Santa Fe Gold Announces Termination of Agreement to Acquire Columbus Silver but Continues to Pursue Purchase of Specific Mineral Properties

Santa Fe Gold Corporation (OTCBB: SFEG) today announced the
termination of the proposed agreement, announced December 15, 2011,
under which Santa Fe would have acquired the common stock of Columbus
Silver Corporation (CSC: TSX-V) in a $10 million cash transaction. Due
in part to difficult market conditions, Santa Fe was not in a position
to satisfy conditions to complete the necessary financing under its debt
facility or otherwise by the deadline of May 31, 2012. Following
termination of the agreement, the Company is negotiating a possible
direct purchase of one or more of Columbus Silver′s mineral properties.

'Although we are disappointed in the Columbus Silver acquisition not
going ahead, our focus and resources must be directed to bringing the
Summit silver-gold mine into full production,? said Pierce Carson, CEO.
'However, certain of Columbus Silver′s properties would be a good
strategic fit for Santa Fe and we are exploring the possibility of
directly purchasing those properties.?

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 commercial production in 2012; (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 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 Corporation

Pierce Carson, President and Chief
Executive Officer

505-255-4852

or

Investor Relations

Torrey
Hills Capital

Clay Chase

858-456-7300

cc@sdthc.com