Shareholder Questions

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. The Arizona copper 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 a high percentage of silica.

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

In February we announced a trial shipment of 3,000 tons of beneficiated low grade ore. This was to determine the suitability of the material as a flux. Due to circumstances beyond our control, the test took longer than anticipated. The good news is that results of the smelter trial should be available soon. Following evaluation of the test results, Dr. Carson and the smelter will be in a position to discuss a contract for supply of flux to the smelter and payment for precious metals content. When concluded, Santa Fe Gold plans to announce the outcome possibly before the end of the current quarter.

Meanwhile, revenues booked in the March 2010quarter 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 believe it could help us to optimize economics from Summit production. For example, depending on precious metals grades and silica content, we would have the option of either selling ore as flux or processing it at the mill and selling it as a concentrate. Further, selling ore as flux also would have the effect of freeing milling capacity for processing of ore from other potential ore sources.

First, what is concentrate? Concentrate is the fine, powdery product of the milling process containing a relatively high percentage of valuable metals. At the smelter, the concentrate is smelted down to produce gold and silver. Our income is based upon the ounces of gold and silver metals contained in the concentrate. 

The Lordsburg mill is successfully and consistently processing ore at the rate of about 150 tons a day. Currently we are operating on a one shift basis, five days a week. Production is planned to ramp up over the next several months to reach the targeted rate of 400 tons of ore per day. To commission the mill, we have first used lower quality ore. As the mill operation settles down, we will process higher grade ore. Currently we are accumulating high quality concentrate derived processing the ore and are in discussions with several smelters interested in purchasing the concentrate. Obviously our primary objective is to maximize the returns on this valuable product. Again, as soon a signed contract is in hand, an announcement will be forthcoming.

We are currently experiencing great success at our mill. Our concentrate contains precious metals that are more highly condensed than expected. (Since each drum of concentrate is therefore more valuable per pound, Santa Fe Gold's shipping costs to the smelter are reduced. We can ship our concentrate virtually anywhere in the world to obtain the best price.) With our high levels of contained metal, we may find that our smelting takes place overseas. Gold and silver smelting is done on a worldwide basis and we can expect there will be competition for our business.

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 later this year. Investors, shareholders and others will be invited. For the time being, we are focusing on operations including mining and milling of our ore. The interesting point in this is that most mines are not easily accessible or even located in or 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 attractions. That you can visit the mine is also true of analysts, brokers, investors, investments bankers and institutions alike. Our mill is about 2 ½ hours via freeway from the Tucson, Arizona airport. The ease in visiting our operations is a real asset for Santa Fe Gold Corp.

Recent Activity

Dale Jackson, host of "Money on the Mark", a radio show airing in New York City, completed a tour of the Santa Fe Gold Corporation Summit silver-gold mine and the Lordsburg mill with Dr. Carson the week of May 24th. Following his visit he will conduct an hour long interview with Dr. Carson, along with RJ Bommarito (shareholder relations) and Paul Moore (operations manager) 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 visit and interview will provide first hand information to our shareholders as to the mining and milling operations and the current state of the company. A link will be provided when the interview is complete.

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 write-up 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 pre-cursor to activity, as we are a relatively unknown company at this point.

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 advisers, institutions, traders and self-directed 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.