---

UNITED STATESSECURITIES AND EXCHANGE COMMISSIONWashington, D.C.
20549

FORM 10-Q

(Mark One)

[ x ] QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934For the quarterly period ended March 31, 2009

[    ] TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE EXCHANGE
ACTFor the transition period from _____to _______

Commission File Number: 001-12974

SANTA FE GOLD
CORPORATION(Exact Name of Small Business Issuer as Specified
in its Charter)

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

1128 Pennsylvania NE, Suite 200, Albuquerque, NM
87110(Address of Principal Executive Offices)

Registrant's telephone number including area code: (505)
255-4852

N/AFormer name, former address, and former
fiscal year, if changed since last report

Indicate by check mark whether the registrant (1) filed all
reports required to be filed by Section 13 or 15(d) of the Securities Exchange
Act of 1934 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 large
accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller
reporting company. See definition of large accelerated filer, accelerated
filer and smaller reporting company in Rule 12b-2 of the Exchange Act.

|Larger accelerated filer [   ] | Accelerated filer [  
    ]    
|------------------------------ | -------------------------------
|Non-accelerated filer [   ]    | Smaller reporting company [ x ]

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

Indicate the number of shares outstanding of each of the
issuers classes of common stock, as of the latest practicable date: 80,221,171
shares outstanding as of May 12, 2009.

---

|SANTA FE GOLD CORPORATION           
|------------------------------------
|INDEX TO FORM 10-Q                  
|FOR THE QUARTER ENDED MARCH 31, 2009
|                                    
|                                    
|TABLE OF CONTENTS                   
|                                    
|PART I                              
|FINANCIAL INFORMATION               

|        | Page                                                                                                                     
|------- | -------------------------------------------------------------------------------------------------------------------------
|        |                                                                                                                          
|Item 1. | Financial
      Statements                                                                                               
|        | Consolidated
      Balance Sheets, March 31, 2009 (Unaudited) and June 30, 2008                                          
|        | Consolidated
      Statements of Operations for the Three and Nine Months Ended March 31,
      2009 and 2008 (Unaudited)
|        | Consolidated
      Statements of Cash Flows for the Nine Months Ended March 31, 2009 and 2008 (Unaudited)                
|        | Notes
      to the Unaudited Consolidated Financial Statements                                                           
|        |                                                                                                                          
|Item 2. | Managements
      Discussion and Analysis and Plan of Operations                                                        
|        |                                                                                                                          
|Item 4. | Controls
      and Procedures                                                                                            

PART IIOTHER INFORMATION

|Item
      1.  | Legal
      Proceedings                                           | 18
|-------------- | ----------------------------------------------------------------- | --
|Item
      1A. | Risk
      factors                                                | 18
|Item
      2.  | Unregistered
      Sales of Equity Securities and Use of Proceeds | 18
|Item
      3.  | Defaults
      Upon Senior Securities                             | 18
|Item
      4.  | Submission
      of Matters to a Vote of Security Holders         | 18
|Item
      5.  | Other
      Information                                           | 18
|Item
      6.  | Exhibits                                                          | 18
|SIGNATURES     | 18                                                               
|CERTIFICATIONS |                                                                  

2

---

PARTIFINANCIALINFORMATION

ITEM1. FINANCIALSTATEMENTS



SANTA FE GOLD CORPORATIONCONSOLIDATED BALANCE SHEETS

|                                                                                |   | March 31,   |   |   | June 30,    |  
|------------------------------------------------------------------------------- | - | ----------- | - | - | ----------- | -
|                                                                                |   | 2009        |   |   | 2008        |  
|ASSETS                                                                          |   | (Unaudited) |   |   |             |  
|CURRENT ASSETS:                                                                 |   |             |   |   |             |  
|Cash and cash equivalents                                                       | $ | 1,998,769   |   | $ | 3,255,754   |  
|Accounts receivable                                                             |   | 4,949       |   |   | -           |  
|Inventory                                                                       |   | 5,000       |   |   | -           |  
|Interest receivable                                                             |   | -           |   |   | 1,424       |  
|Prepaid expenses                                                                |   | 172,883     |   |   | 101,103     |  
|Equipment deposits                                                              |   | 22,712      |   |   | -           |  
|Deposits                                                                        |   | 11,878      |   |   | -           |  
|Total Current Assets                                                            |   | 2,216,191   |   |   | 3,358,281   |  
|MINERAL PROPERTIES                                                              |   | 579,000     |   |   | 579,000     |  
|PROPERTY, PLANT AND EQUIPMENT, net                                              |   | 12,013,923  |   |   | 3,137,329   |  
|OTHER ASSETS:                                                                   |   |             |   |   |             |  
|Idle equipment,
      net                                                       |   | 1,311,500   |   |   | 1,311,500   |  
|Restricted cash                                                                 |   | 203,903     |   |   | 182,548     |  
|Deferred financing
      costs                                                  |   | 229,331     |   |   | 275,197     |  
|Deposit                                                                         |   | 1,342       |   |   | 1,342       |  
|Total Other Assets                                                              |   | 1,746,076   |   |   | 1,770,587   |  
|                                                                                | $ | 16,555,190  |   | $ | 8,845,197   |  
|                                                                                |   |             |   |   |             |  
|LIABILITIES AND STOCKHOLDERS' (DEFICIT)                                         |  
|CURRENT LIABILITIES:                                                            |   |             |   |   |             |  
|Accounts payable                                                                | $ | 904,302     |   | $ | 873,434     |  
|Accrued liabilities                                                             |   | 76,606      |   |   | 96,172      |  
|Line of credit                                                                  |   | -           |   |   | 11,400      |  
|Derivative instrument
      liabilities                                         |   | 13,568      |   |   | 2,884,189   |  
|Current portion, notes payable                                                  |   | 72,946      |   |   | 50,000      |  
|Current portion,
      capital leases                                           |   | 97,770      |   |   | -           |  
|Current portion senior secured convertible
      notes payable, net of discount |   |             |   |   |             |  
|of $20,646 and $491,603, respectively                                           |   | 3,823       |   |   | 10,925      |  
|Accrued interest payable                                                        |   | 849,617     |   |   | 154,666     |  
|Total Current Liabilities                                                       |   | 2,018,632   |   |   | 4,080,786   |  
|LONG TERM LIABILITIES:                                                          |   |             |   |   |             |  
|Senior secured convertible
      notes payable, net of discount of              |   |             |   |   |             |  
|$4,797,483
      and $2,637,191, respectively                                   |   | 9,389,660   |   |   | 3,541,038   |  
|Derivative instrument
      liabilities                                         |   | 10,752,645  |   |   | 2,173,865   |  
|Notes payable, net of current portion                                           |   | 205,100     |   |   | 200,000     |  
|Capital leases,
      net of current portion                                    |   | 331,675     |   |   | -           |  
|Asset retirement obligation                                                     |   | 84,059      |   |   | 80,309      |  
|Total Liabilities                                                               |   | 22,781,771  |   |   | 10,075,998  |  
|STOCKHOLDERS' (DEFICIT):                                                        |   |             |   |   |             |  
|Common stock, $.002
      par value, 200,000,000 shares authorized;             |   |             |   |   |             |  
|79,986,879
      and 75,473,510 shares issued and outstanding, respectively     |   | 159,974     |   |   | 150,948     |  
|Additional paid
      in capital                                                |   | 47,589,300  |   |   | 46,304,115  |  
|Deferred stock compensation                                                     |   | -           |   |   | (448,000    | )
|Accumulated (deficit)                                                           |   | (53,975,855 | ) |   | (47,237,864 | )
|Total
      Stockholders' (Deficit)                                             |   | (6,226,581  | ) |   | (1,230,801  | )
|                                                                                | $ | 16,555,190  |   | $ | 8,845,197   |  

The accompanying notes are an integral part of the consolidated
  financial statements.

3

---

SANTA FE GOLD CORPORATIONCONSOLIDATED STATEMENTS OF OPERATIONS(Unaudited)

|                                                      |   | Three Months Ended |   |   | Nine Months Ended |  
|----------------------------------------------------- | - | ------------------ | - | - | ----------------- | -
|                                                      |   | March 31,          |   |   | March 31,         |  
|                                                      |   | 2009               |   |   | 2008              |  
|SALES                                                 | $ | 45,049             |   | $ | -                 |  
|                                                      |   |                    |   |   |                   |  
|OPERATING COSTS AND EXPENSES:                         |   |                    |   |   |                   |  
|Costs applicable to sales                             |   | 11,061             |   |   | -                 |  
|Exploration and mining
      costs                    |   | 166,600            |   |   | 42,277            |  
|General and administrative                            |   | 305,933            |   |   | 330,101           |  
|General and administrative
      - stock compensation |   | 158,670            |   |   | 65,312            |  
|Depreciation and amortization                         |   | 85,027             |   |   | 1,395             |  
|Accretion of asset retirement
      obligation        |   | 1,250              |   |   | 1,250             |  
|                                                      |   | 728,541            |   |   | 440,335           |  
|                                                      |   |                    |   |   |                   |  
|(LOSS) FROM OPERATIONS                                |   | (683,492           | ) |   | (440,335          | )
|                                                      |   |                    |   |   |                   |  
|OTHER INCOME (EXPENSE):                               |   |                    |   |   |                   |  
|Interest income                                       |   | 28,159             |   |   | 1,230             |  
|Miscellaneous income                                  |   | -                  |   |   | 11,155            |  
|Foreign currency translation
      gain (loss)        |   | 2,021              |   |   | 1,806             |  
|Gain (loss) on derivative instrument liabilities      |   | (6,259,972         | ) |   | 618,511           |  
|Relief of debt                                        |   | -                  |   |   | -                 |  
|Accretion of discounts on notes payable               |   | (607,926           | ) |   | (22,882           | )
|Interest expense                                      |   | (63,523            | ) |   | (20,067           | )
|                                                      |   | (6,901,241         | ) |   | 589,753           |  
|                                                      |   |                    |   |   |                   |  
|INCOME (LOSS) BEFORE PROVISION FOR INCOME TAXES       |   | (7,584,733         | ) |   | 149,418           |  
|                                                      |   |                    |   |   |                   |  
|PROVISION FOR INCOME TAXES                            |   | -                  |   |   | -                 |  
|                                                      |   |                    |   |   |                   |  
|NET INCOME (LOSS)                                     | $ | (7,584,733         | ) | $ | 149,418           |  
|                                                      |   |                    |   |   |                   |  
|Income (Loss) per Share:                              |   |                    |   |   |                   |  
|Basic                                                 | $ | (0.10              | ) | $ | 0.00              |  
|                                                      |   |                    |   |   |                   |  
|Diluted                                               | $ | (0.10              | ) | $ | 0.00              |  
|                                                      |   |                    |   |   |                   |  
|Weighted Average Common Shares Outstanding:           |   |                    |   |   |                   |  
|Basic                                                 |   | 76,009,126         |   |   | 74,773,510        |  
|                                                      |   |                    |   |   |                   |  
|Diluted                                               |   | 76,009,126         |   |   | 83,000,433        |  

The accompanying notes are an integral part of the consolidated
  financial statements.

4

---

SANTA FE GOLD CORPORATIONCONSOLIDATED STATEMENTS OF CASH FLOWS(Unaudited)

|                                                      |   | Nine Months Ended |  
|----------------------------------------------------- | - | ----------------- | -
|                                                      |   | March 31,         |  
|                                                      |   | 2009              |  
|CASH FLOWS FROM OPERATING ACTIVITIES:                 |   |                   |  
|Net (loss)                                            | $ | (6,737,991        | )
|Adjustments to reconcile
      net (loss) to net cash |   |                   |  
|(used in) operating activities:                       |   |                   |  
|Depreciation                                          |   | 148,765           |  
|Stock
      compensation                              |   | 772,065           |  
|Stock issued for interest expense                     |   | -                 |  
|Accretion
      of discount on notes payable          |   | 1,133,452         |  
|Accretion of asset retirement obligation              |   | 3,750             |  
|Relief
      of debt                                  |   | (48,872           | )
|Foreign currency translation (gain) loss              |   | (10,467           | )
|Loss
      on derivative instrument liabilities       |   | 3,474,893         |  
|Amortization of deferred financing costs              |   | 45,866            |  
|Net change in operating assets and
      liabilities: |   |                   |  
|Accounts receivable                                   |   | (4,949            | )
|Inventory                                             |   | (5,000            | )
|Interest receivable                                   |   | 1,424             |  
|Prepaid
      expenses                                |   | (71,780           | )
|Deposits                                              |   | (34,590           | )
|Accounts
      payable                                |   | 79,740            |  
|Accrued liabilities                                   |   | (9,099            | )
|Accrued
      interest payable                        |   | 694,951           |  
|Net Cash (Used in) Operating Activities               |   | (567,842          | )
|                                                      |   |                   |  
|CASH FLOWS FROM INVESTING ACTIVITIES:                 |   |                   |  
|Increase to restricted cash                           |   | (21,355           | )
|Purchase of property,
      plant and equipment       |   | (2,124,243        | )
|Construction in progress                              |   | (6,325,759        | )
|Net Cash (Used in) Investing Activities               |   | (8,471,357        | )
|CASH FLOWS FROM FINANCING ACTIVITIES:                 |   |                   |  
|Proceeds from convertible
      notes payable         |   | 8,150,000         |  
|Payments on notes payable                             |   | (66,567           | )
|Payments on capital
      leases                      |   | (51,299           | )
|Payments on line of credit                            |   | (11,400           | )
|Payments on convertible
      debenture notes         |   | (238,520          | )
|Deferred Finance Costs                                |   | -                 |  
|Net Cash Provided by Financing Activities             |   | 7,782,214         |  
|INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS      |   | (1,256,985        | )
|CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD        |   | 3,255,754         |  
|CASH AND CASH EQUIVALENTS, END OF PERIOD              | $ | 1,998,769         |  

|Cash paid for interest                                                | $ | 43,599  |  | $ | 14,924  | 
|--------------------------------------------------------------------- | - | ------- |  | - | ------- | 
|                                                                      |   |         |  |   |         | 
|Cash paid for income
      taxes                                      | $ | -       |  | $ | -       | 
|                                                                      |   |         |  |   |         | 
|SUPPLEMENTAL DISCLOSURE OF NON-CASH INVESTING
      AND               |   |         |  |   |         | 
|FINANCING ACTIVITIES:                                                 |   |         |  |   |         | 
|Stock issued for
      conversion of accrued interest                 | $ | -       |  | $ | 28,777  | 
|                                                                      |   |         |  |   |         | 
|Stock issued for
      conversion of senior secured convertible notes | $ | 380,625 |  | $ | 945,420 | 
|                                                                      |   |         |  |   |         | 
|Equipment purchased
      with note payable                           | $ | 94,613  |  | $ | -       | 
|                                                                      |   |         |  |   |         | 
|Equipment purchased
      with capital leases                         | $ | 480,744 |  | $ | -       | 

5

The accompanying notes are an integral part of the consolidated
  financial statements.

---

SANTA FE GOLD CORPORATIONNOTES TO THE UNAUDITED
CONSOLIDATED FINANCIAL STATEMENTS March 31, 2009

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 100% owned Summit silver-gold project in
New Mexico, the leased Ortiz gold property in New Mexico, the 100% owned Black
Canyon mica project in Arizona and the 100% owned Planet micaceous iron oxide
property in Arizona.

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-Q
under Article 8.03 of Regulation S-X. 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
nine month period ended March 31, 2009, are not necessarily indicative of the
results that may be expected for the year ending June 30, 2009. 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, 2008, included in the Companys Annual Report on Form 10-KSB, as filed
with Securities and Exchange Commission.

NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

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 had net (loss) of
$(6,737,991) for the nine months ended March 31, 2009, has working capital of
$197,559 and has a total accumulated (deficit) of $(53,975,855) at March 31,
2009. In addition, the Company had only nominal revenue-generating operations in
the nine months ended March 31, 2009. To continue as a going concern, the
Company is dependent on continued fund raising for project development and for
administrative operating expenses. In December 2007, the Company entered into a
definitive agreement with an investor for the private placement of a $13.5
million financing facility to be advanced in multiple tranches. The Company has
received funding advances for the entire $13.5 million (see NOTE 4).

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.

Estimates

The preparation of financial
statements in conformity with accounting principles generally accepted in the
United States of America requires management to make estimates and assumptions
that affect the reported amounts of assets and liabilities and disclosure of
contingent assets and liabilities at the date of the financial statements and
the reported amounts of revenues and expenses during the reporting period.
Actual results could differ from those estimates under different assumptions or
conditions.

6

---

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.

Derivative financial instruments
are initially measured at their fair value. For derivative financial instruments
that are accounted for as liabilities, the derivative instruments are initially
recorded at their fair values and are then re-valued at each reporting date,
with changes in the fair values 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 a convertible debt or equity instrument resulting from allocating some or all
of the proceeds to the derivative instrument, 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.

Restricted Cash

Restricted cash of $203,903 is
maintained in connection with requirements for reclamation of projects as well
as weighmaster activities. As part of the reclamation deposits, the Company has
restricted cash of $202,903, comprised of $50,000 held on deposit for the
Arizona State Treasurer in a one-year automatically renewable short-term
investment; $128,658 held as collateral against an irrevocable letter of credit
of the same amount to the U.S. Bureau of Land Management (BLM); and $24,245
posted as a financial guarantee with the New Mexico Energy Minerals and Natural
Resources Department. The Company also maintains a certificate of deposit in the
amount of $1,000 for the New Mexico Department of Agriculture in accordance with
bonding requirements for a weighmaster.

Net Earnings (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. Therefore the impact of outstanding stock
equivalents has not been included as they would be anti-dilutive.

NOTE 3 - DERIVATIVE INSTRUMENT LIABILITIES

On July 15, 2008, under the terms
of 7% Senior Secured Convertible Debenture dated December 21, 2007, the Company
received the fourth advance under the agreement of $3,500,000 and issued
1,750,000 warrants relating to the advance. The fair value of the derivative
instruments liability for these warrants issued under the

7

---

placements at the time of issuance was determined to be
$1,184,521 with the following assumptions: (1) risk free interest rate of 3.43%,
(2) an expected life of 6.5 years, (3) expected stock price volatility of
103.613%, and (4) expected dividend yield of zero.

The convertible debenture was
determined to have a beneficial conversion feature of $589,521 based upon the
effective computed conversion price, which was charged to the note discount and
credited to Additional Paid in Capital. The beneficial conversion feature in
conjunction with the derivative instruments liability for the warrants resulted
in an aggregated note discount of $1,774,042.

On October 15, 2008, under the
terms of the 7% Senior Secured Convertible Debenture dated December 21, 2007;
the Company received the fifth advance under the agreement for $3,500,000 and
issued 1,750,000 warrants relating to the advance. The fair value of the
derivative instruments liability for these warrants issued under the placements
at the time of issuance was determined to be $811,917 with the following
assumptions: (1) risk free interest rate of 2.98%, (2) an expected life of 6.2
years, (3) expected stock price volatility of 91.534%, and (4) expected dividend
yield of zero.

On December 22, 2008, under the
terms of the 7% Senior Secured Convertible Debenture dated December 21, 2007;
the Company received the sixth and final advance under the agreement for
$1,150,000 and issued 575,000 warrants relating to the advance. The fair value
of the derivative instruments liability for these warrants issued under the
placements at the time of issuance was determined to be $236,828 with the
following assumptions: (1) risk free interest rate of 1.55%, (2) an expected
life of 6.0 years, (3) expected stock price volatility of 88.659%, and (4)
expected dividend yield of zero.

The fair market value of the
derivative instruments liability at March 31, 2009, was determined to be
$10,766,213 with the following assumptions: (1) risk free interest rate of 0.21%
to 1.67%, (2) remaining contractual life between 0.25 to 6.00 years, (3)
expected stock price volatility of 88.54%, and (4) expected dividend yield of
zero. Based upon the change in fair value, the Company has recorded a non-cash
loss on derivative instruments for the nine months ended March 31, 2009, of
$(3,474,893) and a corresponding increase in the derivative instruments
liability. The impact of EITF 00-19 on the financial statements as of and
through March 31, 2009, was as follows:

|                                                                              |   | Derivative      |           |   | Derivative      |  |   | Derivative Gain |  
|----------------------------------------------------------------------------- | - | --------------- | --------- | - | --------------- |  | - | --------------- | -
|                                                                              |   | Liability as of |           |   | Liability as of |  |   | (Loss) Through  |  
|                                                                              |   | June 30, 2008   |           |   | March 31, 2009  |  |   | March 31, 2009  |  
|Convertible Debentures:                                                       |   |                 |           |   |                 |  |   |                 |  
|Compound Embedded Derivatives                                                 | $ | 236,662         |           | $ | 13,568          |  | $ | 223,094         |  
|Additional Investment Rights                                                  |   | 204,471         |           |   | -               |  |   | 204,471         |  
|Purchase Agreement Warrants                                                   |   | 3,337,285       |           |   | 8,938,851       |  |   | (5,601,566      | )
|Amendment 2 Warrants                                                          |   | 1,279,636       |           |   | 1,813,794       |  |   | (534,158        | )
|Totals                                                                        | $ | 5,058,054       |           | $ | 10,766,213      |  |   | (5,708,159      | )
|                                                                              |   |                 |           |   |                 |  |   |                 |  
|Amount allocated to convertible note
      discounts at transaction inception |   |                 | 2,233,266 |  
|                                                                              |   |                 |           |   |                 |  | $ | (3,474,893      | )

NOTE 4  CONVERTIBLE DEBENTURE NOTES PAYABLE

On December 21, 2007, the Company
entered into a definitive agreement for the placement with a single investor of
a 7% Senior Secured Convertible Debenture in the amount of $13,500,000. The
agreement provided proceeds from the debenture for the Summit project and to be
issued in accordance with a pre-determined funding schedule. The term of the
debenture is 60 months, at the end of which time all remaining principal and
interest shall become due. The debenture bears interest at the rate of 7% per
annum. Interest will be accrued until June 30, 2009. Interest on the outstanding
principal balance will then be payable in quarterly installments commencing on
July 1, 2009. Interest may be paid in cash or stock at the investors election.
If paid in stock, the number of shares will be calculated using the average of
the daily volume weighted average sales prices of the common stock for the
twenty (20) trading days immediately preceding the payment date. The entire
amount of principal and any unpaid interest

8

---

will become due December 31, 2012, subject to the investors
right to require the Company after 36 and 48 months to apply up to 30% of the
Summit projects positive cash flow toward retirement of the debenture. The
debenture is secured by a mortgage on the Summit real property and a security
interest in Summit personal property. The investor may at any time convert
unpaid principal and interest into shares of the Companys common stock at the
rate of $1.00 per share. The debenture will be automatically converted into
common stock if the weighted average closing sales price of the stock exceeds
$2.50 per share for 10 consecutive trading days. Beginning January 1, 2011, the
Company may redeem the entire outstanding amount of the debenture, including
principal and outstanding interest, subject to the investors right to convert
the debenture into shares of common stock. In connection with the transaction,
for every $2.00 of the original principal amount of the debenture, the Company
will issue to the investor a warrant to purchase one share of common stock at a
price of $1.00. The warrants are exercisable from July 1, 2010 to December 31,
2014. As of March 31, 2009, the Company has received funding advances for the
entire $13.5 million and has issued 6,750,000 warrants under the financing
facility terms.

During the quarter ended March
31, 2009, a convertible debenture holder converted $380,625 of note principal
into 380,625 shares of the Companys common stock. The conversion of the note
principal resulted in an additional write off of discounts on the convertible
notes aggregating $307,920.

The current and long-term
portions of the convertible debenture notes payable and related discounts at
March 31, 2009 are as follows:

|Date     |  |   | Notes Payable |  |   | Discounts  | 
|-------- |  | - | ------------- |  | - | ---------- | 
|of Note  |  |   | Current       |  |   | Long-Term  | 
|10/30/07 |  | $ | -             |  | $ | 150,000    | 
|10/30/07 |  |   | -             |  |   | 150,000    | 
|11/28/07 |  |   | -             |  |   | 150,000    | 
|12/21/07 |  |   | -             |  |   | 13,500,000 | 
|01/09/08 |  |   | -             |  |   | -          | 
|01/10/08 |  |   | 6,250         |  |   | -          | 
|02/01/08 |  |   | -             |  |   | 237,143    | 
|04/30/08 |  |   | -             |  |   | -          | 
|06/02/08 |  |   | 18,219        |  |   | -          | 
|         |  | $ | 24,469        |  | $ | 14,187,143 | 

NOTE 5  NOTES PAYABLE

On June 5, 2008, the Company
agreed to exercise the option to purchase the Planet MIO property, consisting of
thirty-one patented mining claims totaling 523 acres in La Paz County, Arizona.
The Company originally leased the property in 2000 from New Planet Copper Mining
Company under the terms of a Lease with Option to Purchase. The Company agreed
to exercise the purchase option in connection with settlement of an action the
Company commenced in March 2007 seeking to confirm that the lease remained in
good standing. The purchase price was $250,000. The Company signed a promissory
note for $200,000 with interest payable at 10% per annum from the date of
closing of the transaction. The provisions of the note call for a $50,000
payment at the signing of the note, which occurred in August 2008, and $50,000
annual principal and interest payments on the four subsequent anniversary dates
of the note. The agreement also provides for a 5% royalty to be paid on any
future production from the property.

On July 25, 2008, the Company
entered into an installment sales contract for $94,613 to purchase certain
equipment. The term of the agreement is for 36 months at an interest rate of
6.75%, with the equipment securing the loan.

The following summarizes notes payable
at March 31, 2009 and June 30, 2008:

|                                                                                                                                                                         |   | March 31, 2009 |  |   | June 30, 2008 | 
|------------------------------------------------------------------------------------------------------------------------------------------------------------------------ | - | -------------- |  | - | ------------- | 
|                                                                                                                                                                         |   | (Unaudited)    |  |   |               | 
|Note payable for mineral property,
           interest at 10%, payable in 5 annual
      principle installments      of $50,000 with
      interest, through August 2012 | $ | 200,000        |  | $ | 250,000       | 

|Installment sales contract on equipment,
           interest at 6.75%, payable in 36 monthly
      installments      of $2,911, including interest
      through September 2011 |   | 78,046  |   |   | -       |  
|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- | - | ------- | - | - | ------- | -
|Total Outstanding Notes Payable                                                                                                                                                 |   | 278,046 |   |   | 250,000 |  
|Less: Current maturities                                                                                                                                                        |   | (72,946 | ) |   | (50,000 | )
|Obligations of notes payable due after one year                                                                                                                                 | $ | 205,100 |   | $ | 200,000 |  

9

---

The aggregate maturities of notes
payable as of March 31, 2009, is as follows:

Year ending June 30,2009
    $
    7,5272010
    
    81,3372011
    
    83,4042012
    
    55,7782013
    
    50,000Total Outstanding Notes Payable
    $
    278,046


NOTE 6  CAPITAL LEASES

During the nine months ended
March 31, 2009, the Company utilized capital leases for the purchase of
equipment. Lease terms and interest rates for the equipment are 60 months at
6.25%, 36 months at 5.34%, and 36 months at 5.78% . The assets and liabilities
under capital leases are recorded at the lower of the present value of the
minimum lease payments or the fair value of the asset. The assets are amortized
or depreciated over the lower of their related lease terms or their estimated
productive lives.

Minimum future lease payments under capital leases, as of March
31, 2009, for each of the following years and in aggregate, are as follows:

Year ended June 30,2009
    $
    37,3912010
    
    149,5632011
    
    149,5632012
    
    88,5132013
    
    43,0412014
    
    3,600Total minimum lease payments
    
    471,671Amount representing interest
    
    (42,226
    )Present value of future minimum lease
      payments
    
    429,445Current portion of capital lease
      obligations
    
    (97,770
    )Obligations of capital leases due after one
      year
    $
    331,675


10

---

NOTE 7 - STOCKHOLDERS EQUITY

Issuances of Common Stock

On September 30, 2008, a director
exercised an option to purchase 500,000 shares of common stock at $0.11 per
share on a cashless basis. Under the cashless basis exercise, 431,250 shares
were issued. On March 31, 2009, an officer exercised an option to purchase
4,000,000 shares of common stock at $.10 per share on a cashless basis. Under
the cashless basis exercise, 3,701,494 shares were issued.

During the quarter ended March
31, 2009, a convertible debenture holder converted $380,625 of note principal
into 380,625 shares of the Companys common stock.

Issuances of Options and Shares

On December 3, 2008, the Company
cancelled and re-issued several outstanding options to four employees. The new
options grant each employee a five (5) year option to purchase 100,000 shares of
common stock at an option exercise price of $0.60 per share, the closing price
on the date of grant, and the options will vest on June 30, 2009. Each option
was valued at $30,101 using the Black-Scholes option pricing model. The options
were valued using a volatility of 80.172%, a risk free interest rate of 0.76%,
an expected life of 2.8 years and zero quarterly dividends. General and
administrative stock compensation aggregating $68,800 for the four employees was
recognized during the nine months ended March 31, 2009. The following describes
the options that were cancelled:

- On July 22, 2008, the Company granted a five (5) year option to purchase
  100,000 shares of common stock to an employee. The option exercise price is
  $0.83 per share, the closing price on the date of grant and the options have a
  vesting period of six months from the date of grant. The options were valued
  at $64,247 using the Black-Scholes option pricing model. The options were
  valued using a volatility of 103.613%, a risk free interest rate of 3.48%, an
  expected life of 5.0 years and zero quarterly dividends. On December 3, 2008,
  the options were cancelled and re-issued, with any further amortization of the
  options ceasing on that date. General and administrative stock compensation of
  $42,832 was recognized during the nine months ended March 31, 2009.
- On May 1, 2008, the Company granted a five (5) year option to purchase
  100,000 shares of common stock to an employee. The option exercise price is
  $0.79 per share, the closing price on the date of grant. The options were
  valued at $61,724 using the Black-Scholes option pricing model. On December 3,
  2008, the options were cancelled and re-issued. The options were fully vested
  and amortized at the time of the cancellation. General and administrative
  stock compensation expense of $41,149 was recognized for the nine months ended
  March 31, 2009.
- On March 24, 2008, the Company granted a five (5) year option to purchase
  100,000 shares of common stock to an employee. The option exercise price is
  $0.73 per share, the closing price on the date of grant, and the options have
  a vesting period of six months from the date of grant. The options were valued
  at $57,048 using the Black-Scholes option pricing model. On December 3, 2008
  the options were cancelled and re-issued. The options were fully vested and
  amortized at the time of the cancellation. General and administrative stock
  compensation expense of $28,524 was recognized for the nine months ended March
  31, 2009.
- On May 2, 2006, the Company granted a five (5) year option to purchase
  50,000 shares of common stock to an employee, who is the son of the Companys
  President and Chief Executive Officer, in connection with an employment
  agreement. The option exercise price is $1.24 per share, the closing price on
  the date of grant and the options vested on the date of grant. The options
  were valued at $50,971 using the Black-Scholes option pricing model. On
  December 3, 2008, the options were cancelled and re-issued. The options were
  fully vested and amortized at the time of cancellation.

11

---

- On April 25, 2007, the Company granted a five (5) year option to purchase
  50,000 shares of common stock to an employee, who is the son of the Companys
  President and Chief Executive Officer. The option exercise price is $0.74 per
  share, the closing price on the date of grant and the options vested on the
  date of grant. The options were valued at $30,505 using the Black-Scholes
  option pricing model and are expensed in the period granted. On December 3,
  2008, the options were cancelled and re-issued. The options were fully vested
  and amortized at the time of cancellation.

On December 3, 2008, the Company
granted a five (5) year option to twenty-three employees and two board members
to purchase 830,000 shares of common stock at an option exercise price of $0.60
per share, the closing price on the date of grant, and the options will vest on
June 30, 2009. The options were valued at $249,838 using the Black-Scholes
option pricing model. The options were valued using a volatility of 80.172%, a
risk free interest rate of 0.76%, an expected life of 2.8 years and zero
quarterly dividends. General and administrative stock compensation of $142,760
was recognized during the nine months ended March 31, 2009.

On June 25, 2008, the Board of
Directors granted awards of 500,000 shares of restricted stock to an officer and
200,000 shares of restricted stock to an employee. The shares vested on December
31, 2008, and are subject to forfeiture contingent on attainment of certain
performance objectives related to construction of the Summit project. The stock
grants were valued at $448,000 using the closing price on the date of grant and
was initially recorded as deferred stock compensation as equity reduction.
General and administrative stock compensation expense of $448,000 was recognized
for the nine months ended March 31, 2009.

Issuances of Warrants

On December 22, 2008, in
connection with a scheduled advance of $1,150,000 under the 7% Senior Secured
Convertible Debenture, the Company issued 575,000 warrants, each warrant giving
the note holder the right to purchase one share of common stock at a price of
$1.00 per share. The warrants are exercisable from July 1, 2010 to December 31,
2014.

On October 15, 2008, in
connection with a scheduled advance of $3,500,000 under the 7% Senior Secured
Convertible Debenture, the Company issued 1,750,000 warrants, each warrant
giving the note holder the right to purchase one share of common stock at a
price of $1.00 per share. The warrants are exercisable from July 1, 2010 to
December 31, 2014.

On July 15, 2008, in connection
with a scheduled advance of $3,500,000 under the 7% Senior Secured Convertible
Debenture, the Company issued 1,750,000 warrants, each warrant giving the note
holder the right to purchase one share of common stock at a price of $1.00 per
share. The warrants are exercisable from July 1, 2010 to December 31, 2014.

Stock option and warrant
activity, both within the 1989 Stock Option Plan and 2007 EIP and outside of
these plans, for the nine months ended March 31, 2009, are as follows:

|                              |  | Stock Options |   |  | Stock Warrants |         
|----------------------------- |  | ------------- | - |  | -------------- | --------
|                              |  |               |   |  |                | Weighted
|                              |  |               |   |  |                | Average 
|                              |  | Shares        |   |  |                | Price   
|Outstanding at June 30, 2008  |  | 10,150,000    |   |  | $              | 0.14    
|Granted                       |  | 1,330,000     |   |  | $              | 0.62    
|Canceled                      |  | (400,000      | ) |  | $              | 0.84    
|Expired                       |  | ---           |   |  |                | ---     
|Exercised                     |  | (4,500,000    | ) |  | $              | 0.10    
|Outstanding at March 31, 2009 |  | 6,580,000     |   |  | $              | 0.22    

Stock options and warrants exercisable at March 31, 2009, are
as follows:

12

---

|Outstanding and Exercisable Options |  | Outstanding and Exercisable
      Warrants | 
|----------------------------------- |  | ------------------------------------------ | 
|                                    |  |                                            | 
|                                    |  |                                            | 
|                                    |  |                                            | 
|                                    |  |                                            | 
|Exercise                            |  |                                            | 
|Price                               |  | Outstanding                                | 
|Range                               |  | Number                                     | 
|$0.10                               |  | 1,000,000                                  | 
|$0.11                               |  | 4,000,000                                  | 
|$0.46                               |  | 100,000                                    | 
|$0.55                               |  | 250,000                                    | 
|$0.60                               |  | 1,230,000                                  | 
|                                    |  | 6,580,000                                  | 
|                                    |  |                                            | 
|Outstanding Options                 |  |                                            | 
|Exercisable Options                 |  |                                            | 

NOTE 8  OTHER INCOME

In August 2008, the Company
received $60,762 that is included in miscellaneous income for full restitution
of an amount it was defrauded in a financing transaction several years earlier.
Additionally, in September 2008, the Company negotiated a settlement with a
governmental agency on outstanding amounts owed for property taxes. In
connection with the settlement, the Company made a payment in cash to settle the
account in full and recognized relief of debt of $48,872 for the remaining
unpaid amount.

NOTE 9  SUBSEQUENT EVENTS

On April 6, 2009, a convertible
debenture holder converted $237,143 of note principal and $28,391 of accrued
interest into 214,401 shares of the Companys common stock. On April 30, 2009, a convertible debenture holder converted $22,875 of accrued interest into 19,891 shares of the Company’s common stock.

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

THIS FORM 10-Q 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,

13

---

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-Q 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, 2008.

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: (1) developing our Summit silver-gold property located in New Mexico
and placing the property into production, (2) conducting further studies on our
Ortiz gold project located in New Mexico, (3) funding the re-opening and
enhancement of our Black Canyon mica project located in Arizona or alternatively
selling the project, (4) raising working capital for general operating and
administrative expenses, and (5) acquiring 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. We had net (loss) of $(6,737,991) for the nine months ended March
31, 2009, and have a total accumulated (deficit) of $(53,975,855) at March 31,
2009. To continue as a going concern, we are dependent on continued fund raising
for project development, execution of our business strategy and payment of
general and administrative operating expenses.

In December 2007, we entered into
a definitive agreement with a single investor for the private placement of a 7%
Senior Secured Convertible Debenture in the amount of $13.5 million. Advances
under this agreement were issued in accordance with a pre-determined funding
schedule related to the Summit project. The Company has received funding
advances for the entire $13.5 million.

We will need to continue to raise
additional working capital to deploy other segments of our business plan and for
corporate general and administrative operating expenses. 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. As of March 31, 2009, we have
cash on hand of $1,998,769. We will be required to raise additional working
capital in equity or financing transactions in order to satisfy our expected
cash expenditures and continue to deploy our current business strategies.

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.

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. Our derivative instrument

14

---

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 March 31, 2009
and 2008

Sales

We had revenues of $45,049 for
the three months ended March 31, 2009, and $-0- for the three months ended March
31, 2008. The increase of $45,049 is due to the sales of aggregate products.

Operating Costs and
Expenses

Costs applicable to sales were
incurred aggregating $11,061 for the three months ended March 31, 2009, and $-0-
for the three months ended March 31, 2008.

Exploration and mining costs were
$166,600 for the three months ended March 31, 2009, and $42,277 for the three
months ended March 31, 2008, an increase of $124,323. The increase is mainly
attributable to property and casualty liability insurance of $14,707, relocation
costs of $35,560 and equipment leases aggregating $43,819.

General and administrative stock
compensation increased to $158,670 for the three months ended March 31, 2009,
from $65,312 for the comparative three months ended March 31, 2008, an increase
of $93,358. The increase is attributable to amortized costs associated with
incentive stock options issued to employees during the previous quarter ended
December 31, 2008.

Other Income and Expenses

Other income and (expenses) for
the three months ended March 31, 2009, were $(6,901,241) as compared to $589,753
for the comparable three months ended March 31, 2008. The decrease of
$(7,490,994) is attributable to an increase in the loss recognized on derivative
instruments liability of $6,878,483; an increase in interest expense of $43,456;
a decrease in miscellaneous income of $11,155; and an increase in accretion of
discounts on notes payable of $585,044 mainly attributable to the early
conversion of convertible notes aggregating $380,625; and offset by an increase
in interest income of $26,929.

Loss on Derivative Financial
Instruments

We recognized a loss on
derivative financial instruments of $(6,259,972) for the three months ended
March 31, 2009, as compared to a gain of $618,511 for the prior year comparable
period, resulting to a difference of $6,878,483. The non-cash loss arises from
adjustments to record the derivative financial instruments at fair values in
accordance with current accounting standards. The derivative financial
instruments arose in connection with 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 decrease in the
derivative income in the three months ended March 31, 2009, is attributable
mainly to changes in the market price of our common stock, which is a component
of the calculation model and offset by the issuance of additional warrants
resulting in derivative treatment. We use the Black-Scholes option pricing model
to estimate the fair value of this derivative. Because Black-Scholes uses our
stock price, changes in the stock price will result in volatility in the
earnings in future periods as we continue to reflect the derivative financial
instruments at fair values.

15

---

Operating Results for the Nine Months Ended March 31, 2009
and 2008

Sales

We had revenues of $68,192 for
the nine months ended March 31, 2009, and $-0- for the nine months ended March
31, 2008. The increase of $68,192 is due to the sales of aggregate products.

Operating Costs and
Expenses

Costs applicable to sales were
incurred aggregating $34,667 for the nine months ended March 31, 2009, and $-0-
for the nine months ended March 31, 2008, as the Company began allocating costs
to the business segment in the in the quarter ended December 31, 2008.

Exploration and mining costs were
$407,415 for the nine months ended March 31, 2009, and $192,380 for the nine
months ended March 31, 2008, an increase of $215,035. The increase is mainly
attributable to property and casualty liability insurance of $29,780, equipment
leases aggregating $43,819, relocation costs of $39,013, repairs and maintenance
and related supplies of $39,312, general mine expenses aggregating $60,151, shop
supplies of $29,917 and mine claim fees of $9,629. These increases were offset
by a decrease in outside mine consulting cost of $41,970.

General and administrative stock
compensation increased to $772,065 for the nine months ended March 31, 2009,
from $102,005 for the comparative nine months ended March 31, 2008, an increase
of $670,060. The increase is attributable to amortized costs associated with
deferred stock compensation for an officer and another key employee, as well as
incentive stock options issued to numerous employees during the current period.

Other Income and Expenses

Other income and (expenses) for
the nine months ended March 31, 2009, were $(4,596,335) as compared to
$(2,083,221) for the comparable nine months ended March 31, 2008. The increase
of $2,513,114 is attributable to an increase in the loss recognized on
derivative instruments liability of $3,374,863; an increase in accretion of
discounts on notes payable of $119,561 resulting from an early payoff in 2009 on
a convertible note ; and these increases were offset by a decrease in interest
expense of $800,004 due primarily to two factors: the capitalization of $528,698
in interest commencing with the construction of the Summit Project, and the
recognition of interest on the conversion of senior secured convertible debt in
the prior comparable period; an increase in interest income of $70,501; an
increase in miscellaneous income of $50,107 and relief of debt of $48,872.

Loss on Derivative Financial
Instruments

We recognized a loss on
derivative financial instruments of $(3,474,893) for the nine months ended March
31, 2009, as compared to a loss of ($100,030) for the prior year comparable
period, resulting to an increase of $3,374,863. The non-cash loss arises from
adjustments to record the derivative financial instruments at fair values in
accordance with current accounting standards. The derivative financial
instruments arose in connection with 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 loss in the nine months ended March 31, 2009, is attributable mainly
to changes in the market price of our common stock, which is a component of the
calculation model and offset by the issuance of additional warrants resulting in
derivative treatment. We use the Black-Scholes option pricing model to estimate
the fair value of this derivative. Because Black-Scholes uses our stock price,
changes in the stock price will result in volatility in the earnings in future
periods as we continue 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

16

---

capital. We also will require additional working capital for
employment of necessary corporate personnel, and related general and
administrative expenses.

As of March 31, 2009, we had cash
on hand of $1,998,769, a working capital of $197,559 and an accumulated
(deficit) of $(53,975,855).

We are continuing to pursue a
joint venture or sale of the Black Canyon mica project. Management has
determined 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 general and administrative commitments, to continue feasibility
studies on our mineral properties and to initiate exploration programs. We
anticipate going into production in third calendar quarter of 2009 and that our
operations for the remaining fiscal year 2009 will be funded from our current
financing facilities, the sale of our securities and possibly through the
exercise of certain options and warrants. 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.

On December 21, 2007, we entered
into a definitive agreement for the placement with a single investor of a 7%
Senior Secured Convertible Debenture in the amount of $13,500,000. Advances from
the debenture were issued in accordance with a pre-determined funding schedule
and the term of the debenture is 60 months. The Company has received funding
advances for the entire $13.5 million and has issued 6,750,000 warrants under
the financing facility terms.

Factors Affecting Future Operating Results

We have deployed our plan to
place the Company on an improved financial footing. In addition to the
significant capital raisings already achieved, important elements of the plan
include maintaining currency in the filing of our annual and quarterly financial
reports and continuing to raise interim funding to provide for operations on our
various property sites. If we are able to continue to secure required financing
on acceptable terms, we believe we will be in a position to execute our business
plan on our property sites.

Off-Balance Sheet Arrangements

During the nine months ended
March 31, 2009, we did not engage in any off-balance sheet arrangements defined
in Item 303(a) (4) of the SECs Regulation S-K.

ITEM 4  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 March 31, 2009. Based on this
evaluation, our Chief Executive Officer has concluded that our disclosure
controls and procedures are effective.

During the quarter ended March
31, 2009, 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.

17

---

PART IIOTHER INFORMATION

ITEM 1 LEGAL PROCEEDINGS

None

ITEM 1A. RISK FACTORS

Not Applicable

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

None.

ITEM 3. DEFAULTS UPON SENIOR SECURITIES

None.

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

None

ITEM 5. OTHER INFORMATION

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.                          

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: May 14, 2009 | SANTA FE GOLD
      CORPORATION
|------------------- | -------------------------------
|                    |                                
|                    | By:                            
|                    |                                
|                    |                                
|                    |                                

18

---