Santa Fe Gold Announces 2012 Smelter Contracts for Gold and Silver Sales Valued up to $30 Million

Santa Fe Gold Corporation (OTCBB: SFEG) is pleased to announce it
has entered into contracts with three smelters to sell a majority of its
anticipated 2012 production of high-value precious metals concentrate
and siliceous flux material. The three smelters include Aurubis AG in
Germany, and Freeport ? McMoRan Miami Inc. and ASARCO LLC in Arizona.
The 2012 contracts are valued in the aggregate up to $30 million at
current gold and silver prices. Santa Fe′s Lordsburg flotation mill
produces gold and silver concentrate from its Summit mine located in
southwest New Mexico. The company also produces silica flux material,
the sale of which involves direct shipment of ore with only minimal
processing required.

'We are pleased to have reached agreements for sales of a majority of
our 2012 concentrates and silica flux,? said Pierce Carson, President
and Chief Executive Officer. 'The contract with Aurubis provides for
deliveries of up to 360 tons of concentrate, and the contracts with FMI
Miami and Asarco provide for a total of up to 48,000 tons of silica
flux. These contracts reflect a realization of our marketing strategy of
developing multiple customer outlets and multiple revenue streams.?

Dr. Carson continued, 'Sales of flux to FMI Miami and Asarco are
significant to Santa Fe and could account for a substantial portion of
ore mined at Summit. 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 expected to reach full, steady production during the
first quarter of calendar 2012. Revenues are expected to increase
significantly over the course of 2012 reflecting increases in both
tonnage and grades. Annual life of mine revenue at full production is
estimated to be approximately $40 million at recent gold and silver
prices. Ore reserves are estimated to average 0.143 ounces per ton gold
and 10.78 ounces per ton silver (0.35 ounces per ton gold equivalent).
Direct operating costs are projected to be $364 per ounce of gold
equivalent produced over the life of the mine.

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
and its Canadian public disclosure filings may be accessed via www.sedar.com,
and readers are urged to review these materials.

Santa Fe Gold Corp

W. Pierce Carson, President and Chief Executive
Officer

505-255-4852

www.santafegoldcorp.com