Forward-Looking Statements

This Form 10-Q contains certain "forward-looking" statements as such term is defined by the Securities and Exchange Commission in its rules, regulations and releases, which represent the Company's expectations or beliefs, including but not limited to, statements concerning the Company's strategy, operations, economic performance, financial condition, resource drilling strategies, investments, and future operational plans. For this purpose, any statements contained herein that are not statements of historical fact may be deemed to be forward-looking statements. Without limiting the generality of the foregoing, words such as "may," "will," "expect," "believe," "anticipate," "intent," "could," "estimate," "might," "plan," "predict" or "continue" or the negative or other variations thereof or comparable terminology are intended to identify forward-looking statements. This information may involve known and unknown risks, uncertainties and other factors which may cause our actual results, performance or achievements to be materially different from the future results, performance or achievements expressed or implied by any forward-looking statements. This Form 10-Q contains forward-looking statements, many assuming that the Company secures adequate financing and is able to continue as a going concern, including statements regarding, among other things: our ability to continue as a going concern;

•exploration for minerals is highly speculative and involves greater risk than many other businesses; as such, most exploration programs fail to result in the discovery of economic mineralization;

•our mineralized material calculations at various projects are only estimates and are based principally on historic data;

•actual capital costs, operating costs, production and economic returns may differ significantly from those that we have anticipated;

•exposure to all of the risks associated with restarting and establishing new mining operations, if the development of one or more of our mineral projects is found to be economically feasible;

•title to some of our mineral properties may be uncertain or defective;

•land reclamation and mine closure may be burdensome and costly;

•significant risk and hazards associated with mining operations;

•we will require additional financing in the future to develop a mine at any other projects;

•the requirements that we obtain, maintain and renew environmental, construction and mining permits, which is often a costly and time-consuming process and may be opposed by local environmental group;

•our anticipated needs for working capital;

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•our ability to secure financing;

•claims and legal proceedings against us;

•our lack of necessary financial resources to complete development of our projects and the uncertainty of our future financing plans;

•our exposure to material costs, liabilities and obligations because of environmental laws and regulations (including changes thereto) and permits;

•changes in the price of silver and gold;

•extensive regulation by the U.S. government as well as state and local governments;

•our projected sales and profitability;

our business growth strategies;

•anticipated trends in our industry;

the lack of commercial acceptance of our product or by-products;

•problems regarding availability of materials and equipment;

•failure of equipment to process or operate in accordance with specifications, including expected throughput, which could prevent the production of commercially viable output; and

•our ability to seek out and acquire high quality gold, silver and/or copper properties.

The Company does not intend to undertake to update the information in this Form 10-Q if any forward-looking statement later turns out to be inaccurate.

The following discussion summarizes the results of our operations for the three months ending September 30, 2017 and 2016, but with the knowledge that Santa Fe Gold with all its subsidiaries filed for Bankruptcy - Chapter 11 in August 2015 and the case was dismissed from bankruptcy on June 15, 2016.

Basis of Presentation and Going Concern

The consolidated unaudited financial statements have been prepared on a going concern basis, which contemplates the realization of assets and satisfaction of liabilities and commitments in the normal course of business. As a result of these circumstances, management concluded that there is substantial doubt regarding the Company's ability to continue as a going concern as it is currently structured.

The future of the Company is discussed in the 10-K filings for the fiscal year ended June 30, 2019.

Santa Fe Gold Corporation ("Santa Fe", "the Company", "our" or "we") is a U.S. mining company, incorporated in 1991 in the state of Delaware. Our general business strategy is to acquire explore, develop and to create shareholder value.

The Company has recorded a loss of $865,670 for the three months ended September 30, 2017, and has a total accumulated deficit of $100,282,310 and a working capital deficit at September 30, 2017 of $15,430,803. The Company currently has no source of generating revenue.

To continue as a going concern, the Company is dependent on continued capital financing for project development, repayment of various debt facilities and payment of current operating expenses until the Company has acquired new mining claims and an acceptable source to process the mineralized ore to generate revenue. We have no commitment from any party to provide additional working capital and there is no assurance that any funding will be available as required, or if available, that its terms will be favorable or acceptable to the Company.

At September 30, 2017, the Company was in defaults on payments of approximately $7.56 million under a gold stream agreement (the "Gold Stream Agreement") with Sandstorm Gold Ltd. ("Sandstorm"), other notes payable principle aggregating approximating $2.38 million, accrued liabilities of approximately $3.31 million and accounts payable approximating $2.99 million.

The results of operations in the past reflected a continued under-capitalization of our projects which required additional funding to be able to achieve full project performance and sustained potential profitability. We currently are dependent on additional financing to resume any mining operations and to continue our exploration efforts in the future if warranted.

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Operating Results for the Three Months Ended September 30, 2017 and 2016 (As Restated)





Sales, net



During the three months ended September 30, 2017 and 2016, the Company had no revenue in the periods of measurements.





Operating Costs and Expenses


Our operating cost incurred in three months ended September 30, 2017, increased $160,144 from $333,793 in the three months ended September 30, 2016, to $493,937 for the current period of measurement. The increases in operating costs in the current period of measurement is attributable increased exploration and mine related costs of $31,981and increased general and administrative of $128,163.

Increases in exploration and mine related costs were due mainly to increased geological exploration related costs. The increase in general and administrative expenses was mainly attributable to an increase consulting fees related to working capital raises of $103,401 and legal and accounting fees of $25,889.





Other Income (Expense)


Other income (expense) for three months ended September 30, 2017, was $(371,733) as compared to $(807,736) for three months ended September 30, 2016, a decrease in other expense of $436,003. The net decrease in other expense for the current period measurement is mainly comprised of the following components: decreased losses on foreign currency translation of $109,141; on derivative instruments of $381,231, misappropriation of funds of $23,209 and interest expense of $119,848. These other expense decreases were offset by an increase in financing costs - commodity supply agreements of $145,027 and interest on mandatory share redemption by a related party of $37,800.

For the three months ended September 30, 2017, there were no derivative financial instruments or related derivative gain or loss and in the current reporting period. The prior reporting period had a loss $381,231 on derivative instruments. The changes in derivative financial instruments are non-cash items and arise from adjustments to record the derivative financial instruments at fair values. These changes are attributable mainly to adjustments to record the change in fair value for the embedded conversion feature of derivative financial instruments, warrants previously issued under our registered direct offerings, fluctuation in the market price of our common stock, which is a component of the calculation model, and the issuance of additional warrants resulting in derivative treatment. We use the Black-Scholes option pricing model to estimate the fair value of the derivative financial instruments. Because Black-Scholes uses our stock price, fluctuation in the stock prices will result in volatility to the earnings (losses) in future periods as we continue to reflect the derivative financial instruments at fair values. When required to arrive at the fair value of derivatives associated with the convertible note and associated warrants, a Monte Carlo model is utilized that values the Convertible Note and Warrant based on average discounted cash flow factoring in the various potential outcomes by a Chartered Financial Analyst ('CFA"). In determining the fair value of the derivatives, the CFA assumed that the Company's business would be conducted as a going concern.

For the three months ended September 30, 2017, financing costs - commodity supply agreements had an increased loss of $145,027 from the comparable period of measurement, which had a loss of $6,491. The financing costs for commodity supply agreements relate directly to production delivery of refined precious metals to Sandstorm in the prior period of measurement. The financing costs are adjusted period-to-period based upon the total number of undelivered gold and silver ounces outstanding at the end of each period. The increased in the current period of measurement is driven by an increase in precious metals prices.

The decrease in interest expense for the current period of measurement was $119,848, and is a result of a decrease in loan discounts expensed as interest expense of $60,547 and no convertible debt interest in the current period of measurement.

Liquidity and Capital Resources; Plan of Operation

As of September 30, 2017, we had cash of $733,033 and we had a working capital deficit of $15,430,803.

At September30, 2017, we were in arrears on payments totaling approximately $7.56 million under a gold stream agreement (the "Gold Stream Agreement") with Sandstorm in the Santa Fe Gold Barbados subsidiary and other corporate debt approximating $10.44 million.

The Company upon emergence resorted to selling equity for cash so as to proceed on reviving the Company. Currently we have no continuing commitment from any party to provide necessary additional working capital, or if one becomes available, there is no certainty that its terms will be favorable or acceptable to the Company to continue its current business plan.

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On July 19, 2016, a new company was formed: Santa Fe Acquisition LLC ("SFA") with Tom Laws, our CEO, as the signer, for the sole purpose of acquiring assets for Santa Fe Gold ("SFG"). On September 25, 2017, with an effective date of July 23, 2016, the CEO assigned ownership of SFA to Santa Fe Gold whereby SFG became to sole member of SFA resulting in SFA becoming a wholly owned subsidiary of SFG. All major purchases were made through the SFA Company for the benefit of SFG, with the funding provided by SFG.

During the three months ending September 30, 2017, the Company continued to implement its initial plan to emerge from the bankruptcy proceedings. The Company raised $2,545,226 from the sale of common stock subscriptions and the exercise of attached warrants. The funds were used as working capital to implement the Company business plan.

On August 18, 2017, the Company signed the Bullard's Peak Agreement and delivered $100,000 towards the purchase price. The Agreement is to purchase Bullard's Peak Corporation and Black Hawk Consolidated Mines Company and acquire 100% of the issued and outstanding capital stock for a cash purchase price in the aggregate amount of $3,000,000, to be paid with installments stated in the Bullard's Peak Agreement. Title to the claims and transfer of the issued and outstanding shares will be transferred upon receipt by seller of the full purchase price. The final payment was made on April 2, 2019 and the final purchase price with related costs was $3,115,365.

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