2011 Contract with German Smelter

bwire




ALBUQUERQUE, N.M. (Business Wire) -- Santa Fe Gold Corporation (OTCBB: SFEG) is pleased to announce it
has shipped 40 tons of gold and silver concentrate under the sales
contract with Aurubis AG that was announced December 23, 2010. The 40
ton shipment is valued at over $1.0 million and represents the initial
delivery against 240 tons contracted for delivery in 2011. The contract
with Aurubis AG, Europe's largest copper and precious metals smelter,
will provide a sales outlet for a portion of the company's anticipated
2011 production of high-value precious metals concentrate. The sales
agreement was reached following a successful smelting trial of an
initial 20 tons of concentrate shipped to Aurubus AG in October 2010.
The company's Lordsburg flotation mill is producing gold and silver
concentrate from its Summit mine located in southwest New Mexico.




"We are pleased to have begun shipments of concentrate under the 2011
Aurubis AG sales agreement, which we consider to be a very favourable
agreement," said Pierce Carson, President and Chief Executive Officer.
"We expect this initial shipment will be followed by on-going regular
shipments of concentrate produced from the Summit mine.




"We also anticipate being in a position shortly to announce an agreement
with an Arizona smelter for sales of siliceous flux material. Our
strategy is to establish sales of both concentrate and siliceous flux,
which will enable us to develop multiple customer outlets and revenue
streams."




Production from the Summit mine is expected to increase in tonnage and
grade and to reach full, steady production in 2011. Operations at the
mine have been accelerated to two 10-hour shifts, seven days a week.
Summit ore reserves average 0.143 ounces per ton gold and 10.78 ounces
per ton silver (0.35 ounces per ton gold equivalent). At full
production, operating costs are projected to be $340 per ounce of gold
equivalent produced.




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, Arizona; 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.