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Santacruz Silver Reports Second Quarter 2014 Financial Results

Vancouver, B.C. – Santacruz Silver Mining Ltd. (TSX.V:SCZ) (the “Company” or “Santacruz”) is pleased to announce the financial and operating results for the second quarter of 2014 (“Q2”).  The full version of the financial statements and accompanying management discussion and analysis can be viewed on the Company’s website at www.santacruzsilver.com or on SEDAR at www.sedar.com.  All financial information is prepared in accordance with IFRS and all dollar amounts are expressed in US dollars unless otherwise indicated.

“During the second quarter we have been successful in reducing our operating costs significantly while keeping on-track with our 2014 mine plan, in particular we have reduced our all-in sustaining cost per silver equivalent ounce sold by more than 28% from the first quarter of 2014,” said Arturo Préstamo, President and CEO. “We exited the second quarter at a 300-tpd production rate and currently are averaging mine production of 380-tpd with a targeted third quarter exit rate of 400-tpd. We expect an increase on the Rosario Mine´s head grades, as less development ore will be included with production going forward (during 2Q/14, 70% of all ore milled was from development and 30% from production stopes). In addition, during the second quarter the Company incurred approximately $450,000 for engineering consultant fees. These are the final engineering consultant fees to be paid as the Company has successfully reached the objectives outlined under this technical support agreement. Finally, the recent addition of Mr. Robert Byrd as Chief Operating Officer of the Company will assist us greatly in our efforts to become cash flow positive in the near term at the Rosario Mine.”

Second Quarter 2014 Financial Summary

(1)   During the second quarter of 2014 the Company took the decision to capitalize the expenditures incurred subsequent to December 31, 2013 to develop the Main Access Ramp.  Accordingly, $735,096 was capitalized to Plant and Equipment during the second quarter. Included in this amount was $486,514 relating to the first quarter of 2014. For the purposes of this comparison the referenced 2014 first quarter and second quarter figures have been adjusted accordingly to reflect this change.

Second Quarter 2014 Mine Operations Summary

(1)   Ore Processed includes 4,025 and 11,453 tonnes respectively in the second and first quarter arising from third party ore purchased by the Company and processed through the milling facility.

(2)              Silver equivalent ounces produced for fiscal 2014 are calculated using prices of US$20.00/oz., US$1,250/oz.,  US$0.96/lb. and US$90/lb. for silver, gold, lead and zinc respectively, applied to the recovered metal contained in the lead and zinc concentrates produced at the Rosario Mine.

(3)                  Silver equivalent ounces sold in the second quarter of 2014 were calculated using realized silver prices of US$19.76/oz in the second quarter and US$20.58/oz in the first quarter, applied to the payable metal content of the lead and zinc concentrates sold from the Rosario Mine.

(4)                 The Company reports non-IFRS measures which include Cash Cost per Silver Equivalent, Production Cost, All-in Sustaining Cost per Silver Equivalent and Average Realized Silver Price.  These measures are widely used in the mining industry as a benchmark for performance, but do not have a standardized meaning and may differ from methods used by other companies with similar descriptions. 

(5)   During the second quarter of 2014 the Company took the decision to capitalize the expenditures incurred subsequent to December 31, 2013 to develop the Main Access Ramp.  Accordingly, $735,096 was capitalized to Plant and Equipment during the second quarter.  Included in this amount was $486,514 relating to the first quarter of 2014.  For the purposes of this comparison the referenced 2014 first quarter and second quarter figures have been adjusted to reflect this change.

Operational Review

During the second quarter of 2014 the average mine production was 270 tpd, exiting the month of June at 300-tpd. As of the months of July and August, the average mine production has been 320 tpd and 380 tpd respectively. The commissioning process for the crushing circuit at 700 tpd has completed and the circuit has been running at specifications. The Company is awaiting the arrival of a new motor for the third ball mill, which is expected to arrive in the first week of September, after a 4-week delay from the vendor. The Company currently is stockpiling ore for processing once the third ball mill is commissioned and takes the Rosario Mine’s milling capacity to 700 tpd. The extra milling capacity will comfortably allow us to continue our production ramp up as scheduled.

Mill recoveries continued to meet or exceed planned levels.  Silver recoveries are expected to average approximately 90% over the duration of the Rosario Mine life.

Cash cost per silver equivalent ounce during Q2 ($22.72) was on budget for the second quarter in the 2014 mine plan.  We expect further operating cost reductions in the last half of 2014 with increased mine production levels, added milling capacity, and general ongoing operational improvements.

The Main Access Ramp (“the Ramp”) development has reached Level 3.  For the remainder of the year we expect to mine at Level 1, Level 1.5, Level 2, and Level 2.5. This will allow the Company to feed approximately 450-tpd to the mill during the fourth quarter of 2014.

Qualified Person

All technical information which is included in this statement has been reviewed and approved by Donald E. Hulse P.E. of Gustavson Associates LLC. Mr. Hulse is independent of the Company and a qualified person, pursuant to the meaning of such terms in National Instrument 43-101 Standards of Disclosure for Mineral Projects.

About Santacruz Silver Mining Ltd.

Santacruz is a Mexican focused silver company with a producing mine (Rosario); two advanced-stage projects (San Felipe and Gavilanes) and an early-stage exploration project (El Gachi). The Company is managed by a technical team of professionals with proven track records in developing, operating and discovering silver mines in Mexico. Our corporate objective is to become a mid-tier silver producer.

‘signed’

Arturo Préstamo Elizondo,

President, Chief Executive Officer and Director

For further information please contact:

Neil MacRae

Santacruz Silver Mining Ltd.

Email: info@santacruzsilver.com

Telephone: (604) 569-1609

Neither the TSX Venture Exchange nor its Regulation Services Provider (as that term is defined in the policies of the TSX Venture Exchange) accepts responsibility for the adequacy or accuracy of this release.

Forward looking information

Certain statements contained in this news release, such as planned production levels and costs, constitute "forward-looking information" as such term is used in applicable Canadian securities laws. Forward-looking information is based on plans, expectations and estimates of management at the date the information is provided and is subject to certain factors and assumptions, including, that the Company's financial condition and development plans do not change as a result of unforeseen events, that the Company obtains regulatory approval, future metal prices and the demand and market outlook for metals.  Forward-looking information is subject to a variety of risks and uncertainties and other factors that could cause plans, estimates and actual results to vary materially from those projected in such forward-looking information.  Factors that could cause the forward-looking information in this news release to change or to be inaccurate include, but are not limited to, the risk that any of the assumptions referred to prove not to be valid or reliable, that occurrences such as those referred to above are realized and result in delays, or cessation in planned work, that the Company's financial condition and development plans change, delays in regulatory approval, risks associated with the interpretation of data, the geology, grade and continuity of mineral deposits, the possibility that results will not be consistent with the Company's expectations, as well as the other risks and uncertainties applicable to mineral exploration and development activities and to the Company as set forth in the Company's Annual Information Form filed under the Company's profile at www.sedar.com. There can be no assurance that any forward-looking information will prove to be accurate, as actual results and future events could differ materially from those anticipated in such statements. Accordingly, the reader should not place any undue reliance on forward-looking information or statements. The Company undertakes no obligation to update forward-looking information or statements, other than as required by applicable law.

Financial outlook information contained herein about the Company's prospective cash flows and financial position is based on assumptions about future events, as described above, based on management's assessment of the relevant information currently available. The purpose of such financial outlook is to provide information about management's current expectations as to the anticipated results of its proposed business activities for the coming quarters. Readers are cautioned that any such financial outlook information contained herein should not be used for purposes other than for which it is disclosed herein.

Rosario Mine

The decision to commence production at the Rosario Mine was not based on a feasibility study of mineral reserves demonstrating economic and technical viability, but rather on a more preliminary estimate of inferred mineral resources. Accordingly, there is increased uncertainty and economic and technical risks of failure associated with this production decision. Production and economic variables may vary considerably, due to the absence of a complete and detailed site analysis according to and in accordance with NI 43-101.