History and Organization

Santa Fe Gold Corporation (“Santa Fe”, "the Company”, “our” or “we”) is a U.S. mining company, incorporated in 1991 in the state of Delaware. Our general business strategy is to acquire explore, develop and to create shareholder value. Santa Fe Gold Corporation (SFG) selected on August 26, 2015 to file for Chapter 11 Bankruptcy protection, Case # 15-11761 (MFW) and the case was dismissed on June 15, 2016.  The Summit Silver-Gold Project, the Lordsburg Copper Project, Black Canyon Mica Project, Planet MIO Project, all claims and other assets were lost in the process. As we emerged from the bankruptcy, we were a management team of two with no assets. The Company is in the process of raising equity funds to acquire new mining claims, a potential processing plant or arrangements with a processing plant in an acceptable geographic location to potential new mining claims.  

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Bankruptcy 363 Asset Sale

Waterton

On June 30, 2013, the Company signed a Waiver of Default Letter (the “Letter”) with Waterton Global Value, L.P. (“Waterton”) wherein the Company agreed to sell, convey, assign and transfer certain accounts receivable as consideration for a waiver for non-payment to Waterton under the Credit Agreement. During the fiscal year ended June 30, 2016, additional adjustments were made to the outstanding obligation by Waterton which included various Agreement penalties. The outstanding aggregate amounts owed to Waterton after these adjustments at the time of the bankruptcy sale was $16,416,537 and at June 30, 2016 was $-0- with the 363 Asset Sale to Waterton in February 2016.  The Company recorded a gain on the bankruptcy 363 Asset Sale of $15,309. See ITEM 7: Liquidity and Capital Resources; Plan of Operation.

The table below summarizes the carrying value of the assets sold and the liabilities disposed in the 363 Asset Sale as of asset transfer on February 26, 2016:

Recent Developments

Canarc Bridge Loan

On July 15, 2014, Santa Fe entered into a Share Exchange Agreement (the “Share Exchange Agreement”) with Canarc Resource Corp., a British Columbia, Canada Corporation whose common shares are listed on the TSX Exchange under the symbol CCM (“Canarc”). In connection with the Share Exchange Agreement the Debtors and Carnac entered into that certain interim financing facility pursuant to which Canarc advanced the Company $200,000 and an additional advance of $20,000. The loan bears interest at an initial compounded rate of 1% a month and was due and payable upon the closing of a gold bond financing by the Debtors or January 15, 2015, if the gold bond financing did not close. The financing failed to close and the interest rate increased to 14% per annum on the compounded outstanding loan balance the entire amount of the loan is outstanding and in default at June 30, 2017. On February 12, 2018 the Company agreed to settle an outstanding Notes Payable with Canarc Resources. The Company will make four scheduled installment payments that aggregate $220,000.

On October 22, 2014 the Company signed a $500,000 Convertible Note with an accredited investor with a 10% original issue discount (“OID) component. The Company drew down net cash Consideration of $175,000 on the facility. The Company may repay the Consideration at any time on or before 120 days from the Effect Date of the draw down and there would be no interest due on the consideration. If the Company does not repay a Consideration on or before 120 days from its Effective Date, a one- time interest charge of 12% shall be applied to the principal sum. At June 30, 2016, the investor had converted note principle, interest and penalties aggregating $155,556 into 30,238,933 shares of common stock. The remaining outstanding balance of $93,333 was retired in January 2017 for $90,000.

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On January 20, 2015 the Company signed a $250,000 Convertible Note with an accredited Investor with a 10% original issue discount (“OID) component. The Company drew down consideration of $100,000 on the facility. The Consideration on the Note has a Maturity date of two years from payment of each Consideration. A one- time interest charge of 12% is applied to the principal sum on the on the date of the Consideration. The Note principal and interest shall be paid at Maturity date or sooner as provided within the Note and conversion provisions. At June 30, 2016, the investor had converted note principle, interest and penalties aggregating $60,192 into 18,007,333 shares of common stock. The remaining outstanding balance of $107,599 at June 30, 2016, was retired in January 2017 for $93,000.

On August 26, 2015, the Company filed for Chapter 11 Bankruptcy protection in Delaware in order to secure the existing assets from creditor actions. Case No. 15-11761 (MFW).  Jakes Jordaan, Santa Fe’s former CEO, filed in the Affidavit in Support of the first day motion (full affidavit can be researched in the Delaware court filings. Case# 15-11761 MFW on August 26, 2015) that we have only one remaining option (plan) to have an orderly sale of all assets to satisfying qualified debt without any plan for the thereafter and he began working with Canaccord Genuity Inc. (“Canaccord”) as our investment banker to assist with these efforts. The “asset sale” took place in February 2016 and left Santa Fe Gold and Subsidiaries without any assets and with the remaining debt.

After the dismissal of the bankruptcy case, the Company has limited assets, but is liable for all commitments and debts that remained outstanding.  After the dismissal, the Company will divest itself from all subsidiaries and will keep only Santa Fe Gold, the parent company active.  Santa Fe Gold Barbados, The Lordsburg Mining Company and AZCO will be dormant and all the commitments and debts will stay with the respective companies. The court set up a Trust fund that will be funded by the activities of the Summit mine for five years and the trust funds will be distributed by an independent trustee to all credit holders of record.

Santa Fe Gold failed to provide a plan of Reorganization with the filing of protection under the Bankruptcy Codes; the significant transactions that occurred upon emergence from bankruptcy were as follows:

·The approximately $ 20 million of indebtedness outstanding on account of the Company’s senior notes and unsecured claims were reinstated.  

·The courts established a GUC Trust Agreement in April 2016 with Gavin/Solmones as Trustee for the benefit of all creditors less Waterton Global. A profit interest is attached to the Summit mine (formerly owned by Santa Fe Gold and its subsidiaries) with the sole benefit for the Creditors holding unsecured claims filed by each creditor with the courts.  

Emergence from Voluntary Reorganization under Chapter 11 Proceedings

The Company and our Chapter 11 Subsidiaries received bankruptcy court confirmation of the dismissal on June 15, 2016, and subsequently emerged from bankruptcy. The only funds available for the future administrative costs were prepaid insurance funds from which we received a refund on June 08, 2016 of $44,926 and on August 22, 2016 received $4,135.  The Company upon emergence resorted to selling equity for cash so as to proceed on reviving the Company. Currently we have no continuing commitment from any party to provide necessary additional working capital, or if one becomes available, there is no certainty that its terms will be favorable or acceptable to the Company to continue its current business plan.

Fiscal 2017 Financing Activity

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

During the fiscal ending June 30, 2017, the Company proceeded to implement our initial plan to emerge from the bankruptcy proceedings. The Company raised $2,708,168 from the sale of unregistered common stock and the exercise of attached warrants. The funds were used as working capital to implement the Company business plan. As part of the plan, the Company negotiated the payoff of seven convertible notes and accrued interest with an aggregate balance of $4,358,282 for $274,782 in cash payments and recorded a gain on extinguishment of debt of $4,083,500. The Company also negotiated settlements with various vendor creditors with an aggregated balance of $343,902 for cash settlement payments of $10,734 and recorded a gain on extinguishment of debt of $333,168.

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Between September 14, 2016 and December 31, 2016, we secured claims 44 claims and paid $8,328 for BLM filing fees, these claims have a 5% royalty attached. We will continue to seek additional claims with other existing mines for which we may have to pay royalties or establish a partnership if an agreement is reached.

On December 9, 2016, the Company retained International Monetary ("IM") as its Investment Banking & Strategic Advisory firm to provide capital resources, structure financing, proprietary investor relations services, advice on maximizing growth and valuation, M&A advisory and counsel to the Company's management on other strategic decisions. IM is to receive 6 installment payments of $6,000 and 2% of the Company’s common stock on a fully diluted basis amounting to 5,665,360 shares issued at the time of signing the contract at a market value of $286,667. In addition, IM is entitled to additional common shares amounting to 2% of the Company’s common stock on a fully diluted basis six month from the date of the agreement.

On April 10, 2017, the Company delivered $500,000 to an attorneys to be held in escrow pending the Stock Purchase Agreement (the “Agreement”) dated August 18, 2017, and subsequently applied as part of the purchase price due under an Agreement with Bullard’s Peak Corporation and Black Hawk Consolidated Mines Company to acquire 100% of the issued and outstanding capital stock for a cash purchase price in the aggregate amount of $3,000,000, to be paid with installments stated in the Bullard’s Peak Agreement. The escrow payment under the Agreement was transferred to the seller on June 12, 2018.

Competitive Business Conditions

Many companies are engaged in the acquisition, exploration, development and mining of mineral properties. We are at a disadvantage with respect to those competitors whose technical staff and financial resources exceed our own. Although the Company survived the bankruptcy with no assets or cash, we decided to start increasing stock value by using equity funding to acquire claims and restart our business.   

Reclamation

We generally will be required to mitigate long-term environmental impacts by stabilizing, contouring, re-sloping and revegetating various portions of a site after mining and mineral processing operations are completed. These reclamation efforts would be conducted in accordance with detailed plans, which must be reviewed and approved by the appropriate regulatory agencies. As soon as we have a mining operation, we will be required to arrange and pledge certificates of deposits for reclamation with the state regulatory agencies. At this time no reclamation cost are calculated or carried forward.

Government Regulation

Our mining operations and exploration activities are subject to various national, state, provincial and local laws and regulations in the United States, and the State of New Mexico, which govern mining, milling, prospecting, development, production, exports, taxes, labor standards, occupational health, and waste disposal, protection of the environment, mine safety, hazardous substances and other matters. There are no current orders or directions relating to us with respect to the foregoing laws and regulations.

Environmental Regulation

All future projects are subject to various federal, state and local laws and regulations governing protection of the environment. These laws are continually changing and, in general, are becoming more restrictive. Our policy is to conduct business in a way that safeguards public health and the environment. We believe that our operations will be conducted in material compliance with applicable laws and regulations.

Changes to current local, state or federal laws and regulations in the jurisdictions where we will operate could require additional capital expenditures and increased operating and/or reclamation costs. Although we are unable to predict what additional legislation, if any, might be proposed or enacted, additional regulatory requirements could impact the economics of our projects.

Employees

As of June 30, 2017, we had two employees. In addition, we use consultants with specific skills to assist with various aspects of our project evaluation, business plan, due diligence, corporate governance and regulatory filings.

Office Facilities

Our principal executive offices are located at 3544 Rio Grande Blvd. NW, Albuquerque, NM 87107. Our telephone number is (505) 255-4852.

Gold Price History

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Not applicable at this time

Seasonality

 We have no properties at this time that is subject to material restrictions on our operations due to seasonality.

Available Information

We make available, free of charge, on or through our Internet website, at www.santafegold.com, our annual report on Form 10-K, our quarterly reports on Form 10-Q and our current reports on Form 8-K and amendments to those reports filed or furnished pursuant to Section 13(a) or 15(d) of the U.S. Securities Exchange Act of 1934. Our Internet website and the information contained therein or connected thereto are not intended to be, and are not incorporated into this annual report on Form 10-K.

The Company operates in a rapidly changing environment that involves numerous risks and uncertainties. Stockholders should carefully consider the risks described below before purchasing the Company’s common shares. The occurrence of any of the following events could harm the Company. If these events occur, the trading price of the Company’s common shares could decline, and shareholders may lose part or even all of their investment. This report, including Management’s Discussion and Analysis of Financial Condition and Results of Operation, contains forward looking statements that may be materially affected by numerous risk factors, including those summarized below:

Risk Factors Related to Our Business and Operations

We are dependent upon production of precious metals and industrial minerals from to being acquired properties and have incurred substantial losses since our inception in 1991 and may never be profitable.

Since our inception in 1991, we have not been profitable. As of June 30, 2017, our total accumulated deficit was approximately $98.0 million. In November 2013, we suspended mine and mill operations at our Summit mine and Banner mill due to operating losses, and a lack of operating capital. On August 26, 2015 Santa Fe Gold filed for Chapter 11 Bankruptcy protection, Case # 15-11761 (MFW) and that case was dismissed on June 15, 2016.  The Summit Silver-Gold Project, the Lordsburg Copper Project, Black Canyon Mica Project, Planet MIO Project, all claims and other assets were lost in the process of the 363 Asset Sale.

Our current management team is acquiring new claims funded by equity sales and is evaluating a number of favorable options to facilitate the processing of current and future mineralized ore production.

To become profitable, we must identify acceptable mineralization at potential sites and either develops properties ourselves or locates and enters into agreements with third party operators. We may suffer significant additional losses in the future and may never be profitable. There can be no assurance we will receive significant revenue from operations in the foreseeable future, if at all. Even if we do achieve profitability, we may not be able to sustain or increase profitability on a quarterly or annual basis. 

If the Company is unsuccessful raising additional funding, its business may not continue as a going concern. Even if the Company does find additional funding sources, it may be required to issue securities with greater rights than those currently possessed by holders of its common shares or on terms less favorable than the Convertible Gold Note financing. The Company may also be required to take other actions that may lessen the value of its common shares or dilute its common shareholders, including borrowing money on terms that are not favorable to the Company or issuing additional equity securities. If the Company experiences difficulties raising money in the future, its business and liquidity will be materially adversely affected.

Our independent registered public accounting firm has included an explanatory paragraph with respect to our ability to continue as a going concern in its report on our consolidated financial statements for the year ended June 30, 2017.

As a result of these factors, as well as adverse industry conditions, our independent registered public accounting firm has included an explanatory paragraph with respect to our ability to continue as a going concern in its report on our consolidated financial statements for the year ended June 30, 2017. The presence of the going concern explanatory paragraph may have an adverse impact on our relationship with third parties with whom we do business, including our customers, vendors and employees and could make it challenging and difficult for us to raise additional debt or equity financing, all of which could have a material adverse impact on our business, results of operations, financial condition and future prospects.

A substantial or extended decline in gold and silver prices would have a material adverse effect on the value of our assets, on our ability to raise capital and could result in lower than estimated economic returns.

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The value of our assets, our ability to raise capital and our future economic returns are substantially dependent on the prices of gold and silver. The gold and silver price fluctuates on a daily basis and is affected by numerous factors beyond our control. Factors tending to influence gold prices include:

·gold sales or leasing by governments and central banks or changes in their monetary policy, including gold inventory management and reallocation of reserves;  

·speculative short positions taken by significant investors or traders in gold;  

·the relative strength of the U.S. dollar;  

·expectations of the future rate of inflation;  

·interest rates;  

·changes to economic activity in the United States, China, India and other industrialized or developing countries;  

·geopolitical conflicts;  

·changes in industrial, jewelry or investment demand;  

·changes in supply from production, disinvestment and scrap; and  

·Forward sales by producers in hedging or similar transactions.  

A substantial or extended decline in the gold or silver price could:

·negatively impact our ability to raise capital on favorable terms, or at all;  

·jeopardize the restart and development of our Summit silver-gold project;  

·reduce the potential for future revenues from gold projects in which we have an interest;  

·reduce funds available to us for exploration with the result that we may not be able to further advance any of our projects; and  

·reduce the market value of our assets.  

In addition to environmental regulations, we are subject to a wide variety of laws and regulations directly and indirectly relating to mining that often change and could adversely affect our business.

We are subject to extensive United States federal, state and local laws and regulations related to mine prospecting, development, transportation, production, exports, taxes, labor standards, occupational health and safety, waste disposal, protection and remediation of the environment, mine safety, hazardous materials, toxic substances and other matters. These laws and regulation frequently change. New laws and regulations or more stringent enforcement of existing ones could have a material adverse impact on us, causing a delay or reduction in production, increasing costs and preventing an expansion of mining activities.

Delaware law and our Articles of Incorporation may protect our directors from certain types of lawsuits. Delaware law provides that our directors will not be liable to our stockholders or to us for monetary damages for all but certain types of conduct as directors of the Company.

Our Articles of Incorporation permit us to indemnify our directors and officers against all damages incurred in connection with our business to the fullest extent provided or allowed by law. The exculpation provisions may have the effect of preventing stockholders from recovering damages against our directors caused by their negligence, poor judgment or other circumstances. The indemnification provisions may require us to use our limited assets to defend our directors and officers against claims, including claims arising out of their negligence, poor judgment, or other circumstances.

Risks Related to our Common Stock

Our common stock is thinly traded, and there is no guarantee of the prices at which the shares will trade. 

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Trading of our common stock is conducted on the OTC Marketplace operated by the OTC Markets Group, Inc., or “OTC Pink Sheets,” under the ticker symbol “SFEG.”  Not being listed for trading on an established securities exchange has an adverse effect on the liquidity of our common stock, not only in terms of the number of shares that can be bought and sold at a given price, but also through delays in the timing of transactions and reduction in security analysts’ and the media’s coverage of the Company.  This may result in lower prices for your common stock than might otherwise be obtained and could also result in a larger spread between the bid and asked prices for our common stock.  Historically, our common stock has been thinly traded, and there is no guarantee of the prices at which the shares will trade, or of the ability of stockholders to sell their shares without having an adverse effect on market prices.  

Because our common stock is currently a “penny stock,” it may be difficult to sell shares of our common stock at times and prices that are acceptable. 

Our common stock is a “penny stock.” Broker-dealers who sell penny stocks must provide purchasers of these stocks with a standardized risk disclosure document prepared by the SEC. This document provides information about penny stocks and the nature and level of risks involved in investing in the penny stock market. A broker must also give a purchaser, orally or in writing, bid and offer quotations and information regarding broker and salesperson compensation, make a written determination that the penny stock is a suitable investment for the purchaser, and obtain the purchaser’s written agreement to the purchase. The penny stock rules may make it difficult for you to sell your shares of our common stock. Because of these rules, many brokers choose not to participate in penny stock transactions and there is less trading in penny stocks. Accordingly, you may not always be able to resell shares of our common stock publicly at times and prices that you feel are appropriate.

The sale of our common stock by selling stockholders may depress the price of our common stock due to the limited trading market that exists.

Due to a number of factors, including the lack of listing of our common stock on a national securities exchange, the trading volume in our common stock has historically been limited. Trading volume over the last 3 months, ending June 30, 2017, has averaged approximately 174,500 shares per day. As a result, the sale of a significant amount of common stock by selling shareholders may depress the price of our common stock and the price of our common stock may decline.

Completion of one or more new acquisitions could result in the issuance of a significant amount of additional common stock, which may depress the trading price of our common stock.

Acquisition of one or more additional mineral properties, conceptually, could result in the issuance of a significant amount of common stock. Such issuance could depress the trading price of our common stock.

Our stock price may be volatile and as a result you could lose all or part of your investment. In addition to volatility associated with OTC securities in general, the value of your investment could decline due to the impact of any of the following factors upon the market price of our common stock: 

·changes in the worldwide prices for gold or silver;  

·disappointing results from our exploration or development efforts;  

·failure to meet our revenue or profit goals or operating budget;  

·decline in demand for our common stock;  

·downward revisions in securities analysts’ estimates or changes in general market conditions;  

·technological innovations by competitors or in competing technologies;  

·investor perception of our industry or our prospects; and  

·general economic trends.  

In addition, stock markets have experienced extreme price and volume fluctuations, and the market prices of securities generally have been highly volatile. These fluctuations commonly are unrelated to operating performance of a company and may adversely affect the market price of our common stock. As a result, investors may be unable to resell their shares at a fair price.

A small number of existing shareholders own a significant portion of our common stock, which could limit your ability to influence the outcome of any shareholder vote.

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Our executive officers and directors, together with our four largest shareholders, beneficially own approximately 32.0% of our common stock as of the date of this report. Under our Articles of Incorporation and Delaware law, the vote of a majority of the shares outstanding is generally required to approve most shareholder action. As a result, these individuals and entities will be able to influence the outcome of shareholder votes for the foreseeable future, including votes concerning the election of directors, amendments to our Articles of Incorporation or proposed mergers or other significant corporate transactions.    

We have never paid dividends on our common stock and we do not anticipate paying any in the foreseeable future.

We have not paid dividends on our common stock to date, and we may not be in a position to pay dividends in the foreseeable future. Our ability to pay dividends will depend on our ability to successfully develop one or more properties and generate revenue from operations. Further, our initial earnings, if any, will likely be retained to finance our growth. Any future dividends will depend upon our earnings, our then-existing financial requirements and other factors and will be at the discretion of our Board of Directors.

None.

The Summit Silver-Gold Project, the Lordsburg Copper Project, Black Canyon Mica Project, Planet MIO Project, all claims and other assets were lost in the Chapter 11 bankruptcy proceedings and were transferred to Waterton in the 363 Asset Sale. Between June 30, 2016 and 2017, Santa Fe paid into escrow a down payment to acquire the Bullard’s Peak Corporation and the Black Hawk Consolidated Mines Company and all its assets. The formal Stock Purchase Agreement was signed and dated as of August 18, 2017.

Current Legal Proceedings

Santa Fe is involved in various legal actions in the ordinary course of our business. We do not believe it is feasible to predict or determine the outcome or resolution of the above litigation proceedings, or to estimate the amounts of, or potential range of, loss with respect to those proceedings. In addition, the timing of the final resolution of these proceedings is uncertain. The range of possible resolutions of these proceedings could include judgments against us or settlements that could require substantial payments by us, which could have a material impact on the Company’s financial position, results of operations and cash flows.

With the completion of the bankruptcy in June 2016, all cases  below  are reinstated, but none of the parties has so far initiated legal actions.

All legal proceedings stayed with the filing of Chapter 11 bankruptcy. At the time of the bankruptcy filing several litigations were filed in several courts. Santa Fe believes that the following suits will be stayed pursuant to the Bankruptcy Code. After dismissal of the Chapter 11 filings, we have not been notified of any of the below cases if they will continue or not.

Boart Longyear Company v. Lordsburg Mining Company, Case No. D-2-2-CV-2015- 06048, County of Bernalillo, NM;

Boart Longyear Company v. Lordsburg Mining Company, Case No. D-721-CV-2015- 00058, County of Sierra, NM;

Boart Longyear Company v. Lordsburg Mining Company, Case No. D-608-CV- 201500165

County of Quintero, NM. Series of collection cases by Boart Longyear Company, who obtained Utah judgment for equipment delivered to Lordsburg Mining Company

Santa Fe Gold Corporation v. Tyhee Gold Corp., Brian K. Briggs, SRK Consulting (US), Inc., and Bret Swanson, Case No: 14CV032866, District Court, Denver County, Colorado

Santa Fe is seeking damages for breach of the Confidentiality Agreement as well as for conversion of Santa Fe’s confidential information. Tyhee Gold Corp. has filed a counter-claim for tortuous interference with prospective contractual relationships with Koza Gold. At this time, there can be no determination of the outcome.

Wagner Equipment Co. v. Lordsburg Mining Company, Case No. D-2014-02372, County of Bernalillo, NM 28

Collection case by Wagner equipment, who obtained judgment for equipment delivered to Lordsburg Mining Company.

In October 2013, Lone Mountain Ranch, LLC, owner of the surface estate overlying our Ortiz gold property, filed a lawsuit against the Company and our lessor, Ortiz Mines, Inc. The lawsuit seeks to clarify Lone Mountain Ranch's rights and obligations under the

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split estate regime. Specifically, Lone Mountain Ranch seeks a declaratory judgment that it may participate in permit hearings, agency proceedings, and private activities related to the permitting of the Ortiz project without being in violation of common law duties to not interfere with development of the mineral estate. The Company conducted a strategic evaluation as whether or not to continue with the Ortiz Gold Project. Given the public opposition to the Ortiz Gold Project, Santa Fe has decided not to further pursue the Ortiz Gold Project. Lone Mountain Ranch LLC sued Ortiz Mines Inc against any mining activities on the property, and Santa Fe Gold was only a co-defender.  With the bankruptcy, we, SFG, were dismissed.

We are in litigation with two vendors for claims for approximately $140,400 and $125,876, respectively against us. If the Company is unsuccessful in raising additional funding, we may not be able to pay resolve these lawsuits and our business may not continue as a going concern. In the event we cannot raise the necessary capital or we cannot restructure through negotiated modifications, we may be required to effect under court supervision pursuant to a voluntary bankruptcy filing under Chapter 11 or Chapter 7 of the U.S. Bankruptcy Code (“Chapter 11 or “Chapter 7”). See “Risk factors.” The claims were against Lordsburg Mining company, were stayed during the proceedings and all claims remained.  At this time, there can be no determination of the outcome.

We are not aware of any material legal proceedings to which any of our officers or any associate of any of our officers is a party adverse to us or any of our subsidiaries or has a material interest adverse to us or any of our subsidiaries.

We are not aware of any of our officers being involved in any legal proceedings in the past ten years relating to any matters in bankruptcy, insolvency, criminal proceedings (other than traffic and other minor offenses) or being subject to any of the items set forth under Item 401 of Regulation S-K.

On August 26, 2015 Santa Fe filed for Chapter 11 Bankruptcy protection, Case # 15-11761 (MFW) in Delaware. At the time of the bankruptcy filing several litigations were filed in several courts. Santa Fe believes that these suits will be stayed pursuant to the Bankruptcy Code. After the dismissal of the filings we were left without assets and none of the filings has been reinstated as of this reporting date.

None

ITEM 5.   MARKET FOR COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND PURCHASE OF EQUITY SECURITIES

Market Information

Our common stock trades over-the-counter and is quoted on the OTC Pink Sheets under the symbol “SFEG.” The table below sets forth the high and low bid prices for our common stock as reflected on the OTC Bulletin Board for the last two fiscal years. Quotations represent prices between dealers, do not include retail markups, markdowns or commissions, and do not necessarily represents at which actual transactions were affected.

OTCBB

We were delinquent in the filing of our financial statements for the year ended June 30, 2003, and consequently the Securities Commissions of Ontario and British Columbia issued cease trade orders for trading of our common stock by Canadian residents, which cease trade orders are still in effect. We believe that less than 2% of our common stock is recorded as held by Canadian residents as of June 30, 2017.

Holders of Common Equity

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As of June 30, 2017, we had 289,936,274 common shares outstanding, the high and low sales prices for fiscal 2017 of our common stock on the OTC Bulletin Board were $.2323 and $0.0115 respectively, and we had approximately 823 holders of record of our common stock.     

Penny Stock Rules

Due to the price of our common stock, as well as the fact that we are not listed on NASDAQ or a national securities exchange, our stock is characterized as “penny stock” under applicable securities regulations. Our stock therefore is subject to rules adopted by the SEC regulating broker-dealer practices in connection with transactions in penny stocks. The broker or dealer proposing to effect a transaction in a penny stock must furnish his customer a document containing information prescribed by the SEC and obtain from the customer an executed acknowledgment of receipt of that document. The broker or dealer must also provide the customer with pricing information regarding the security prior to the transaction and with the written confirmation of the transaction. The broker or dealer must also disclose the aggregate amount of any compensation received or receivable by him in connection with such transaction prior to consummating the transaction and with the written confirmation of the trade. The broker or dealer must also send an account statement to each customer for which he has executed a transaction in a penny stock each month in which such security is held for the customer’s account. The existence of these rules may have an effect on the price of our stock, and the willingness of certain brokers to effect transactions in our stock.

Transfer Agent

Colonial Stock Transfer Co. is the transfer agent for our common stock. The principal office of Colonial Stock Transfer Co. is located at 66 Exchange Place, Salt Lake City, Utah 84111 and its telephone number is (801) 355-5740.

Dividend Policy

We have never declared or paid dividends on our common stock. Payment of future dividends, if any, will be at the discretion of our board of directors after taking into account various factors, including the terms of any credit arrangements, our financial condition, operating results, current and anticipated cash needs and plans for expansion.

Recent Sales of Unregistered Securities

During the year ended June 30, 2017, the Company issued the following common stock:

The issuance of the restricted common shares during the year ended June 30, 2017, were exempt from the registration requirements of the Securities Act of 1933, as amended, pursuant to Section 4(a) (2) thereof because such issuances did not involve a public offering.

Performance Graph

Not required.

We are a smaller reporting company as defined by Rule 12b-2 of the Exchange Act and are not required to provide the information required under this item.

Except for the historical information, the following discussion contains forward-looking statements that are subject to risks and uncertainties. Readers are cautioned that the following discussion contains certain forward-looking statements and should be read in conjunction with the “Cautionary Statement on Forward-Looking Statements” appearing at the beginning of this Annual Report. We caution you not to put undue reliance on any forward-looking statements, which speak only as of the date of this report. Our actual

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results or actions may differ materially from these forward-looking statements for many reasons, including the risks described in “Risk Factors” and elsewhere in this annual report. Our discussion and analysis of our financial condition and results of operations should be read in conjunction with the Financial Statements of the Company and notes thereto included elsewhere in the Annual Report. See “Financial Statements”. Our actual future results may be materially different from what we currently expect.

Overview

During our fiscal year ended June 30, 2016, Santa Fe Gold Corporation (SFG) elected on August 26, 2015 to file for Chapter 11 Bankruptcy protection, Case # 15-11761 (MFW) and the case was dismissed on June 15, 2016.  

The results of operations in the past reflected a continued under-capitalization of our projects which required additional funding to be able to achieve full project performance and sustained potential profitability. We currently are dependent on additional financing to resume any mining operations and to continue our exploration efforts in the future if warranted. After the dismissal of the Chapter 11 filings, we had no funds or assets to continue our operation.  We solicited some of our shareholders and presented our vision for Santa Fe Gold to them and subsequently purchased stock for cash so we could proceed with our vision.  

After the dismissal of the bankruptcy case, the Company had no assets, but is still liable for all commitments and debts outstanding.  After the dismissal, the Company will divest itself from all subsidiaries and will keep only Santa Fe Gold, the parent company active.  SFG Barbados, Lordsburg Mining Company and AZCO will be dormant and all the commitments and debts will stay with the respective companies. The court set up a Trust fund that will be funded by the activities of the Summit mine for five years and the trust funds will be distributed by an independent trustee to all credit holders on record.

Santa Fe Gold failed to provide a Plan of Reorganization with the filing of protection under the Bankruptcy Codes; the significant transactions that occurred upon emergence from bankruptcy were as follows:

·The approximately $20 million of indebtedness outstanding on account of the Company’s senior notes and unsecured claims were reinstated.  

·The courts established a GUC Trust Agreement in April 2016 with Gavin/Solmones as Trustee for the benefit of all creditors less Waterton Global. A profit interest is attached to the Summit mine (formerly owned by Santa Fe Gold and its subsidiaries) with the sole benefit for the Creditors holding unsecured claims filed by each creditor with the courts.  

The consolidated 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.

We have a total accumulated deficit of $98,013,306 at June 30, 2017. To continue as a going concern, we are dependent on continued fund raising. However, currently we have no commitment in place from any party to provide additional capital and there is no assurance that such funding will be available, or if available, that its terms will be favorable or acceptable to us.

Liquidity and Capital Resources; Plan of Operation

As of June 30, 2017, we had cash of $441,806 as compared to $2,815 at June 30, 2016, and we had a working capital deficit of $14,264,771.

At June 30, 2017, we were in arrears on payments totaling approximately $6.4 million under a gold stream agreement (the “Gold Stream Agreement”) with Sandstorm in the Santa Fe Gold Barbados subsidiary and other debt approximating $8.8 million.

Results of Operations

Fiscal Year Ended June 30, 2017 Compared to Fiscal Year Ended June 30, 2016

Sales, net

During the fiscal year, there was miscellaneous sale of $0 as compared to the fiscal year ended June 30, 2016 of $6,250. There were no operations during the current fiscal year.

Operating Costs and Expenses

Our operating cost incurred in our fiscal year ended June 30, 2017, decreased $1,951,212 from $3,679,725 in the fiscal year ended June 30, 2016 to $1,728,513 for the end of the current year. Details of the significant changes are as follows.

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Exploration and mine related costs: The decrease in the current year of measurement aggregated $217,580. The decrease mainly consisted of write off old inventory of $173,426 and decreased property taxes of $205,404 incurred in our year ended June 30, 2016 and were offset by increased exploration costs on new properties of $152,473 on our Santa Fe Acquisitions subsidiary.

Depreciation and amortization: In the fiscal year ended June 30, 2017, depreciation and amortization decreased $1,112,313 as a result of the 363 Asset Sale on February 26, 2016, at which time all assets were sold and depreciation ceased.

General and administration decreased $621,319 in the current year of measurement from $2,072,116 for the year ended June 30, 2016, to $1,450,797 for the year ended June 30, 2017. This decrease was mainly a result of reductions of bankruptcy costs of $1,360,316, compensation and related of $214,868, travel related costs of $44,953, director fees of $28,000, investor relations costs of $66,400, financing costs of 74,459 and miscellaneous and administrative costs of $155,206. These decreases are offset by increases in consulting fees of $1,020,032, increased audit fees of $65,000, and legal fees of $255,822.   

Other Income (Expense)

Other income and (expense) for the fiscal year ended June 30, 2017, was $4,113,056 as compared to $(1,160,761) for the fiscal year ended June 30, 2016, a decrease in other expenses of $5,273,817. The net decrease in other expenses for the current year of measurement is mainly comprised of the following components: increased gain on debt extinguishment of $3,595,618, a decrease in interest expense of $1,443,644, an increase in trust debt forgiveness of $464,763 and a decrease in financing costs - commodity supply agreement of $969,162. These increases to other income were offset by an increased loss recognized on foreign currency translation of $162,771 and an increase in loss on derivatives instruments liabilities of $1,095,638. Further information regarding the changes in the various components of Other Income (Expense) is discussed below.

On June 30, 2016, the total outstanding principle and accrued interest on the IGS Secured Convertible Notes totaled $3,545,940 in US dollars on our balance sheet. The loan and accrued interest are denominated in Australian dollars (A$). This reduced gain in foreign currency translation is the result of a decrease in the US$ relative to the A$ during the current fiscal year ended on the outstanding balances in the current fiscal year.

For the fiscal year ended June 30, 2017, financing costs – commodity supply agreements totaled an increase of $969,162 from the prior year period of measurement loss of $677,996 and resulted in a gain of $291,166 in the fiscal year. The financing costs for commodity supply agreements relate directly to production for the period and the subsequent delivery of refined precious metals to Sandstorm. These financing costs are adjusted period-to-period based upon the total number of undelivered gold and silver ounces outstanding at the end of each period. The increase other income in the current fiscal year is driven by a decrease in precious metals prices.

For the year ended June 30, 2017, the loss on derivative instruments liabilities totaled $26,974 as compared a gain of $1,068,664 for the comparable fiscal year ended. The changes in derivative financial instruments are non-cash items and arise from adjustments to record the derivative financial instruments at fair values. These changes are attributable mainly to adjustments to record the change in fair value for the embedded conversion feature of derivative financial instruments, warrants previously issued under our registered direct offerings, fluctuation in the market price of our common stock, which is a component of the calculation model, and the issuance of additional warrants resulting in derivative treatment. We use the Black-Scholes option pricing model to estimate the fair value of the derivative financial instruments. Because Black-Scholes uses our stock price, fluctuation in the stock prices will result in volatility to the earnings (losses) in future periods as we continue to reflect the derivative financial instruments at fair values. When required to arrive at the fair value of derivatives associated with the convertible note and warrants, a Monte Carlo model is utilized that values the Convertible Note and Warrant based on average discounted cash flow factoring in the various potential outcomes by a Chartered Financial Analyst (‘CFA”). In determining the fair value of the derivatives the CFA assumed that the Company’s business would be conducted as a going concern.

For the fiscal year ended June 30, 2017, interest expense totaled $961,386 as compared to $2,405,030 for the comparable prior fiscal year. The decrease is mainly attributable to no additional penalty charges by Waterton relative to the Credit Agreement in the current year of measurement and the elimination of the Waterton interest debt of $7,755,685 on February 26, 2016, in the 363 Asset Sale to Waterton.

Factors Affecting Future Operating Results

Currently we have no other continuing commitment from any party to provide additional working capital, or if one becomes available, there is no certainty that its terms will be favorable or acceptable to the Company.

Off-Balance Sheet Arrangements

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During the fiscal year ended June 30, 2017, we did not engage in any off-balance sheet arrangements as set forth in Item 303(a) (4) of the Regulation S-K.

Critical Accounting Policies

Our discussion and analysis of our consolidated financial condition and results of operations are based on the Company’s consolidated financial statements, which have been prepared in accordance with accounting principles generally accepted in the United States. The preparation of these consolidated financial statements requires us to make estimates and judgments that affect the reported amount of assets and liabilities and disclosure of contingent assets and liabilities at the date of the consolidated financial statements and the reported amount of revenues and expenses for each period. Critical accounting policies are defined, as policies that management believes are the most important to the portrayal of our consolidated financial condition and results of operations. These policies may require us to make difficult, subjective or complex judgments, commonly about the effects of matters that are inherently uncertain.

Our significant accounting policies are described in the audited consolidated financial statements and notes thereto. See Note 2, “Summary of Significant Accounting Policies” in the Notes to the Consolidated Financial Statements for the fiscal year June 30, 2017, describes our significant accounting policies which are reviewed by management on a regular basis. We believe our most critical accounting policies relate to asset retirement obligations, derivative instruments and variables used in the Black-Scholes option pricing model and in the Monte Carlo model utilized by the Chartered Financial Advisor, estimates utilized, impairment of assets, revenue recognition, accounts receivable, depreciation of equipment and mine development costs, and stock-based compensation.

Our exposure to market risks includes, but is not limited to, the following risks: changes in interest rates and equity and commodity price risks. We do not use derivative financial instruments as part of an overall strategy to manage or hedge market risk.

Interest Rate Risk

We have approximately US $5.74 million indebtedness under our credit facilities at June 30, 2017, The annual interest rates is 24% on $1,745,092 bridge loan. We also have a $212,521 bridge loan with an annual interest rate at 14%. Interest rates on other interest bearing debt is 5.75% and 5.25 %.

Equity Price Risk

We have in the past sought and will likely in the future seek to acquire additional funding by sale of common stock and other equity instruments. Movements in the price of our common stock have been volatile in the past and may also be volatile in the future. As a result, there is a risk that we may not be able to issue shares of common stock or other equity at an acceptable price to meet future funding requirements.

The fair value our stock options, warrants and any related derivatives utilizing the Black-Scholes option pricing model or Monte Carlo model is subject to the volatility of the market price of our common stock. Such fluctuations would affect stock-based compensation and its effect on earnings (losses).

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SANTA FE GOLD CORPORATION

 CONSOLIDATED FINANCIAL STATEMENTS

As of and for the Years ended June 30, 2017 and 2016

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REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the shareholders and board of directors of

Santa Fe Gold Corp.

Opinion on the Financial Statements

We have audited the accompanying consolidated balance sheets of Santa Fe Gold Corp. and its subsidiaries (collectively, the “Company”) as of June 30, 2017 and 2016, and the related consolidated statements of operations, stockholders’ deficit, and cash flows for the years then ended, and the related notes (collectively referred to as the “financial statements”). In our opinion, the financial statements present fairly, in all material respects, the financial position of the Company as of June 30, 2017 and 2016, and the results of their operations and their cash flows for the years then ended, in conformity with accounting principles generally accepted in the United States of America.

Going Concern Matter

The accompanying financial statements have been prepared assuming that the Company will continue as a going concern. As discussed in Note 2 to the financial statements, the Company has suffered recurring losses from operations and has a net capital deficiency that raises substantial doubt about its ability to continue as a going concern. Management's plans in regard to these matters are also described in Note 2. The financial statements do not include any adjustments that might result from the outcome of this uncertainty.

Basis for Opinion

These financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on the Company’s financial statements based on our audit. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) ("PCAOB") and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audit in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. As part of our audit we are required to obtain an understanding of internal control over financial reporting but not for the purpose of expressing an opinion on the effectiveness of the entity's internal control over financial reporting. Accordingly, we express no such opinion.

Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audit also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audit provides a reasonable basis for our opinion.

/s/ MaloneBailey, LLP

www.malonebailey.com

We have served as the Company's auditor since 2016.

Houston, Texas

July 3, 2018

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SANTA FE GOLD CORPORATION
CONSOLIDATED BALANCE SHEETS

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

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SANTA FE GOLD CORPORATION
CONSOLIDATED STATEMENTS OF OPERATIONS

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

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SANTA FE GOLD CORPORATION
CONSOLIDATED STATEMENT OF STOCKHOLDERS' DEFICIT
YEARS ENDED JUNE 30, 2017 and 2016

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

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SANTA FE GOLD CORPORATION
CONSOLIDATED STATEMENTS OF CASH FLOWS

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

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SANTA FE GOLD CORPORATION
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
JUNE 30, 2017 AND 2016

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Stock-Based Compensation

In connection with terms of employment with the Company’s executives and employees, the Company occasionally issues options to acquire its common stock. Awards are made at the discretion of the Board of Directors. Such options may be exercisable at varying exercise prices and generally vest over a period of six months to a year.

The Company accounts for share based compensation on the grant date fair value of the award. The Company estimates the fair value of the award using the Black-Scholes option pricing model for valuation of the share-based payments. The Company believes this model provides the best estimate of fair value due to its ability to incorporate inputs that change over time, such as volatility and

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NOTE 3 - EQUIPMENT

Equipment consists of the following at June 30, 2017 and 2016:

For the year ended June 30, 2016, all property, plant and equipment on the books in were part of the 363 Asset Sale on February 26, 2016. See Note 17 – 363 Asset Sale.

During the fiscal years ended June 30, 2017 and 2016 depreciation and amortization expense was $21,779 and $1,134,112, respectively.

NOTE 4 - ACCRUED LIABILITIES

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NOTE 8 – SENIOR SECURED GOLD STREAM CREDIT AGREEMENT

On December 23, 2011, the Company and its subsidiaries entered into a Senior Secured Gold Stream Credit Agreement (the “Credit Agreement”) with Waterton. The Credit Agreement provided for two $10 million tranches and a $5 million revolving working capital facility. On December 23, 2011, the Company closed the first $10 million tranche of the Credit Agreement. The second $10 million tranche was earmarked for fund but was not drawn down. On February 26, 2016, the note balance was $7,755,685 and accrued interest was $5,746,404 and these amounts were eliminated with the 363 Asset Sale where Waterton received all the assets of the Company for all debt and any other agreement obligations as agreed on in the bankruptcy filings in August 2015.  

Debtor in Possession Financing

In connection with the prepetition negotiations of the restructuring support agreement, Waterton Global Value LP (“Waterton”), holders of the Company’s senior notes agreed to provide the Company and the Chapter 11 Subsidiaries a debtor in possession credit facility (the “DIP Credit Agreement"). The DIP Credit Agreement provided for a multi draw net term loan of which a net $2,037,595 was advanced, which became available to the Company upon the satisfaction of certain milestones and contingencies. Waterton also initially advanced a Bridge loan of $200,000 and also charged a structuring fee of $32,203. Pursuant to the Plan the borrowings under the Bridge loan and DIP Credit Agreement, at the option of the lenders to the DIP Credit Agreement, are part of the purchase price of all assets in the “363 Asset Sale”.  Net advances under the DIP Credit Agreement at February 26, 2016, were  $2,237,595 along with the accrued interest and fees aggregating $101,421 and were eliminated with the 363 Asset Sale where Waterton received all the assets of the Company for all debt and any other agreement obligations as agreed on in the bankruptcy filings in August 2015.

NOTE 9 – NOTES PAYABLE

Pursuant to Share Exchange Agreement (the "Share Exchange Agreement") with Canarc Resource Corp., a British Columbia, Canada corporation whose common shares are listed on the TSX Exchange under the symbol CCM ("Canarc") on July 15, 2014, the Company and Carnac entered into an interim financing facility pursuant to which Canarc advanced a $200,000 loan to the Company and a $20,000 merger advance. The loan bears interest an initial compounded rate of 1% a month and is due and payable upon the closing of a gold bond financing by the Company or January 15, 2015, if the financing does not close. The financing did not close under this Agreement and the interest rate was increased to 14% per annum on the outstanding balance.

In December 2016 the court administered trust paid $9,897 to the note holder and was applied against the accrued interest on the note and was recorded as a gain on trust debt forgiveness. The principal and accrued interest outstanding at June 30, 2017 is in past due and in default. The principle balance outstanding at June 30, 2017 and 2016 was $232,522 and $220,000, respectively.  During the year ended June 30, 2017, the Company made a reclassification of the compounded interest amount to the principle in the amount of $12,522. Accrued interest on note at June 30, 2017 and 2016 was $63,222 and $47,402, respectively.

On June 1, 2012, the Company entered into an installment sales contract for $593,657 to purchase certain equipment. The term of the agreement is for 48 months at an interest rate of 5.75%, with the equipment securing the loan. The balance owed on the note was $398,793 at June 30, 2017 and 2016 and had a accrued interest of $64,757 and $59,238, respectively. In December 2016 the court administered trust paid $17,412 to the note holder and was applied against the accrued interest on the note and this amount was recorded as a gain on trust debt forgiveness. The Company has been unable to make its monthly payments since November 2013, currently is due and in default and the equipment has been returned to the vendor for sale and remains unsold at June 30, 2017.

In conjunction with the Merger Agreement, Tyhee and the Company entered into a Bridge Loan Agreement, pursuant to which Tyhee was obligated to advance up to $3 million to the Company in accordance with the terms thereof. Tyhee advanced the Company only

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