---

**UNITED STATES****SECURITIES AND EXCHANGE COMMISSION**
  Washington, D.C. 20549

FORM10-QSB

(Mark One)

[X]  QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(D) OF
THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended **September 30, 2007**

[   ]  TRANSITION REPORT PURSUANT TO SECTION 13
OR 15(D) OF THE SECURITIES EXCHANGE ACT

For the transition period from _____________ to
_____________

Commission File Number: 0-20430

SANTA FE GOLD CORPORATION(Exact name of Registrant as specified in its charter)

|Delaware                        | 84-1094315                       
|------------------------------- | ---------------------------------
|(State or other jurisdiction of | (IRS Employer Identification No.)
|incorporation or organization)  |                                  

1128 Pennsylvania NE, Suite 200 Albuquerque, NM
87110(Address of principal executive offices)

(505) 255-4852(Issuers telephone number)

Check whether the issuer (1) filed all reports required to be
filed by Section 13 or 15(d) of the Exchange Act during the past 12 months
(or for such shorter period that the registrant was required to file such
reports), and (2) has been subject to such filing requirements for the past
90 days.Yes  [X]   No [   ]

Indicate by check mark whether the registrant is a shell company
(as referred in Rule 12b-2 of the Exchange Act).Yes  [  
]   No [X]

The number of shares outstanding of each of the issuers classes
of common equity was 74,773,510 shares of common stock, par value $0.002, as
of November 14, 2007.

Transitional Small Business Disclosure Format (check one):
Yes  [   ]   No [X]

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SANTA FE GOLD CORPORATIONINDEX TO FORM
10-QSBFOR THE QUARTER ENDED SEPTEMBER 30, 2007



TABLE OF CONTENTS

**Page****PART I** **FINANCIAL INFORMATION**Item 1.
      Financial Statements
      3Consolidated Balance Sheet, September 30, 2007 (Unaudited)
      3Consolidated Statements of Operations For the Three Months
        Ended September 30, 2007 and 2006 (Unaudited)
      4Consolidated Statements of Cash Flows For the Three Months
        Ended September 30, 2007 and 2006 (Unaudited)
      5Notes to the Unaudited Consolidated Financial Statements
      7Item 2.
      Managements Discussion and Analysis and Plan of Operations
      11Item 3.
      Controls and Procedures
      14**PART II** **OTHER INFORMATION**Item 2.
      Unregistered Sales of Equity Securities and Use of Proceeds
      14Item 4.
      Submission of Matters to a Vote of Security Holders
      14Item 6.
      Exhibits
      14SIGNATURES
      15CERTIFICATIONS
      16


2

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PARTI

FINANCIALINFORMATION

ITEM1. FINANCIALSTATEMENTS

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SANTA FE GOLD CORPORATION CONSOLIDATED BALANCE
SHEET

September 30, 2007(Unaudited)

|ASSETS                                                            |  
|----------------------------------------------------------------- | -
|CURRENT ASSETS:                                                   |  
|Cash and cash
      equivalents                                   | $
|Prepaid expenses                                                  |  
|Total Current Assets                                              |  
|                                                                  |  
|PROPERTY AND PLANT AND EQUIPMENT, net                             |  
|                                                                  |  
|OTHER ASSETS:                                                     |  
|Idle plant and equipment, net                                     |  
|Restricted cash                                                   |  
|Deposit                                                           |  
|                                                                  |  
|                                                                  |  
|Total Assets                                                      | $
|                                                                  |  
|LIABILITIES AND
      STOCKHOLDERS' EQUITY                        |  
|CURRENT LIABILITIES:                                              |  
|Accounts payable                                                  | $
|Accrued liabilities                                               |  
|Line of credit                                                    |  
|Derivative instrument
      liabilities                           |  
|Convertible
      debentures payable, net of discount of $310,292 |  
|Accrued interest payable, other                                   |  
|Total Current Liabilities                                         |  
|LONG TERM LIABILITIES:                                            |  
|Asset retirement
      obligation                                 |  
|Total
      Liabilities                                           |  
|                                                                  |  
|STOCKHOLDERS' EQUITY:                                             |  
|Common stock,
      $.002 par value, 200,000,000 shares           |  
|authorized;
      73,885,415 shares issued and outstanding        |  
|Additional paid
      in capital                                  |  
|Deferred compensation                                             |  
|Accumulated
      (deficit)                                       |  
|Total
      Stockholders' Equity                                  |  
|Total Liabilities and Stockholder's Equity                        | $

The accompanying notes are an integral part of these
consolidated financial statements. F-4

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SANTA FE GOLD CORPORATION CONSOLIDATED STATEMENTS OF
OPERATIONS(Unaudited)

|                                                                            |   | Three Months Ended |  
|--------------------------------------------------------------------------- | - | ------------------ | -
|                                                                            |   | September 30,      |  
|                                                                            |   | 2007               |  
|SALES                                                                       | $ | -                  |  
|                                                                            |   |                    |  
|OPERATING COSTS AND EXPENSES:                                               |   |                    |  
|Exploration and mining costs                                                |   | 60,321             |  
|General and administrative                                                  |   | 301,250            |  
|Stock compensation                                                          |   | 18,308             |  
|Depreciation and amortization                                               |   | 338                |  
|Accretion of asset retirement obligation                                    |   | 1,250              |  
|                                                                            |   | 381,467            |  
|                                                                            |   |                    |  
|(LOSS) FROM OPERATIONS                                                      |   | (381,467           | )
|                                                                            |   |                    |  
|OTHER INCOME (EXPENSE):                                                     |   |                    |  
|Interest income                                                             |   | 5,278              |  
|Foreign currency translation
      gain (loss)                              |   | (2,806             | )
|Gain (loss) on derivative instrument liabilities                            |   | 210,568            |  
|Accretion of discounts
      on notes payable and financing lease liability |   | (678,530           | )
|Interest expense                                                            |   | (695,689           | )
|                                                                            |   | (1,161,179         | )
|                                                                            |   |                    |  
|(LOSS) BEFORE PROVISION FOR INCOME TAXES                                    |   | (1,542,646         | )
|                                                                            |   |                    |  
|PROVISION FOR INCOME TAXES                                                  |   | -                  |  
|                                                                            |   |                    |  
|NET (LOSS)                                                                  | $ | (1,542,646         | )
|                                                                            |   |                    |  
|Basic and Diluted (Loss) per Share:                                         | $ | (0.02              | )
|                                                                            |   |                    |  
|Weighted Average Common Shares Outstanding:                                 |   | 72,705,849         |  

The accompanying notes are an integral part of these
consolidated financial statements. F-5

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SANTA FE GOLD CORPORATION CONSOLIDATED STATEMENTS OF CASH
FLOWS(Unaudited)

|                                                                             |   | For the Three Months Ended |  
|---------------------------------------------------------------------------- | - | -------------------------- | -
|                                                                             |   | September 30,              |  
|                                                                             |   | 2007                       |  
|CASH FLOWS FROM OPERATING ACTIVITIES:                                        |   |                            |  
|Net (loss)                                                                   | $ | (1,542,646                 | )
|Adjustments to reconcile
      net (loss) from operations to                 |   |                            |  
|net cash (used in) operating activities:                                     |   |                            |  
|Depreciation
      and amortization                                          |   | 338                        |  
|Stock compensation
      for services                                        |   | 18,308                     |  
|Stock
      issued for interest                                              |   | 677,252                    |  
|Accretion of
      discount on financing leasing liability and notes payable |   | 678,530                    |  
|Accretion
      of asset retirement obligation                               |   | 1,250                      |  
|Foreign currency
      translation loss (gain)                               |   | 2,806                      |  
|(Gain)
      loss on derivative instrument liabilities                       |   | (210,568                   | )
|Net change in current assets and liabilities:                                |   |                            |  
|Prepaid
      expenses                                                       |   | 36,023                     |  
|Deferred financing
      costs                                               |   | 54,184                     |  
|Accounts
      payable                                                       |   | 18,155                     |  
|Accrued liabilities                                                          |   | (5,131                     | )
|Accrued
      interest payable - related party                               |   | -                          |  
|Accrued interest
      payable - other                                       |   | 17,181                     |  
|Accrued
      lease payments                                                 |   | -                          |  
|Net
      Cash (Used in) Operations                                          |   | (254,318                   | )
|                                                                             |   |                            |  
|CASH FLOWS FROM INVESTING ACTIVITIES:                                        |   |                            |  
|Purchase of property, plant
      and equipment                              |   | -                          |  
|Net Cash (Used in) Investing Activities                                      |   | -                          |  
|                                                                             |   |                            |  
|CASH FLOWS FROM FINANCING ACTIVITIES:                                        |   |                            |  
|Proceeds from convertible
      debentures payable                           |   | -                          |  
|Payments on line of credit                                                   |   | (6,600                     | )
|Deferred finance costs                                                       |   | -                          |  
|Net Cash Provided by (Used in)
      Financing Activities                    |   | (6,600                     | )
|                                                                             |   |                            |  
|(DECREASE) INCREASE IN CASH AND CASH EQUIVALENTS                             |   | (260,918                   | )
|CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD                               |   | 639,852                    |  
|                                                                             |   |                            |  
|CASH AND CASH EQUIVALENTS, END OF PERIOD                                     | $ | 378,934                    |  

The accompanying notes are an integral part of these
consolidated financial statements. F-6

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SANTA FE GOLD CORPORATION CONSOLIDATED STATEMENTS OF CASH
FLOWS(Unaudited)

|                                                               |   | For the Three Months Ended | 
|-------------------------------------------------------------- | - | -------------------------- | 
|                                                               |   | September 30,              | 
|                                                               |   | 2007                       | 
|SUPPLEMENTAL CASH FLOW INFORMATION:                            |   |                            | 
|Cash paid for interest                                         | $ | -                          | 
|                                                               |   |                            | 
|Cash paid for income taxes                                     | $ | -                          | 
|                                                               |   |                            | 
|SUPPLEMENTAL DISCLOSURE OF NON-CASH INVESTING AND              |   |                            | 
|FINANCING ACTIVITIES:                                          |   |                            | 
|Stock issued for conversion of senor secured
      convertible |   |                            | 
|notes payable                                                  | $ | 945,420                    | 
|                                                               |   |                            | 
|Stock issued for conversion
      of accrued interest          | $ | 28,777                     | 

The accompanying notes are an integral part of these
consolidated financial statements. F-7

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SANTA FE GOLD CORPORATIONNOTES TO THE UNAUDITED
CONSOLIDATED FINANCIAL STATEMENTS

NOTE 1 NATURE OF OPERATIONS

Santa
Fe Gold Corporation (the Company) is a U.S. mining company incorporated in
Delaware in August 1991. Its general business strategy is to acquire, explore
and develop mineral properties. The Companys principal assets are the leased
Ortiz gold project in New Mexico, the 100% owned Black Canyon mica project in
Arizona, and the 100% owned Summit silver-gold property located in New Mexico.

At
  the Annual Meeting held on July 24, 2007, the Company’s stockholders approved
  proposals to amend the Company’s Certificate of Incorporation, as amended,
  to change its name, formerly Azco Mining Inc., to “Santa Fe Gold Corporation”,
  and to increase its authorized common stock from 100,000,000 to 200,000,000
  shares.

The
unaudited interim consolidated financial statements of the Company included
herein have been prepared in accordance with generally accepted accounting
principles for interim financial information and in accordance with the
instructions for Form 10-QSB under the Security Exchange Act of 1934. These
statements do not include all of the information and notes to the financial
statements required by generally accepted accounting principles for complete
financial statements. In the opinion of management, all adjustments (consisting
of normal recurring accruals) considered necessary for a fair presentation have
been included. Operating results for the three-month period ended September 30,
2007, are not necessarily indicative of the results that may be expected for the
year ending June 30, 2008. The unaudited consolidated financial statements
should be read in conjunction with the audited consolidated financial statements
and notes thereto for the fiscal year ended June 30, 2007, included in the
Companys Annual Report on Form 10-KSB, as filed with Securities and Exchange
Commission.

Basis of Presentation and Going Concern

The
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. Should the Company be unable to
continue as a going concern, it may be unable to realize the carrying value of
its assets and to meet its liabilities as they become due.

The
Company incurred a net (loss) of ($1,542,646) for the three months ended
September 30, 2007, and has a total accumulated deficit of ($44,524,418) at
September 30, 2007. To continue as a going concern, the Company is dependent on
continued fund raising for project development and deployment. In late October
2007, the Company completed a private placement of senior subordinated
convertible notes for an aggregate purchase price of $450,000 to three
accredited investors. The Company has also received a commitment from another
investor for an additional $3.5 million under similar terms (see NOTE 6). In
addition to these funds, the Company will need to continue to raise additional
working capital to deploy its current business plan.

The
Companys financial statements do not include any adjustments relating to the
recoverability and classification of recorded asset amounts and classification
of liabilities that might be necessary should the Company be unable to continue
in existence.

NOTE 2-SUMMARY OF SIGNIFICANT ACCOUNTING
POLICIES

Derivative Financial Instruments

The
Company does not use derivative instruments to hedge exposures to cash flow,
market, or foreign currency risks.

The
Company reviews the terms of convertible debt, equity instruments and other
financing arrangements to determine whether there are embedded derivative
instruments, including embedded conversion options that are required to be
bifurcated and accounted for separately as a derivative financial instrument.
Also, in connection with the issuance of financing instruments, the Company may
issue freestanding options or warrants that may, depending on their terms, be
accounted for as derivative instrument liabilities, rather than as equity. The
Company may also issue options or warrants to non-employees in connection with
consulting or other services they provide.

8

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Derivative
financial instruments are initially measured at their fair value. For derivative
financial instruments that are accounted for as liabilities, the derivative
instrument is initially recorded at its fair value and is then re-valued at each
reporting date, with changes in the fair value reported as charges or credits to
income. For option-based derivative financial instruments, the Company uses the
Black-Scholes option pricing model to value the derivative instruments. To the
extent that the initial fair values of the freestanding and/or bifurcated
derivative instrument liabilities exceed the total proceeds received, an
immediate charge to income is recognized, in order to initially record the
derivative instrument liabilities at their fair value.

The
discount from the face value of the convertible debt or equity instruments
resulting from allocating some or all of the proceeds to the derivative
instruments, together with the stated interest on the instrument, is amortized
over the life of the instrument through periodic charges to income, usually
using the effective interest method.

The
classification of derivative instruments, including whether such instruments
should be recorded as liabilities or as equity, is reassessed at the end of each
reporting period. If reclassification is required, the fair value of the
derivative instrument, as of the determination date, is reclassified. Any
previous charges or credits to income for changes in the fair value of the
derivative instrument are not reversed. Derivative instrument liabilities are
classified in the balance sheet as current or non-current based on whether or
not net-cash settlement of the derivative instrument could be required within 12
months of the balance sheet date.

Net (Loss) per Common Share

The
Company calculates net income (loss) per share as required by Statement of
Financial Accounting Standards (SFAS) No. 128, Earnings per Share. Basic
earnings (loss) per share is calculated by dividing net income (loss) by the
weighted average number of common shares outstanding for the period. Diluted
earnings (loss) per share is calculated by dividing net income (loss) by the
weighted average number of common shares and dilutive common stock equivalents
outstanding. During the periods when they are anti-dilutive, common stock
equivalents, if any, are not considered in the computation. The impact of
outstanding stock options and warrants has not been included in the computation
of diluted loss per common share as it would be anti-dilutive.

NOTE 3 - DERIVATIVE INSTRUMENT LIABILITIES

On
March 20, 2006, the Company completed a private placement of senior secured
convertible notes, additional investment rights and warrants to institutional
investors for an aggregate purchase price of $2,500,000. These notes were
evaluated using Emerging Issues Task Force (EITF) issue No. 00-19, Accounting
for Derivative Financial Instruments Indexed to, and Potentially Settled in, a
Companys Own Stock (EITF 00-19) and it was determined that the warrants,
embedded conversion and interest components and additional investment rights
should be accounted for as derivative instrument liabilities. Accordingly, they
are to be marked to market each reporting period, with the corresponding
non-cash gain or loss reflected in the Companys current period statement of
operations.

On
September 6, 2006, the Company amended the terms of the private placement of the
senior secured convertible notes that were issued on March 20, 2006. The common
stock warrants and additional investment rights held by the investors were also
amended. In connection with the amendment, the investors agreed to purchase in
the aggregate an additional $1,000,000 of notes under the amended terms,
bringing the total outstanding principal, including interest and liquidated
damages, due under the notes to $3,781,662.

The
Company uses the Black-Scholes option pricing model to value options, warrants,
imbedded conversion option components and additional investment rights that are
recorded as derivative liabilities. The fair values calculated on the original
placement of senior secured convertible notes were re-computed for the amended
terms of the placement agreement for the increased principal amount of the
convertible notes and the cost of reducing the conversion price of the existing
convertible notes, warrants and additional investment rights from $1.58 to
$1.00. The aggregate fair values exceeded the additional proceeds received and
$2,400,000 was recognized as a charge to loss on derivative liabilities in the
period ended September 30, 2006. The initial convertible notes had no carrying
value and the modifications made to the notes resulted in no additional carrying
value, as the fair value of the derivative instruments issued exceeded the
proceeds received. As of the date of the amendment, the Company re-computed the
effective interest rate on the convertible notes to accrete the carrying value
of the notes to their redemption dates, based on the revised repayment schedule
and amounts.

9

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On
  February 23, 2007, the Company agreed with the institutional investors to amend
  the terms of the private placement of senior secured convertible notes, additional
  investment rights and warrants issued March 20, 2006 and September 6, 2006.
  Under terms of this Amendment 2, the date by which the Company was required
  to file a registration statement with the Securities and Exchange Commission
  was extended from November 5, 2006, until April 30, 2007 (filed March 23, 2007),
  and the date by which such registration statement was required to be declared
  effective, was extended from February 4, 2007, until July 31, 2007. The investors
  agreed to forgo all liquidated damages and penalties related to the previous
  deadlines. The Company agreed to seek stockholder approval for an increase in
  the Company’s authorized capital, from the authorized limit of 100 million
  shares, to 200 million shares, and, if necessary, to file additional registration
  statements. In connection with the amendment, the Company issued 1,750,000 warrants,
  giving note holders the right to purchase common stock at a price of $1.25 per
  share for a period of five years. The fair value of the derivative instruments
  liability for these warrants at the time of issuance was determined to be $1,773,013
  with the following assumptions: (1) risk free interest rate of 4.67%, (2) remaining
  contractual life of 5 years, (3) expected stock price volatility of 115.5%,
  and (4) expected dividend yield of zero.

The
  fair value of the derivative instruments liability at June 30, 2007, was determined
  to be $2,402,970 with the following assumptions: (1) risk free interest rate
  of 4.91% to 4.93%, (2) remaining contractual life between 0.50 - 4.65 years,
  (3) expected stock price volatility of 115.602%, and (4) expected dividend yield
  of zero. The fair market value of the derivative instruments liability at September
  30, 2007, was determined to be $2,192,402 with the following assumptions: (1)
  risk free interest rate of 3.82% to 4.18%, (2) remaining contractual life between
  0 .25 - 4.4 years, (3) expected stock price volatility of 119.632%, and (4)
  expected dividend yield of zero. Based upon the change in fair value, the Company
  has recorded a non-cash gain on derivative instruments for the three months
  ended September 30, 2007, of $210,568 and a corresponding decrease in the derivative
  instruments liability. The impact of EITF 00-19 on the financial statements
  as of and through September 30, 2007, was as follows:

|                              |   | Derivative          |  |   | Derivative         |  |   | Derivative Gain    |  
|----------------------------- | - | ------------------- |  | - | ------------------ |  | - | ------------------ | -
|                              |   | Liability as of     |  |   | Liability as of    |  |   | (Loss) Through     |  
|                              |   | June
      30, 2007 |  |   | September 30, 2007 |  |   | September 30, 2007 |  
|Convertible Debenture:        |   |                     |  |   |                    |  |   |                    |  
|Compound Embedded Derivatives | $ | 353,534             |  | $ | 179,010            |  | $ | 174,524            |  
|Additional Investment Rights  |   | 552,996             |  |   | 491,506            |  |   | 61,490             |  
|Purchase Agreement Warrants   |   | 775,120             |  |   | 787,396            |  |   | (12,276            | )
|Amendment 2 Warrants          |   | 721,320             |  |   | 734,490            |  |   | (13,170            | )
|Totals                        | $ | 2,402,970           |  | $ | 2,192,402          |  | $ | 210,568            |  

NOTE 4  CONVERTIBLE DEBENTURE NOTES PAYABLE

During
the period July 1, 2007, to September 30, 2007, the Company paid on the
convertible debenture notes, principal installments aggregating $945,420, with
the issuance of 945,420 shares of the Companys common stock and interest
payments aggregating $706,029 with the issuance of 1,857,709 shares of the
Companys common stock.

NOTE 5 - STOCKHOLDERS (DEFICIT)

Issuances of Common Stock

During
the period July 1, 2007, to September 30, 2007, the Company paid on the
convertible debenture notes, principal installments aggregating $945,420, with
the issuance of 945,420 shares of the Companys common stock and interest
payments aggregating $706,029 with the issuance of 1,857,709 shares of the
Companys common stock.

2007 Equity Incentive Plan

At
the Companys Annual Meeting on July 24, 2007, the stockholders approved the
2007 Equity Incentive Plan ("2007 EIP"). The 2007 EIP became effective on July
25, 2007, and will terminate on July 24, 2017. A maximum of 8,000,000 shares of
common stock are reserved for the grant of non-qualified stock options,
incentive stock options, restricted stock awards and other stock awards under
the 2007 EIP. The 2007 EIP replaces the Companys 1989 Stock Option Plan, which
terminated on April 30, 2007.

10

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The
purpose of the 2007 EIP is to provide the employees, non-employee directors, and
consultants who are selected for participation in the 2007 EIP with added
incentives to continue in the long-term service of the Company and to create in
such persons a more direct interest in the future success of the Companys
operations by relating increases in compensation to increases in stockholder
value, so that the income of the participants in the 2007 EIP is more closely
aligned with the financial interests of the Companys stockholders. The 2007 EIP
is also intended to provide a financial incentive that will enable the Company
to attract, retain and motivate the most qualified directors, employees, and
consultants. As of September 30, 2007, one executive officer, two non-employee
board members and approximately five other employees and consultants are
eligible to receive grants under the 2007 EIP.

In
  July 2007, the Company granted a five (5) year option to purchase 100,000 shares
  of common stock to a director. The option exercise price is $0.46 per share,
  the closing price on the date of grant and the options have a vesting period
  of one year from the date of grant. The options were valued at $37,849 using
  the Black-Scholes option pricing model and will be expensed over the vesting
  period. The options were valued using a volatility of 114.622%, a risk free
  interest rate of 4.8%, an expected life of 5.0 years and zero quarterly dividends.
  During the three months ended September 30, 2007, $9,462 was recognized as stock
  compensation expense.

In
  addition to options under the 1989 Stock Option Plan and 2007 EIP, the Company
  also has issued options outside of these plans and these options are exercisable
  over various terms up to a maximum of ten years.

Stock
  option and warrant activity, both within the 1989 Stock Option Plan and 2007
  EIP and outside of these plans, for the three months ended September 30, 2007
  are as follows:

|                                  |  | Stock
      Options |  |   | Stock
      Warrants | 
|--------------------------------- |  | ------------------- |  | - | -------------------- | 
|                                  |  |                     |  |   | Weighted             | 
|                                  |  |                     |  |   | Average              | 
|                                  |  | Shares              |  |   | Price                | 
|                                  |  |                     |  |   |                      | 
|Outstanding at June 30, 2007      |  | 9,600,000           |  | $ | 0.11                 | 
|Granted                           |  | 100,000             |  | $ | 0.46                 | 
|Canceled                          |  | ---                 |  |   | ---                  | 
|Expired                           |  | ---                 |  |   | ---                  | 
|Exercised                         |  | ---                 |  |   | ---                  | 
|Outstanding at September 30, 2007 |  | 9,700,000           |  | $ | 0.12                 | 

Stock
options and warrants outstanding and exercisable at September 30, 2007, are as
follows:

Outstanding and Exercisable Options
      Outstanding and Exercisable WarrantsWeighted
      Weighted
      
      
      Weighted
      WeightedExercise
      
      Average
      Average
      Exercise
      
      Average
      AveragePrice
      
      Contractual
      Exercise
      Price
      
      Contractual
      ExerciseRange
      Number
      Life
      Price
      Range
      Number
      Life
      Price$0.10
      5,000,000
      1.71
      $0.10
      $1.00
      1,965,301
      3.87
      $1.00$ 0.11
      4,500,000
      5.48
      $0.11
      $1.25
      1,750,000
      4.40
      $1.25$0.74
      50,000
      4.58
      $0.74
      
      --$1.24
      50,000
      3.59
      $1.24
      
      --9,600,000
      
      $0.11
      
      3,715,301
      
      $1.12


NOTE 6  SUBSEQUENT EVENTS

On
October 3, 2007, the Company issued 831,818 shares of the Companys common stock
at an aggregate value of $253,954 to true-up the stock issued for the October
2007 principal payment due under the senior subordinated convertible notes. An
additional 56,277 shares of the Companys common stock was issued at an
aggregate market value of $17,181 to true-up the stock issued for the accrued
interest payment due September 30, 2007.

11

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In
October 2007, the Company completed a private placement of senior subordinated
convertible notes for an aggregate purchase price of $450,000 to three
accredited investors. The Company has also received a commitment from another
investor for an additional $3.5 million under similar terms. The subordinated
convertible notes have a term of sixty (60) months and bear interest at 10% per
annum. Interest accrues for the first eighteen months and thereafter is paid
quarterly in arrears. The holders of the subordinated convertible notes have the
option to convert the outstanding principal and accrued unpaid interest to
common stock at anytime at a conversion price of $1.25 per share. Outstanding
principal and interest is automatically converted at the $1.25 conversion price
if the reported weighted average closing sales price of the Companys stock
exceeds $2.50 per share for ten consecutive trading days. In connection with the
transaction, the Company issued one warrant for each $2.50 invested, each
warrant giving note holders the right to purchase one share of common stock at a
price of $1.25 per share for a period of five years. The Company agreed to
register the shares underlying the notes and warrants upon request, provided the
reported weighted average closing sales price of its common stock exceeds $1.50
per share for ten consecutive trading days.

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ITEM 2  MANAGEMENTS DISCUSSION AND ANALYSIS AND PLAN OF
OPERATION

THIS FORM 10-QSB MAY CONTAIN CERTAIN FORWARD-LOOKING
STATEMENTS AS SUCH TERM IS DEFINED IN THE PRIVATE SECURITIES LITIGATION REFORM
ACT OF 1995 AND 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 OPERATIONS,
ECONOMIC PERFORMANCE, FINANCIAL CONDITION, GROWTH AND ACQUISITION 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. THESE STATEMENTS BY THEIR NATURE INVOLVE SUBSTANTIAL
RISKS AND UNCERTAINTIES, CERTAIN OF WHICH ARE BEYOND THE COMPANYS CONTROL, AND
ACTUAL RESULTS MAY DIFFER MATERIALLY DEPENDING ON A VARIETY OF IMPORTANT
FACTORS, INCLUDING UNCERTAINTY RELATED TO ACQUISITIONS, GOVERNMENTAL REGULATION,
MANAGING AND MAINTAINING GROWTH, THE OPERATIONS OF THE COMPANY AND ITS
SUBSIDIARIES, VOLATILITY OF STOCK PRICE AND ANY OTHER FACTORS DISCUSSED IN THIS
AND OTHER REGISTRANT FILINGS WITH THE SECURITIES AND EXCHANGE COMMISSION. THE
COMPANY DOES NOT INTEND TO UNDERTAKE TO UPDATE THE INFORMATION IN THIS FORM
10-QSB IF ANY FORWARD-LOOKING STATEMENT LATER TURNS OUT TO BE INACCURATE. THE
FOLLOWING SHOULD BE READ IN CONJUNCTION WITH THE INFORMATION PRESENTED IN THE
COMPANYS ANNUAL REPORT ON FORM 10-KSB FOR THE YEAR ENDED JUNE 30, 2007.

General

Santa
Fe Gold Corporation (the Company, our or we) is a U.S. mining company,
incorporated in August 1991 in the state of Delaware, with a general business
strategy to acquire and develop mining properties amenable to low cost
production. We currently are focused on financing efforts to: (1) conduct
engineering studies on our Summit silver-gold property located in New Mexico,
(2) conduct further studies on our Ortiz gold project located in New Mexico, (3)
fund the re-opening and enhancement of our Black Canyon mica project located in
Arizona and (4) acquire high quality gold, silver and/or copper properties.

Basis of Presentation and Going Concern

The
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. Should we be unable to continue as
a going concern, we may be unable to realize the carrying value of our assets
and to meet our liabilities as they become due.

The
Company incurred a net loss of ($1,542,646) for the three months ended September
30, 2007, and has a total accumulated deficit of ($44,524,418) at September 30,
2007. To continue as a going concern, we are dependent on continued fund raising
for project development and deployment. In late October 2007, the Company
completed a private placement of senior subordinated convertible notes for an
aggregate purchase price of $450,000 to three accredited investors. The Company
has also received a commitment from another investor for an additional $3.5
million under similar terms (see NOTE 6). In addition to these funds, the
Company will need to continue to raise additional working capital to deploy its
current business plan. In seeking additional working capital and there is no
assurance that such funding will be available when needed, or if available, that
its terms will be favorable or acceptable to the Company. We have $378,934 cash
on hand at September 30, 2007. We will be required to raise additional working
capital in equity or financing transactions in order to satisfy our expected
cash expenditures and deploy our current business strategies. At September 30,
2007, based upon our current working capital utilization rate, we have working
capital to fund approximately four months of operations.

The
Companys financial statements do not include any adjustment relating to the
recoverability and classification of recorded asset amounts and classification
of liabilities that might be necessary should we be unable to continue in
existence.

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Derivative Financial Instruments

In
connection with the issuance of debt or equity instruments, we may issue options
or warrants to purchase our common stock. In certain circumstances, these
options or warrants may be classified as derivative liabilities, rather than as
equity. Additionally, the debt or equity instruments may contain embedded
derivative instruments, such as conversion options, which in certain
circumstances, may be required to be bifurcated from the associated host
instrument and accounted for separately as a derivative instrument liability.

The
identification of, and accounting for, derivative instruments is complex.
Company derivative instrument liabilities are re-valued at the end of each
reporting period, with changes in the fair value of the derivative liability
recorded as charges or credits to income, in the period in which the changes
occur. For warrants that are accounted for as derivative instrument liability,
we determined the fair value of these warrants using the Black-Scholes option
pricing model. That model requires assumptions related to the remaining term of
the instruments and risk-free rates of return, our current common stock price
and expected dividend yield, and the expected volatility of our common stock
price over the life of the warrants. The identification of, and accounting for,
derivative instruments and the assumptions used to value them can significantly
affect our financial statements.

RESULTS OF OPERATIONS

**Operating Results for the Three Months Ended September
  30, 2007 and 2006**

***Sales***

We
had no sales for the quarters ended September 30, 2007 and 2006.

***Operating
Costs and Expenses***

Mine
related costs decreased in the quarter ended September 30, 2007, to $60,321 from
$70,256 for the comparable quarter ended in 2006, a decrease of $9,935. This
decrease in the current quarter is mainly attributable to decreased costs
incurred on the Ortiz site aggregating $12,740 and offset by an increase in
property taxes of $2,095 on properties.

General
and administrative decreased to $301,250 for the quarter ended September 30,
2007, from $370,725 for the comparative quarter ended September 30, 2006, a
decrease of $69,475. The decrease in the current quarter is mainly attributable
to decreases in rent expense of $126,352; accounting and legal fees of $22,854;
and per diem costs of $15,048. These decreases were mainly offset by increases
in financing fees of $11,135; travel related costs of $4,884; investor relations
of $40,875; costs associated with the corporate annual shareholder meeting of
$32,876; and director fees of $6,000.

General
and administrative stock compensation increased to $18,308 for the quarter ended
September 30, 2007, from $11,165 for the comparative quarter ended September 30,
2006, an increase of $7,143. The increase is attributable to amortized costs
associated with options issued to a director aggregating $9,462 that are being
amortized over the vesting period of one year.

***Other
Income and Expenses***

Other
income and (expenses) for the quarter ended September 30, 2007, were
$(1,161,179) as compared to $(1,561,351) for the comparable quarter ended
September 30, 2006. The decrease in other expenses incurred in the current
quarter of $400,172 is mainly attributable to an increased gain on derivative
instruments liability of $1,275,427. This gain was offset by increases in the
current period of accretion of discounts on notes payable and lease liability
aggregating $296,313 and interest expense of $568,928, consisting mainly of
interest recognized on debt conversion of the senior secured convertible debt.

***Gain
on Derivative Financial Instruments***

We
recognized a gain on derivative financial instruments of $210,568 for the
quarter ended September 30, 2007, as compared to a (loss) of $(1,064,859) for
the prior year comparable period. The non-cash gain arises from adjustments to
record the derivative financial instruments at fair values in accordance with
current accounting standards. The derivative financial

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instruments arose in connection with a financing lease and
senior secured convertible notes. Otherwise, we generally do not use derivative
financial instruments for other purposes, such as hedging cash flow or
fair-value risks. The increase in the derivative gain in the quarter ended
September 30, 2007, is mainly attributable to changes in the market price of our
common stock, which is a component of the calculation model. We use the
Black-Scholes option pricing model to estimate the fair value of this
derivative. Because Black-Scholes uses the Companys stock price, changes in the
stock price will result in volatility in the earnings in future periods as the
Company continues to reflect the derivative financial instruments at fair
values.

PLAN OF OPERATIONS

Liquidity and Capital Resources

To
continue with the deployment of our business strategies, we will require
significant additional working capital. We also will require additional working
capital funds for continuing payments for necessary corporate personnel, and
related general and administrative expenses.

As
of September 30, 2007, we had cash on hand of $378,934, a working capital
deficit of $2,805,240, which is mainly attributable to non-cash derivative
instrument liabilities of $2,192,402, and an accumulated (deficit) of
$(44,524,418). At September 30, 2007, based upon our current working capital
utilization rate, we have working capital to fund approximately four months of
operations.

We
are continuing to pursue a joint venture or sale of the Black Canyon mica
project. Management has determined that it would be significantly more
beneficial for the Company to deploy its resources in the area of precious
metals based upon the current and projected market trends in this area.

We
continue to seek funding to advance our business plan and strategies. We require
funding to meet our corporate commitments, to place our Summit silver-gold
deposit into production, to continue feasibility studies on our mineral
properties and to initiate exploration programs. We anticipate that our
operations for the remaining quarters in fiscal 2008, will be funded from our
current cash position; sale of our securities and possibly through the exercise
of certain options and warrants; and other financing facilities. While we
believe we will be able to finance our continuing activities, there are no
assurances of success in this regard or in our ability to obtain continued
financing through capital markets, joint ventures, or other acceptable
arrangements. If our plans are not successful, operations and liquidity may be
adversely impacted. In the event that we are unable to obtain additional
required capital, we may be forced to reduce our exploration and operating
expenditures or to cease development operations altogether.

In
late October 2007, we completed a private placement of senior subordinated
convertible notes for an aggregate purchase price of $450,000 to three
accredited investors. We have also received a commitment from another investor
for an additional $3.5 million under similar terms. The subordinated convertible
notes have a term of sixty (60) months and bear interest at 10% per annum.
Interest accrues for the first eighteen months and thereafter is paid quarterly
in arrears. The holders of the subordinated convertible notes have the option
convert the outstanding principal and accrued unpaid interest to common stock at
anytime at a conversion price of $1.25 per share. Outstanding principal and
interest is automatically converted at the $1.25 conversion price if the
reported weighted average closing sales price of our stock exceeds $2.50 per
share for ten consecutive trading days. In connection with the transaction, we
issued one warrant for each $2.50 invested, each warrant giving note holders the
right to purchase one share of common stock at a price of $1.25 per share for a
period of five years. We have agreed to register the shares underlying the notes
and warrants upon request, provided the reported weighted average closing sales
price of the Companys common stock exceeds $1.50 per share for ten consecutive
trading days

Factors Affecting Future Operating Results

We
have developed a plan to place the Company on an improved financial footing.
Important elements of the plan include maintaining currency in the filing of our
annual and quarterly financial reports, continuing to raise interim funding to
provide for deployment of operations on our various property sites, and
restructuring of debt with secured creditors. If we are able to continue to
secure additional interim financing on acceptable terms and obtain the
additional required project financing, we believe we will be in a position to
deploy our business plan on mining operations.

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Off-Balance Sheet Arrangements

During
the three months ended September 30, 2007, we did not engage in any off-balance
sheet arrangements defined in Item 303(c) of the SECs Regulation S-B.

ITEM 3  CONTROLS AND PROCEDURES

We
maintain disclosure controls and procedures as defined in Rules 13a-15(e) and
15d-15(e) under the Securities and Exchange Act of 1934, as amended (the
Exchange Act) that are designed to ensure that information required to be
disclosed by us in the reports that we file or submit under the Exchange Act is
recorded, processed, summarized and reported, within the time periods specified
in the Securities and Exchange Commission's rules and forms, and is accumulated
and communicated to our management as appropriate to allow timely decisions
regarding required disclosure. Under the supervision of, and the participation
of, our management, including our Chief Executive Officer, we have conducted an
evaluation of our disclosure controls and procedures as of September 30, 2007.
Based on this evaluation, our Chief Executive Officer has concluded that our
disclosure controls and procedures are effective.

During
the quarter ended September 30, 2007, there were no changes in our internal
controls over financial reporting that have materially affected, or are
reasonably likely to materially affect, our internal controls over financial
reporting.

PART IIOTHER INFORMATION

ITEM 2 - UNREGISTERED SALE OF EQUITY SECURITIES AND USE OF
PROCEEDS

During
the period July 1, 2007, to September 30, 2007, the Company paid on the senior
secured convertible notes, principal installments aggregating $945,420, with the
issuance of 945,420 shares of the Companys common stock and interest payments
aggregating $706,029 with the issuance of 1,857,709 shares of the Companys
common stock.

ITEM 4 - SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

None.

ITEM 6 - EXHIBITS

(a)
The following exhibits are filed as part of this report:

| | 31.1 | Certification of Chief Executive
        Officer and Chief Accounting Officer of Periodic Report pursuant to Rule
        13a- 14a and Rule 15d-14(a).
| | ---- | ------------------------------------------------------------------------------------------------------------------------------------------------------
| |      |                                                                                                                                                       
| | 32.1 | Certification of Chief Executive
        Officer and Chief Accounting Officer pursuant to 18 U.S.C.  Section
        1350.                           

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SIGNATURES:

In accordance with the requirements of the Securities Exchange
Act of 1934, the Registrant has caused this report to be signed on its behalf by
the undersigned, thereunto duly authorized.

|Dated: November 16, 2007 | SANTA FE GOLD CORPORATION                       
|------------------------ | ------------------------------------------------
|                         |                                                 
|                         | By: /s/ W. Pierce
      Carson                  
|                         | W. Pierce Carson                                
|                         | Chief Executive Officer, President, Director and
|                         | Principal Accounting Officer                    

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