Santa Fe Gold Provides Update to Shareholders

Common Shareholder Questions / Recent Activity

(PresseBox) (Boca Raton FL, ) What is the status of the trial flux material shipment?

First, what is flux? Defined in layman's terms, flux is the name given to a chemical substance required in the process of smelting ore into metal. Freeport McMoRan, the smelter we are testing with, uses tons of flux in their copper smelting process. The chemical substance they need is silica. Our ore consists of silver, gold and silica.

What that means to Santa Fe Gold is that Freeport needs our silica and we need their smelting process. This forms the basis of a beneficial deal for both parties.

In February we announced providing Freeport with a trial shipment of 3,000 tons of low grade ore. This was mainly to determine the suitability of the material as a flux rather than primarily to make money from the sale of gold and silver. Meanwhile, the Freeport-McMoRan smelter was down for about four weeks for maintenance. In order to reestablish a baseline, they had to restart with their own material. This slowed down the test by nearly two months. The good news is the smelter trial should be completed very soon. Following the test results Dr. Carson and Freeport-McMoRan will negotiate a contract. When completed results will be announced in the form of a press release, most likely before the end of the current quarter.

Meanwhile, revenues booked in 1Q2010 constitute the majority of what we will be paid, with a final payment due in June.

Also noteworthy is that if an agreement can be arranged, we may find some interesting economics in this agreement. Not all of the ore that comes out of the mine is of the highest grade. Some higher and some lower. If we had no option but to mill and process the ore, we would be forced to use all the grades of ore that come out of the mine. However, if we come to agreement with Freeport we can then have our metals extracted from the lower grade ore and reserve our mill for the best ore. This option will reduce wear and tear on the mill, saving money. Further, this also frees milling capacity should we secure another source of ore for the mill.

What is the status of the mill production of our concentrate?

First, what is concentrate? Concentrate is the fine, powdery product of the milling process containing a high percentage of valuable metals. This fine powder containing the gold and silver is then smelted down to produce gold and silver. Our income is based upon the ounces of gold and silver metals contained in this fine powder. Santa Fe Gold does not sell gold or silver. The product we produce and sell is called concentrate, containing gold and silver.

The mill is successfully producing concentrate and the production is ramping up quickly. Increasing amounts of ore will be processed to reach mill capacity, hopefully by year end. In the course of initializing a mill, lower quality ore is first used and as the results improve, better and better ore are processed. Right now the concentrate is accumulating and there are several smelters testing our samples in preparation for a contract offer. Obviously we are looking to maximize the returns on this valuable product and this does involve negotiations and contract discussions. Again, as soon a signed contract is in hand, an announcement will be forthcoming.

We are currently experiencing great success at our mill near Lordsburg, New Mexico. Our powder concentrate is more highly condensed than expected. (Since each drum of powder is therefore more valuable per pound, Santa Fe Gold's shipping costs to the smelter are reduced. Now we can ship our concentrate virtually anywhere in the world to obtain the best price.) At this time there is a voracious appetite in Europe for precious metals. Now with our higher levels of contained metal, we may find that our smelting takes place overseas. Since gold and silver smelting is done on a worldwide basis the competition for our business is therefore in our favor.

Can I visit the mill and the mine?

Now that we are in production, this question is coming in nearly every day. In order to accommodate the numerous requests, an open house/mill commissioning event will be planned as soon as is practical. Investors, shareholders and others will be invited. For the time being, we are focusing on operations and personnel are focused mining and milling of our ore. The interesting point in this is that most mines are neither accessible nor even near the USA. So the fact that you are able to actually reach the operations without passport, helicopter or donkey ride is frankly one of our great strengths. That you can visit the mine is also true of analysts, brokers, investors, investments bankers and institutions alike. Our mill is about 2 1/2 hours from the Tucson, Arizona airport. No planning ravel during summer months only (Yukon Territory, Baffinland), no planning on immunizations and security (Congo, Zimbabwe) no planning for language barriers or currency exchange. The ease in visiting our operations is another positive for Santa Fe Gold Corporation.

Recent Activity

Dale Jackson, host of "Money on the Mark", a radio show airing in New York City, will be touring the Santa Fe Gold Corporation Summit silvergold mine and the Banner mill with Dr. Carson the week of May 24th. Following his visit he will conduct an hour long interview with Dr. Carson, to be broadcast live in New York. The interview will later be archived to our website for you to hear. Dale has decades of experience in the business of radio advertising and investor involvement, having been a stock broker at one time. He has maintained contact with numerous individuals and investors over the years. His first hand visit, followed by the interview, will not only give credibility to investors, but will also serve to inform our shareholder base of the current state of the company. A link will be provided when the interview is complete.

http://www.KITCO.com is a precious metals website known for its news, metal prices and commentaries. Recently, Santa Fe Gold began advertising on KITCO in the form of a banner ad. The one inch by three inch banner ad is right of center near the top. The ad space is part of a rotational system where each of the 20 advertisers receives a 15 second time slot. You can refresh your screen again and again until our banner ad shows up. Or if you scroll down to the bottom of the home page, in the lower left corner, in a faint grey color, you will see our number 6. Refresh until that number appears and you will see our ad! Clicking the banner ad sends you through to our website. We have had numerous hits on our website as a result of this exposure.

Also on KITCO, we are listed on the left side of the home page about 1/3 of the way down in a box titled "Investor Information." Santa Fe Gold is on a rotation there as well, but it is not numbered. When Santa Fe Gold appears, you will find a brief writeup and a place to ask for additional information. We have received many requests from this listing as well.

Dr. Carson's travels to the Eastern USA (Atlanta, New York and Detroit) went well. He had the opportunity to meet with potential investors and renew relationships with existing shareholders. Following that, Dr. Carson spent three days in London at the Rodman and Renshaw Mining Conference, where he was able to speak to numerous institutional investors and individuals about Santa Fe Gold. Although the current share price has not reflected a surge in buying activity, more and more people are 'watching' our stock. This is a precursor to activity, as we are a relatively unknown company at this point.

Another trip is being planned by Dr. Carson to New York and Boston in June as a follow up to the recent activities. Rodman is involved in some of the introductions.

Standard and Poor's manual.

Finally, Santa Fe Gold was recently listed in the Standard & Poor's Market Access Manual. This means that investors worldwide have access to the consistent and independent profile now provided to broker, financial advisors, institutions, traders and selfdirected investors. Furthermore, this important listing permits more brokers than ever to recommend our stock without the limitations that some state Blue Sky laws can impose. Our visibility and our marketability have been increased by this enhancement.

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) the Ortiz gold property in northcentral New Mexico, estimated to contain two million ounces of gold; (iii) the Black Canyon mica mine and processing facility near Phoenix, Arizona; and (iv) a large resource of micaceous iron oxide (MIO) in western Arizona. Santa Fe Gold intends to build a portfolio of highquality, diversified mineral assets with an emphasis on precious metals.

To learn more about Santa Fe Gold, visit www.santafegoldcorp.com.
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