Mr. Arturo Prestamo reports

SANTACRUZ SILVER ANNOUNCES AGREEMENT TO SELL SAN FELIPE PROJECT

Santacruz Silver Mining Ltd.'s wholly owned subsidiary, Impulsora Minera Santacruz SA de CV, has entered into an agreement with a private Mexican company based in Hermosillo, Mexico, to sell 100 per cent of its interest in the San Felipe project located in Sonora, Mexico, to the Hermosillo Group for cash consideration of $15.0-million (plus value-added tax (VAT) of $2.4-million) (all amounts are in U.S. dollars). The transaction is scheduled to close on or about Dec. 19, 2016.

Key features of the transaction:

• Hermosillo Group to pay $15.0-million plus VAT in cash to the company in three tranches in exchange for 100 per cent of the company's interest in the San Felipe project;
• From the proceeds of the transaction, the company will pay $10.0-million cash (plus VAT) to Minera Hochschild Mexico SA de CV (MHM), the underlying property vendor, and will issue to MHM 13,415,000 common shares of Santacruz as full and final payment for 100 per cent of the San Felipe project free of all encumbrances and the El Gachi property;
• The payment schedule for the $15.0-million plus VAT amount is as follows:
  • $3-million to be paid on or before Dec. 9, 2016;
  • $12-million to be paid on or before Dec. 19, 2016;
  • $2.4-million to be paid on or before Feb. 15, 2017.

Upon completion of the transaction, the company will retain $5.0-million in cash and will own 100 per cent of the El Gachi property. From these proceeds the company will pay approximately $2.0-million to JMET LLC to reduce the company's indebtedness to JMET, while the residual balance is to be used by Santacruz for general working capital purposes.

"Our divestment of the San Felipe project is the result of an internal analysis that identified the property as being a non-core asset at this time in light of the opportunity that exists at the company's recently established operating base in Zacatecas, Mexico. This strategic decision will allow the company to further delever its balance sheet and accelerate our growth at the Veta Grande project located in one of Mexico's most recognized silver districts," stated Arturo Prestamo, president and chief executive officer. "The company's focus in 2017 will be to further optimize the operations at our two producing mines with the goal of increasing production levels and reducing costs."

The transaction is subject to normal course closing documentation and conditions, including approval by the TSX Venture Exchange.

About Santacruz Silver Mining

Santacruz is a Mexico-focused silver company with two producing silver (Rosario and Veta Grande) and four exploration properties, including the Gavilanes property, El Gachi property, Minillas property and Zacatecas properties, including the Panuco deposit.

We seek Safe Harbor.