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,"

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"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;

•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 and the nine months ending March 31, 2019 and 2018, 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.

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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, 2017.

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 $2,688,790 or the nine months ended March 31, 2019, and has a total accumulated deficit of $104,702,164 and a working capital deficit at March 31, 2019, of $16,337,401. 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.

On March 31, 2019, the Company was in default on payments of approximately $7.87 million under a gold stream agreement (the "Gold Stream Agreement") with Sandstorm Gold Ltd. ("Sandstorm") and other notes payable principle aggregating $2,143,885 and accrued interest on the notes of $2,155,801.

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.

Operating Results for the Three Months Ended March 31, 2019 and 2018





Sales, net

During the three months ended March 31, 2019 and 2018, the Company had no revenue in the periods of measurements.





Operating Costs and Expenses

Our operating cost incurred in three months ended March 31, 2019, increased $1,611,430 from $256,501 in the three months ended March 31, 2018, to $1,867,931 for the current period of measurement. The increase in operating costs in the current period of measurement is mainly attributable increased general and administrative of $1,582,029.

This increase in general and administrative consist mainly of increases in consulting fees of $94,113, legal fees of $32,261, non-cash costs of warrants issued of $1,497,985 and is offset by a decrease in salary burden of $43,462.





Other Income (Expense)

Other income (expense) for three months ended March 31, 2019, was $(350,213) as compared to $620,709 for three months ended March 31, 2018, a decrease in other income of $970,922. The net decrease in other income for the current period measurement is mainly comprised of the following component decrease in interest income change on interest on mandatory redemption shares by related party of $1,207,800. This decrease was offset by a decreased in misappropriated funds of $172,891 and a decrease in financing costs - commodity supply agreement of $61,014.

For the three months ended March 31, 2019, financing costs - commodity supply agreements had a decreased loss of $61,014 from the comparable period of measurement. 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 decrease in the current period of measurement is driven by a decrease in precious metals prices.

The interest on mandatory redemption shares by related party of $127,800 is a result of each subsequent period measurement closing, the shares will be valued at the current market price and any increase in valuation from the initial valuation will be recorded

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as a designated interest expense. Any decrease in valuation from the initial valuation will be recorded to Addition Paid in Capital as the obligation is to a related party of the Company.

Operating Results for the Nine Months Ended March 31, 2019 and 2018





Sales, net

During the nine months ended March 31, 2019 and 2018, the Company had no revenue in the periods of measurements.





Operating Costs and Expenses

Our operating cost incurred in nine months ended March 31, 2019, increased $1,142,657 from $1,251,753 in the nine months ended March 31, 2018, to $2,394,410 for the current period of measurement. The increase in operating costs in the current period of measurement is mainly attributable increased general and administrative of $1,140,164.

The increases in general and administrative in the current period of measurement are mainly attributable to increases in legal fees of $104,188 and a non-cash cost of options issued aggregating $1,497,985. These increases were offset by decreases in salary burden of $42,957 and consulting fees of $418,695.





Other Income (Expense)

Other income (expense) for nine months ended March 31, 2019, was $(294,380) as compared to $(1,435,327) for nine months ended March 31, 2018, a decrease in other expense of $1,140,947. The net decrease in other expenses for the current period measurement is mainly comprised of decreased losses in the following components: misappropriation of funds of $604,159, financing costs - commodity supply agreement of $135,939 and interest on mandatory redemption shares by related party of $270,000, and a gain on debt extinguishment of $112,625.

During the current period of measurement, the Company received reimbursements of misappropriated funds aggregating $378,060 as compared to the prior period of measurement loss of $226,099, a change of $604,159.

For the nine months ended March 31, 2019, financing costs - commodity supply agreements had a decreased loss of $166,725 from the comparable period of measurement, which had a loss of $302,664. 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 decrease in the current period of measurement is driven by a decrease in precious metals prices.

The interest on mandatory redemption shares by related party of $127,800 in the current period of measurement is a result of each subsequent period measurement closing, the shares will be valued at the current market price and any increase in valuation from the initial valuation will be recorded as a designated interest expense. Any decrease in valuation from the initial valuation will be recorded to Addition Paid in Capital as the obligation is to a related party of the Company.

The decrease in interest expense for the current period of measurement was $17,587, and is a result of a decrease in interest bearing loan balances.

Liquidity and Capital Resources; Plan of Operation

As of March 31, 2019, we had cash of $37,977 and we had a working capital deficit of $16,337,401.

At March 31, 2019, the Company was in defaults on payments of approximately $7.87 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 $2.94 million and accounts payable approximating $3.05 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.

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.

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During the nine months ending March 31, 2019, the Company continued to implement its initial plan to emerge from the bankruptcy proceedings. The Company raised $758,000 from the sale of common stock subscriptions and received cash loans from two related parties aggregating $249,750 and deferred payroll added to the notes of $41,462. 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. Payments on the purchase price for the nine months ended March 31, 2019 were $515,000.

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