. (Business Wire) -- Santa Fe Gold Corporation (OTCBB: SFEG) is pleased to announce it
has contracted with ASARCO LLC ("Asarco") to sell 12,000 tons of
siliceous flux material for delivery during 2011. At recent gold and
silver prices, the contract is valued at up to $4.0 million. The
siliceous flux will be shipped to Asarco's smelter in Hayden, Ariz. The
flux material will be processed for precious metals recovery. Santa Fe
will be paid for the contained silver and gold less customary charges.
The sales agreement was reached following a successful smelting trial of
an initial 1,000 tons of siliceous flux shipped to Asarco in 2010. Sale
of siliceous flux material involves direct shipment of ore with only
minimal processing required.




"We are pleased to have reached this agreement with Asarco for sale of
siliceous flux material," said Pierce Carson, President and Chief
Executive Officer. "We also have conducted successful flux trials with
another Arizona smelter, Freeport-McMoRan Miami Inc. ("FM Miami"), and
are discussing a long-term sales agreement. We believe that sales of
flux to Asarco and FM Miami could be quite significant to Santa Fe, and
eventually could account for a substantial portion of ore mined at
Summit.




"The Asarco flux contract covering a portion of Summit's anticipated
production fits with our strategy of establishing sales of both
siliceous flux and concentrate. This strategy will enable Santa Fe to
develop multiple customer outlets and multiple revenue streams. We
recently announced an agreement to sell concentrates to a European
smelter.




"Smelter flux sales also add another dimension to our strategy of
expanding Santa Fe's production profile by processing other ores from
the Lordsburg area, utilizing our excess milling capacity. Among other
potential advantages, material sold as smelter flux does not have to be
milled and therefore frees even more capacity at our Lordsburg mill."




The Summit mine is ramping up production and is expected to reach full,
steady production during 2011. Revenues are expected to increase
significantly over the course of 2011, reflecting increases in both
tonnage and grades. At full production, annual revenues are estimated as
approximately $40 million at recent gold and silver prices. Operating
costs are projected to be $340 per ounce of gold equivalent produced.
Ore reserves average 0.143 ounces per ton gold and 10.78 ounces per ton
silver (0.35 ounces per ton gold equivalent).




About Santa Fe Gold:




Santa Fe Gold is a U.S.-based mining and exploration enterprise focused
on acquiring and developing gold, silver, copper and industrial mineral
properties. Santa Fe controls: (i) the Summit mine and Lordsburg mill in
southwestern New Mexico; (ii) a substantial land position at the
Lordsburg mill, comprising the core of the Lordsburg Mining District;
(iii) the Ortiz gold property in north-central New Mexico, estimated to
contain two million ounces of gold; (iv) the Black Canyon mica mine and
processing equipment near Phoenix, Ariz.; and (v) a large resource of
micaceous iron oxide (MIO) in western Arizona. Santa Fe Gold intends to
build a portfolio of high-quality, diversified mineral assets with an
emphasis on precious metals.




To learn more about Santa Fe Gold, visit http://www.santafegoldcorp.com/">www.santafegoldcorp.com.