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Santacruz Silver Reports Third 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 third quarter of 2014 (“Q3”).  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.

“The third quarter has seen continued improvements at the Rosario Mine. Most importantly we have seen a significant increase in our revenues while at the same time a continuous reduction in our operating costs per silver equivalent ounce resulting in positive cash flow of $464,000 at our Rosario Mine during the quarter,” said Arturo Préstamo, President and CEO. “The cash cost per equivalent ounce of silver sold has decreased more than 18% when compared to the second quarter of 2014, and we expect that this figure will decrease even further in subsequent quarters as production keeps ramping up and efficiencies are taking place. We have just started the commissioning of the third ball mill and expect it to be running at specifications by mid-December, taking Rosario´s milling capacity up to 450-500 tpd. This will allow us to further reduce our costs going forward.”

“In addition, and in light of current volatility in metal prices, as announced on December 1, 2014, we have established a floor price for silver production from the Rosario Mine through 2015 and 2016. We have minimum floor prices of $17/oz for all of 2015 and Q1 2016 and $16/oz for the last three quarters of 2016. The financial instruments establishing the floor prices allow us to fully participate in any increase in the silver price. Our main objective is to ensure the production and cost targets for Rosario that will allow us to keep building a strong treasury with a view to advancing our properties as soon as a more stable environment to do so prevails.”

Third 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 at Rosario.  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.

Third 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 third, second and first quarter of 2014 were calculated using realized silver prices of US$19.55/oz, US$19.76/oz and US$20.58/oz respectively, 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 third quarter of 2014 the average mine production was 325 tpd, exiting the quarter at 380 tpd. The arrival in late November of the new motor for the third ball mill and commencement of commissioning now puts the operation on a stronger footing. This will allow the milling facility capacity to increase to 450 tpd before the end of December and with a planned installation of additional flotation cells in early January the milling facility capacity will increase to approximately 700 tpd. With the surface stockpile of ore at Rosario at over 12,000 tonnes the Company is well positioned to see continued improvements in the Rosario Mine operations over the coming quarters.

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 and milling levels, costs, sales prices and efficiencies, 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 third party ore to be milled by the Company has properties consistent with management's expectations, that the Company obtains all required regulatory approvals, and that future metal prices and the demand and market outlook for metals remains stable or improves.  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, which could result in lower revenue, higher cost, lower production levels, delays, and/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 (including in respect of the third party ore), 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 costs of production and sales prices 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.