Summit Mine

Current production of approximately 17,000 gold equivalent oz per annum with significant uplift scheduled (28,000 – 30,000 ozs per annum) for the next four years as the main high grade ore body (8 g/t average gold equivalent head grade) is accessed in Q3 2013. Potential also exists to increase production rates with processing improvements and further developments and exploration.

Santa Fe Gold acquired the Summit silver-gold project in May 2006. The project includes the underground Summit gold-silver mine and related property consisting of 5.5km2 (857 acres) of patented and unpatented mining claims in south-western New Mexico;

The ore produced from the Summit Mine is processed at the 100% Santa Fe owned and operated Banner Mill, located approximately 57 miles south of the Summit Mine near the town of Lordsburg, New Mexico.  The mill has a capacity of 272,000 tonnes per annum (tpa) (300,000 short tons per annum (stpa)), including mineral processing equipment consisting of a crushing and screening plant, a ball mill and a 400 short ton-per-day flotation plant, and related property consisting of approximately 6km2 (1,500 acres) of wholly owned and leased patented and unpatented mining claims.

Ortiz Project Mineral Resource Estimate:

JORC Compliant Indicated Resource estimate

1: Gold equivalency for silver calculate at a 60:1 silver to gold ratio

Chapman, Wood and Griswold, Inc. (“CWG”), an independent geological engineering firm, completed resource estimation of Summit mineralisation in May 2011 and reported to a Canadian NI 43-101 standard. CWG concluded that a portion of the Indicated resource material can be elevated to the category of Probable Reserve under the SEC’s Industry Guide 7. At a cutoff grade of 5.49g/t (0.16 oz/st) gold and gold-equivalent, CWG estimated the in-place, diluted Probable Reserve, for the main footwall zone, to be 560,700 tonnes (618,070 short tons) grading 4.90 g/t (0.143 oz/st) gold and 370g/t (10.78 oz/st) silver, sufficient for a five year mine life at the planned rate of production.

Project Location and Tenure

The Summit silver-gold mine is located in a rugged and isolated setting in Grant County, south-western New Mexico, near the Arizona state line. The property lies within the Steeple Rock Mining District, which has recorded notable historical production of gold, silver, base metals and fluorspar from several mines, currently inoperative, including Carlisle, East Camp and Norman King.

The property is accessible by paved and gravel road approximately 24 Kilometres (15 miles) northeast from Arizona State Highway 75 N and the town of Duncan, Arizona. Electric power is not available on or near the property and is generated on-site in connection with the mining operation. Water for limited usage is available on and near the property.

The terrain of the property is rugged, with steep canyons and ridges. Elevations range from1,370 m to 1,890 m  (4,500 ft to 6,200 ft) above sea level. The Summit siliceous mineralized structure forms a prominent north-westerly trending ridge.

The Banner mill site is situated 92 kilometres (57 miles) drive to the south of the Summit mine near the town of Lordsburg, Hidalgo County, New Mexico. Lordsburg is connected to Duncan, Arizona via US Highway 70. The Banner mill site is accessible from Lordsburg by a 4-mile paved road. Utilities on site include water and electric power. The Lordsburg area is well supported by transportation services including trucking and rail services, and by a wide range of fabrication, construction and other support services. The labour force required for the plant operation is sourced locally.

SFEG holdings at the Summit silver-gold property in Grant County, New Mexico consist of 10 patented federal mining claims totalling approximately 0.5km2 (117 acres) and 62 unpatented federal mining claims totalling approximately 5km2 (740 acres). SFEG holdings at and adjacent to the Banner mill site in Hidalgo County, New Mexico consist of 86 wholly-owned patented federal mining claims, 5 wholly-owned unpatented mining claims, 17 leased patented mining claims and 6 leased unpatented mining claims, aggregating approximately 6 km2 (1,500 acres). All wholly-owned claims for the Summit Mine and Banner Mill Site are held in the name of Lordsburg Mining Company, a wholly owned subsidiary of Santa Fe Gold Corp. The unpatented mining claims are located on public land and held pursuant to the General Mining Law of 1872.

Patented mining claims in the US are required to pay annual property taxes to Grant and Hidalgo County government in which those claims reside (Summit in Grant County and Banner Mill in Hidalgo County).  Unpatented mining claims have an annual assessment fee required by Bureau of Land Management and record the payment of rental fees with Grant and Hidalgo Counties.

The Summit property is subject to underlying net smelter return royalties capped at US$4,000,000 and to a net-proceeds interest on sales of un-beneficiated mineralized rock with an end price of US$2,400,000. The Summit acquisition is subject to a property identification agreement between SFEG and SFEG’s President and Chief Executive Officer.

History of Mining and Exploration

The Summit silver-gold property lies within the Steeple Rock district, which is one of the historic mining areas in the southwest United States. The former mines produced gold, silver and base metals from underground mining of epithermal vein systems. Prospecting activity dates back to before 1860. The first recorded production was from the Carlisle property, which operated from 1880-1897. A number of other mines including the Norman King and Billali also opened up during the 1880’s but ceased operation by the turn of the century. Following this early production, the district was largely dormant until the 1930’s-mid 1940’s when several mines operated. Subsequently sporadic small-scale operations continued until the 1990’s on various deposits including the Summit, Center, Mount Royal and Carlisle deposits.

The US Bureau of Mines estimated that between 1880 and 1986 the Steeple Rock district produced at least 148,000 ounces of gold, 3.3 million ounces of silver, 1.2 million pounds of copper, and 5 million pounds of lead and 4 million pounds of zinc. In addition, there was unrecorded precious and base metal production as part of silica flux shipments. Some 6,500 tons of fluorspar also were produced.

In the late 1970’s, Summit Minerals Inc. is reported to have shipped about 27,200 t (30,000 st) of mineralized material from the Summit property to ASARCO’s El Paso smelter as direct shipping silica flux grading 3.50 grams per tonne (0.102 ounces per ton) gold and 170 grams per tonne (4.95 ounces per ton) silver.

Exploration work estimated to have cost in excess of US$8.0 million was carried out on the Summit silver-gold property from 1984-1992. This work included drilling totalling 31,900 metres (104,700 feet) on the Summit Vein and adjacent structures, of which 23,800 metres (78,000 feet) was directed to the Summit structure. In 1984-85, Inspiration Mines Inc. reportedly spent about US$1.5 million conducting underground development, shallow core drilling and sampling and mapping. In 1988-89, Novagold Resources Inc. reportedly expended approximately US$2.0 million in surface and airborne geophysical surveys, underground mapping and sampling, and core drilling. Novagold’s drilling identified a significant block of mineralized material in the Summit vein. From 1989-1992, Biron Bay Resources Ltd., in joint venture with Novagold, conducted extensive exploration, drilled 88 core holes, and reportedly spent over US$5.0 million extending and improving the level of confidence in the mineralized material at the Summit vein and in defining exploration potential in adjacent and outlying vein structures.

In April 2007, Santa Fe received results of an engineering study that concluded the Summit deposit would form the basis of an economically viable underground mining operation and Santa Fe began construction activities during 2008, including development of the Summit Mine and construction of the Banner mill. Ore generated in the process of developing the mine was stockpiled for later processing. Construction of the Banner Mill was completed in mid-2009 and construction of the tailings disposal impoundment was completed in early 2010.

Santa Fe commenced processing operations at the Banner mill in April 2010. Trial sales of ore as silica flux material commenced in the second quarter of 2010 and trial sales of precious metals flotation concentrate began in the third quarter of 2010. The Summit mine achieved commercial production in Q2 of calendar 2012.

Geology and Mineralization

The Steeple Rock district contains numerous structurally controlled epithermal vein systems. The veins are controlled by conjugate fault systems that cut a thick pile of Tertiary volcanic rocks of intermediate composition. The deposits are localized along structurally controlled, hydrothermally altered zones cutting the volcanic host rocks. The dominant structures trend north-westerly and dip steeply. Secondary veins trend easterly and north-north-westerly. The veins can be traced for distances of up to several miles along strike and have widths that range up to 30 metres (100 feet) or more.

The epithermal veins have formed as open-space filling by a mixture of quartz, carbonate minerals and wallrock fragments and show evidence of multiple episodes of brecciation and re-cementation. Gold occurs as fine free grains or as electrum. Silver is found as argentite or in sulfosalts. Base metal sulphides including chalcopyrite, sphalerite and galena are common in certain deposits but rare in others. Gangue minerals usually consist of quartz, pyrite, calcite, barite and fluorite. Alteration of the volcanic country rocks adjacent to the veins commonly consists of sericitization, argillization and silicification.

The principal vein structure on the Summit silver-gold property is the Summit structure, which can be traced for 914 metres (3,000 feet) from southeast to northwest. The Billali structure forms a farther 610 metre (2,000 foot) continuation of the Summit structure in a north-westerly direction across an east-west fault. The Summit and Billali structures dip steeply to the northeast. These structures form segments of the East Camp Fault, which constitutes the main ore control in this part of the Steeple Rock district. The core drilling carried out from 1984-1992 tested both the Summit and Billali vein structures. Of the two, results from the Summit structure were the more promising with respect to vein continuity and economic potential.

The Summit mineralized vein occurs within a wide, structurally controlled zone of hydrothermally altered volcanic rocks. Silver and gold mineralization is epithermal in style and consists of silver sulfides and electrum or native gold along with lesser pyrite, sphalerite and chalcopyrite. Precious metals contents, which are relatively low at the surface, increase significantly with depth for several hundred feet, apparently a reflection of vertical mineral zoning within the deposit. Below 300-457m (1,000-1,500 feet), the precious metals contents appear to decrease although little deeper drilling has been carried out. The main block of mineralized material, which occurs along the footwall of the structure, was shown by extensive drilling to trend north-westerly 610 metre (2,000 feet) in strike length and to extend 300 metre (1,000 feet) down dip. The true width of mineralization across the footwall mineralized zone ranges from 1.8 metre (6 feet) to over 15 metre (50 feet) and averages 3-4.6 metre (10-15 feet) wide.

Competent Person Statement

The information included in this release that relates to Santa Fe Gold Corp’s Summit Mine resource and historical mining data is based on information compiled by Douglas F. Irving, who is a professional member of a ‘Recognised Overseas Professional Organisation’ (The Association of Professional Engineers and Geoscientists of British Columbia) included in a list promulgated by the ASX from time to time. Mr. Irving is employed by Chapman, Wood and Griswold, Inc. and has worked as a consultant in exploration and mine development for 40 years in precious and base metal exploration. Mr. Irving has sufficient experience which is relevant to the style of mineralization and type of deposit under consideration and to the activity which he is undertaking to qualify as a Competent Person.  Mr. Irving consents to the inclusion in the release of the matters based on his information in the form and context in which it appears.