Santa Fe Gold Corporation agrees to acquire Columbus Silver Corporation for $0.20 per share in cash

If the conditions to completion are satisfied, the Acquisition will see the purchase by Santa Fe of all of the then-issued and outstanding Shares for CDN$0.20 per Share. Columbus Silver presently has 36,083,730 Shares outstanding, but also owes its significant shareholder Columbus Gold Corporation (“Columbus Gold“) approximately $1,380,269 in principal and $253,864 in interest under convertible notes, the principal of which may be converted at Columbus Gold’s election into Shares at $0.10 per Share. If such principal amount is fully converted, Santa Fe will be acquiring approximately 49,886,424 Shares, at a total cost of approximately $9,977,285.

Upon closing of the Acquisition, holders of Columbus Silver stock options and warrants are to be paid cash equal to $0.20 per such stock option or warrant, less the exercise price thereof. For those options and warrants with an exercise price of $0.20 or higher, Santa Fe will pay the holders thereof such nominal amounts as shall be agreed to between Santa Fe and Columbus.

Santa Fe has also agreed to provide bridge financing to cover Columbus Silver’s financial commitments prior to closing, which are estimated to be approximately $513,716 to the end of December, 2011 or $543,716 to the end of January, 2012. The aforementioned bridge financing, as well as an earlier $200,000 advance made by Santa Fe to Columbus Silver while the parties were contemplating an all share merger transaction earlier in 2011, will be deemed to be non-refundable if (i) Santa Fe fails to provide the Commitment Letter to Columbus Silver by November 30, 2011, or (ii) the Acquisition does not complete by March 31, 2012 other than due to the failure of Columbus Silver to obtain shareholder and other required regulatory approvals, except where such failure is due to concerns relating to Santa Fe or the terms of the Acquisition. In other circumstances, if the Acquisition fails to complete the bridge financing provided to Columbus Silver will be due and payable 90 days thereafter.

Columbus Silver has agreed to exclusively deal with Santa Fe until October 1, 2011 in connection with a merger, acquisition of its Shares or substantial amount of its assets, or a take-over bid or similar transaction. The parties have also agreed to use commercially reasonable efforts to replace the MOU with a definitive agreement by such date, which agreement will include a provision for the parties to use commercially reasonable efforts to complete the Acquisition on or before December 31, 2012 and in any event prior to March 31, 2012.

Columbus Silver’s President and CEO, Robert F. Giustra, commented that, “This is a very positive development for Columbus Silver shareholders; the consideration per Share represents a significant premium over market prices for the last several months.”

Santa Fe’s President and CEO, Pierce Carson, said, “This transaction is strategically important to Santa Fe and potentially will more than double our controlled silver and gold resources available for processing at our fully-permitted and operating flotation mill near Lordsburg, New Mexico. This will build on current silver and gold production sourced from our Summit mine. Furthermore, Columbus Silver’s portfolio of seven high quality US silver-gold properties in New Mexico, Arizona, Nevada and Utah provides excellent upside exploration potential.”

ON BEHALF OF THE BOARD,

Robert F. Giustra, President & CEO, Director

This release contains forward-looking information and statements, as defined by law including without limitation Canadian securities laws and the “safe harbor” provisions of the US Private Securities Litigation Reform Act of 1995 (“forward-looking statements”), respecting the proposed Acquisition, proposed date of completion thereof, and transactions ancillary thereto. Forward-looking statements involve risks, uncertainties and other factors that may cause actual results to be materially different from those expressed or implied by the forward-looking statements, including without limitation the ability to acquire necessary authorizations; Santa Fe’s ability to raise necessary financing to complete the Acquisition, in particular on or before November 30, 2011; the entering into a definitive agreement; obtaining approval of the TSX Venture Exchange; obtaining approval of shareholders; obtaining court approval; obtaining applicable US approvals; cost increases; possibility of a competing offer arising; unforeseen circumstances; risks associated with the exploration projects or title thereto held by Columbus Silver; mineral reserve and resource estimates (including the risk of assumption and methodology errors); dependence on third parties for services; non-performance by contractual counterparties; title risks; and general business and economic conditions. Forward-looking statements are based on a number of assumptions that may prove to be incorrect, including without limitation assumptions about: that the required approvals mentioned above will occur; that Santa Fe will be able to obtain required financing in a timely fashion; the timing and receipt of required approvals; that shareholders will vote in favor of the Acquisition; that required service providers will be available to assist with the transaction; that items required for mandated disclosure are available; general business and economic conditions; availability of financing; and ongoing relations with employees, partners and joint venturers. The foregoing list is not exhaustive and we undertake no obligation to update any of the foregoing except as required by law.