El Granizo

The El Granizo property covers over 500 hectares of prospective high-grade stratiform copper-silver mineralization and is located approximately 40 km south of the town of Cuatro Ciénegas, Coahuila State, Mexico. The property boundary follows a copper-silver rich contact unit over approximately 3 km of strike length underneath northwards dipping cliffs of the Jabali Valley (Figure 1).

Figure 1 – The Location of the El Granizo property

Reports

The mineralization on the property is a short term copper and silver target. It is one of three projects that Santa Fe Metals currently owns in the region.

Geology – El Granizo, a red bed copper deposit

Figure 2 - Geology of the El Granizo property

Figure 3 - Our team at work

The copper-silver horizon is found at the contact between sequence of red, purple sandstones called the San Marcos Sandstones, and a sequence of sandy dolomites and limestones. Mineralization is hosted within a seemingly continuous layer of distinctive white to grey and grey-green sandstones and conglomerates.

The red (oxidized iron) sandstones, known as "redbeds", are believed to have formed under hot, dry, desert conditions on an emergent continental landmass. The white to grey-green sandstones (reduced iron) that overlie these redbeds and host the mineralization, and which may be up to 60 m thick, show abundant indications of having been deposited under deltaic, estuarine and shoreline conditions.

On the property, mineralization is characterized by a stratabound oxidized unit containing malachite, azurite and chrysocolla with a true width of between 5 and 10 meters.

The geology is characterized by stratabound oxide-copper/silver mineralization consistent with many “stratiform-copper” style deposits worldwide (Bersh, 2008), examples of which include Spar Lake (Troy), Rock Creek and Montanore (Montana, USA), White Pine (Michigan, USA), Creta (Oklahoma, USA), Kupferschiefer district (Germany and Poland), and Zambia-Zaire copper belt (Zaire).

Previous Work

Figure 4 - Satellite photograph of the workings at El Granizo

Pre 2000

Figure 5 - Malachite in outcrop El Granizo

The main workings, located in the east of El Granizo property, were initially developed shortly after WW2 and then reopened in 1987 with the idea of producing saleable quantities of copper salts (MCD Report - 1994).

At this location the full strike length of the exposed mineralization is approximately 100 m.

Limited exploration activity by several North American companies was undertaken on the Cuatro Ciénegas region in the 1990's. Exploration was discontinued due to the then low copper prices and the companies' interests in the mineral concessions lapsed. Limited channel sampling of surface outcrops and underground exposures (from small mine activity) reports copper oxide values (primarily malachite, azurite with some chalcocite) ranging from 0.56% to 5.16% copper and silver from 88 grams per tonne ("g/t") to 576 g/t silver (Bersh, 2008).

Santa Fe Metals - 2008

Figure 6 - 2008 Channel Sampling at El Granizo

In 2008 Santa Fe Metals continued the work of MCD in 1994 and completed a detailed channel sampling program of the exposed mineralization on El Granizo Property in order to assess the potential of the copper and silver rich horizon. In total 80 channel samples were collected representing 100 meter of strike length.

Results of Santa Fe Metals’ 2008 Channel Sampling Program

Figure 7 - 2008 Channel Sampling at El Granizo

Table1 - Results of Santa Fe Metals’ 2008 Channel Sampling Program

Plan of Work

The Company at present has completed an Environmental Study and will begin building of the copper plant following permit for the use of surface rights.

The Company plans to produce feed for an acid heap leaching operation from underground exploration drifts and produce cement copper precipitate, by running the pregnant solution through launders containing scrap iron. Revenues from this operation will be used to offset exploration activities.