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ALBUQUERQUE, N.M. (Business Wire) -- Santa Fe Gold Corporation (OTCBB: SFEG) announced it has loaned
US$200,000 to Columbus Silver Corporation (TSXV: CSC) in connection with
the Memorandum of Understanding dated September 24, 2010, under which
the two companies set out agreed terms for completing a business
combination. In consideration of Santa Fe advancing the $200,000,
Columbus Silver has agreed to proceed with the proposed business
combination. Columbus Silver also has agreed to deal exclusively with
Santa Fe in connection with any acquisition proposal until March 31,
2011. Columbus Silver will use the loan to cover certain property
payments, legal costs and operating expenses through April 30, 2011, by
which time the parties anticipate being able to consummate the business
combination. The combination with Columbus Silver is a notable step
forward in Santa Fe's objective of becoming a significant North American
precious metals producer.




"The Columbus Silver transaction is taking longer than originally
anticipated due to Canadian regulations requiring Santa Fe to become
current in financial and technical reporting under Canadian standards,"
said Pierce Carson, President and CEO. "However, we are pleased to have
received Columbus Silvers' commitment to proceed with the transaction
and to have arranged an extension of the exclusivity period.




"This transaction is strategically important to Santa Fe and potentially
will more than double our controlled gold and silver resources available
for processing at our fully-permitted and operating flotation mill near
Lordsburg, New Mexico. Processing of new resources will build on silver
and gold production sourced from our Summit mine.




"This is an exciting time for the shareholders of Santa Fe and Columbus
Silver. The successful completion of the merger will position the
combined company to deliver both near and long-term value to its
shareholders through existing production growth as well as significant
development and exploration upside from a diverse portfolio of precious
metal properties."




In connection with the $200,000 loan, Columbus Silver executed a
Promissory Note in favour of Santa Fe. Simple interest on the
outstanding principal amount of $200,000 shall accrue at the rate of
four percent (4%) per annum. On December 31, 2012, the outstanding
principal amount and all accrued and compounded interest shall be due
and payable. In the event the business combination does not proceed, the
loan may be repaid in Columbus Silver stock after compliance with TSX
Venture Exchange requirements.




Pursuant to the Memorandum of Understanding, Santa Fe will acquire all
of the outstanding shares of common stock of Columbus Silver in exchange
for shares of Santa Fe common stock. The contemplated exchange ratio is
one share of Santa Fe common stock for every 5.82515 shares of Columbus
Silver's common stock. It is contemplated that Santa Fe will issue a
total of 8,787,527 shares in the transaction. Following completion of
the transaction, it is estimated that Santa Fe will be owned 91.37% by
current Santa Fe shareholders and 8.63% by Columbus Silver shareholders.




The Memorandum of Understanding contemplates a business combination by
way of a Plan of Arrangement, which is subject to Canadian court
approval. In addition, the proposed transactions are subject to the
final approval of the boards of directors of Santa Fe and Columbus
Silver, stock exchange and regulatory approvals, and Columbus Silver
shareholder approval.




Additional Information




The Promissory Note and a related Side Letter are included as Exhibits
to Santa Fe's Current Report on Form 8-K, which it will file promptly
with the SEC. Santa Fe's Current Report on Form 8-K will be available at
the website maintained by the SEC at >www.santafegoldcorp.com.




To learn more about Columbus Silver, visit http://www.columbussilvercorp.com/">www.columbussilvercorp.com.