Santa Fe Metals Corp.

Santa Fe Metals Corp.

May 07, 2008 12:39 ET

Santa Fe Metals Enters Into an Agreement to Acquire the Cuatro Cienegas Property and Into a Subscription Agreement With Mineria Melina S.A. de C.V.

VANCOUVER, BRITISH COLUMBIA--(Marketwire - May 7, 2008) - Santa Fe Metals Corporation (TSX VENTURE:SFM) (the "Company") is pleased to announce that its wholly owned subsidiary, Compania Minera Coronado S.A. de C.V. ("Coronado"), has entered into an agreement with Mineria Melina S.A. de C.V. ("Melina") dated May 6, 2008 to acquire certain mineral concessions collectively referred to the Cuatro Cienegas Property in the State of Coahuila, Mexico (the "Acquisition") for the purchase price of US$500,000 plus applicable taxes. No finder's fee is payable in connection with the Acquisition. The Company will also make five annual payments of US$100,000 plus applicable taxes with the last payment due in April 2012, of which US$100,000 has already been made. A 3.5% net smelter returns royalty ("NSR") is payable on future production revenues, of which a 1% NSR can be purchased for US$1 million at any time.

The Company is also pleased to announce that it has entered into a subscription agreement with Melina to issue by way of private placement 500,000 common shares of the Company at a price of US$0.60 per common share for an aggregate subscription price of US$300,000 (the "Private Placement"). Both the Acquisition and the Private Placement are subject to regulatory approval.

The Cuatro Cienegas Property consists of 6 concessions totaling 3408 ha and are located about two hours northeast of the city of Torreon, in the State of Coahuila, on Highway 30 and about 40km south of the town of Cuatro Cienegas.

The property appears to be a breached anticline containing a sedimentary formation of sandstones up to 20 metres in thickness of the "red bed" type formation. It is considered to have been formed in a marine environment, the "Mar Coahuilense" or Sea of Coahuila, (approximately 72 million years ago) that stretched from Coahuila State to southern Mexico. Red bed formations are known to typically contain large tonnages of high grade copper and historically have accounted for about 30% of world copper production.

Limited exploration activity by several North American companies was undertaken on the Cuatro Cienegas Property in the 1990's. Exploration was discontinued due to the then low copper prices and the companies' interests in the mineral concessions lapsed. Limited channel sampling of surface outcrops and underground exposures (from small mine activity) reports copper oxide values (primarily malachite, azurite and chalcocite) ranging from 0.56% to 5.16% and silver from 88 grams per tonne ("g/t") to 576 g/t.

Field mapping suggests estimated strike lengths of the cupriferous sandstone beds of approximately 1.7km in the southern, "El Granizo" claims, and approximately 7.7km in the northern, "Don Indio" claims, based on surface exposures, although much of the cupriferous sandstone beds are covered by scree. In the Don Indio claim, which covers approximately 2,947ha over a length of about 17km, the tenor of the mineralization changes from principally copper in the eastern section to silver, lead and zinc in the west where results of previous channel samples reported in public documents show silver, lead and zinc values ranging from 42 to 180 g/t, 3% to 4.7% and 4.7% to 9.7%, respectively. However, these values have not been independently verified by the Company. Also mineable grades, taking into account dilution, will be lower.

Under the terms of the agreement the Company is obligated to put the property into production at an estimated daily production rate of 1,000 tonnes within 18 months (or by November 7, 2009). The Company plans to produce feed for an acid heap leaching operation from underground exploration drifts and produce cement copper precipitate by running the pregnant solution through launders containing scrap iron. Revenues from this operation will be used to offset exploration activities. This process will not, however, recover any silver in the oxidized material that will remain in the heap. Melina retains the right to recover this silver, if it so desires, at its cost and will assume the related reclamation liabilities.

The Company plans to complete the Acquisition and the Private Placement upon receipt of the approval of the TSX Venture Exchange.

All securities issued under the Private Placement will be subject to a hold period of four months and one day after the closing date of the Private Placement in accordance with the policies of the TSX Venture Exchange and applicable Canadian securities laws and such other further restrictions as may apply under foreign securities laws, if applicable.

About Santa Fe Metals Corp.

The Company's mission is to utilize the broad experience and expertise of its management team and board to aggressively identify and develop precious and base metal properties in Mexico. The Company's management and board together have more than 200 years of industry experience in senior corporate positions encompassing exploration, mining and metallurgical engineering, operations, project management, finance and accounting and mining, corporate and securities law. The Company's initial area of interest for project acquisitions is the prolific Mexican gold and silver and CRD belts (silver, lead, zinc and copper) of north-central Mexico. Some members of the management and board are very knowledgeable on working conditions in Mexico, having worked there for many years. Mexico is a country that has low political and permitting risk, exceptionally good infrastructure and a very skilled work force. Further information is available on the Company's website


IAN SMITH, President & CEO

This release contains forward-looking statements, including statements relating to Santa Fe Metals' future plans and objectives with respect to the exploration of the lobos property. Forward-looking statements are based on numerous assumptions and are subject to all of the risks and uncertainties inherent in Santa Fe Metals' business, including risks inherent in resource exploration and development. There can be no assurance that an economic resource will be developed at the Lobos property. Actual results may vary materially from those described in forward-looking statements.

The TSX Venture Exchange Inc. does not accept responsibility for the adequacy or accuracy of this news release.

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