Santa Fe Gold Corporation is pleased to announce it has entered into definitive agreements governing the proposed plan of arrangement under which Santa Fe has conditionally agreed to acquire all of the common stock of Columbus Silver Corporation for CDN$0.20 per share in cash, in a transaction valued at approximately $10 million.

The parties have agreed to use commercially reasonable efforts to complete the acquisition by March 31, 2012, and in any event by May 31, 2012. The acquisition, when completed, will add significantly to Santa Fe's silver and gold resources potentially available for processing at its fully permitted and operating flotation mill near Lordsburg, New Mexico.

The acquisition remains subject to conditions, including (a) Santa Fe obtaining financing in a sufficient amount to consummate the transaction; (b) Columbus Silver obtaining shareholder approval for the acquisition; and (c) all necessary court and regulatory approvals. Santa Fe must notify Columbus Silver by December 31, 2011 that it has obtained a firm commitment for the required financing, or Columbus Silver will have the option to terminate the agreement.

Santa Fe's President and CEO, Pierce Carson, said The Columbus Silver acquisition is strategically important to Santa Fe's future. We are working to secure the required funding and are confident that financing will be available under acceptable terms.

Santa Fe also has advanced US$300,000 to Columbus Silver under a bridge financing agreement. As previously disclosed, Santa Fe has agreed to provide bridge financing to Columbus Silver on an as needed and ongoing basis until closing or other termination of the acquisition.

Additional Information:

The Memorandum of Understanding will included as an Exhibit to Santa Fe's Current Report on Form 8-K to be filed with the SEC, and available at www.sec.gov.

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, which began processing operations in 2010; (ii) a substantial land position near the Lordsburg mill, comprising the core of the Lordsburg Mining District; (iii) the Ortiz gold property in north-central New Mexico; (iv) the Black Canyon mica deposit and processing equipment near Phoenix, Arizona; and (v) a deposit 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 www.santafegoldcorp.com.

Cautionary Note Regarding Forward-Looking Statements:

This press release contains forward-looking statements and forward-looking information (collectively, forward-looking statements) within the meaning of applicable US and Canadian securities legislation. All statements, other than statements of historical fact, included herein are forward-looking statements. Although the Company believes that such statements are reasonable, it can give no assurance that such expectations will prove to be correct. Forward-looking statements are typically identified by words such as: believe, expect, anticipate, intend, estimate, postulate and similar expressions, or are those, which, by their nature, refer to future events. The Company cautions investors that any forward-looking statements by the Company are not guarantees of future results or performance, and that actual results may differ materially from those in forward looking statements as a result of various factors, including, but not limited to, variations in the nature, quality and quantity of any mineral deposits that may be located, variations in the market price of any mineral products the Company may produce or plan to produce, the Company's inability to obtain any necessary permits, consents or authorizations required for its activities, the Company's inability to produce minerals from its properties successfully or profitably, to continue its projected growth, to raise the necessary capital or to be fully able to implement its business strategies, and other risks and uncertainties disclosed in the Company's Annual Report on Form 10-K for the year ended June 30, 2011 and its most recent quarterly reports filed with the United States Securities and Exchange Commission (the SEC), and other information released by the Company and filed with the appropriate regulatory agencies. All of the Company's US public disclosure filings may be accessed via www.sec.gov.

CONTACT:

Santa Fe Gold Corporation
W. Pierce Carson
President and Chief Executive Officer
505-255-4852
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DISCLAIMER

This publication is an advertisement and/or a company update on behalf of Santa Fe Gold Corporation and may not be construed as investment advice. This is not a solicitation to buy or sell securities and this does not purport to be a complete analysis of the company mentioned. Investing in securities is speculative and carries a high degree of risk. Past performance does not guarantee future results. Readers should consult with their own independent tax, business and financial advisers with respect to any investment, including any contemplated investment in the advertised company. All information contained in this advertisement should be independently verified with the advertised company and by an independent financial analyst. You should independently investigate and fully understand all risks before investing.

This email was prepared for and by Santa Fe Gold Corporation staff. The information set forth herein was obtained from sources believed to be reliable, but there no guarantee to its accuracy or completeness. For further information on Santa Fe Gold Corporation, please contact R.J. Bommarito, director of shareholder communications at rjbommarito@santafegoldcorp.com [mailto:rjbommarito@santafegoldcorp.com]. Current stock price and trading volume information is available from your broker and from online information services such as America Online, Yahoo and Bloomberg. All projections, estimates, compilations of future earnings and/or market share represent the best estimate by management of the advertised company of the expected future growth of Santa Fe Gold Corporation and/or the industry as a whole. While management of Santa Fe Gold Corporation believe all facts and figures are accurate, no assurances can be given that any of the projected figures will be attained. This publication contains forward-looking statements as defined in the Securities Litigation Improvements Act of 1996. The words believe, expect, estimate and project and similar expressions define forward-looking statements, which speak only as of the date the statement was made. Santa Fe Gold Corporation undertakes no obligation to publicly update or revise any forward-looking statements, whether because of new information, future events or otherwise. Forward-looking statements are currently subject to risks and uncertainties, some of which cannot be predicted or quantified. Future events and actual results could differ materially from those set forth in, contemplated in, or underlie the forward-looking statements. The risks and uncertainties to which forward-looking statements are subject include, but are not limited to, the company's ability to meet its projected growth, the effects of government regulation, competition and other material risks.