Santa Barbara Signs Letter of Intent with Rio Alto Mining for Sancos Property in Peru and Announces Private Placement

Vancouver, British Columbia CANADA, February 07, 2013 /FSC/ - Santa Barbara Resources Limited (SBL - TSX Venture), ("Santa Barbara" or the "Company") is pleased to announce that it has entered into a non-binding letter of intent ("LOI") with Rio Alto Mining Limited ("Rio Alto") whereby Santa Barbara will grant to Rio Alto options (the "Options") to which it may earn and acquire up to a 66% interest in the Company's 8,200 hectare Sancos gold property ("Sancos") in Peru. The LOI also contemplates that Rio Alto will make a $200,000 equity investment in Santa Barbara at $0.08 per share.

Santa Barbara's President Christoph Lassl comments: "We are delighted to work with Rio Alto on the further development of our flagship Sancos high-sulphidation epithermal gold project. Rio Alto has a proven track record of resource definition and mine development in Peru. Gold production within 3 years from acquisition and subsequent ramping up of production to about 200,000 ounces gold in 2012 at Rio Alto?s La Arena mine in Peru is a clear indication of the company?s expertise and capability.

In addition, as a result of significant operating cost reductions and the cash to be received from the Rio Alto transaction, Santa Barbara will not be required to conduct a significant financing under the current challenging conditions. This allows the Company to minimize share dilution for its shareholders at current share prices."


Rio Alto LOI:

Under the terms of the LOI, Rio Alto will have the option to acquire up to a 51% interest in Sancos within a three year period by incurring US$4.5 million expenditures at the minimum rate of US$1.5 million a year and by paying Santa Barbara US$250,000 on signing the LOI as well as US$500,000 not later than at the 51% option exercise date (the "51% Program"). Completion of the first year of the 51% Program, including a minimum 5,000 metre drilling program, is a firm commitment. The purpose of the 51% Program is to carry out exploration on the Sancos project with a view to identifying and defining mineral resources of sufficient magnitude to justify on a commercially reasonable basis the undertaking of preliminary economic assessment (scoping study) of the Sancos project in compliance with NI 43-101.

Rio Alto may earn an additional 15% interest in the Sancos project within the subsequent two year period by undertaking all necessary actions required to prepare Sancos for a production decision, including obtaining all required permits from the applicable Peruvian government authorities and preparing a feasibility study in respect of the Sancos project in compliance with the requirements of NI 43-101. Rio Alto will pay a further US$500,000 to Santa Barbara upon its acquisition of the 15% interest.

Within 90 days of the 15% option exercise date, Santa Barbara may elect to participate proportionally in the costs of the development and construction of a mine on the Sancos Project and maintain its interest in the Sancos Joint Venture at 34% or allow Rio Alto to arrange for project financing for the mine construction, including Santa Barbara?s proportional share, in which case Rio Alto will have acquired an additional 9% interest in the Sancos Project and Rio Alto will have the right to recover Santa Barbara's proportional share of the project financing from up to 80% of Santa Barbara's share of cash distributions under the Sancos Joint Venture.

Rio Alto and Santa Barbara will enter into a service agreement pursuant to which Santa Barbara will be appointed as the operator during at least the first year of the option term. The appointment of the operator in the following years will be either Santa Barbara or Rio Alto at Rio Alto's election. The operator is allowed to charge a 10% administration fee of actual costs incurred on the project during the 51% option period and the 15% option period. If Rio Alto takes over as project operator, it will purchase the Sancos camp from Santa Barbara for US$100,000.

The parties intend to replace the LOI with a definitive option and joint venture agreement containing industry standard terms and conditions within 60 days of the date of the LOI.


Private Placement:

The LOI also contemplates that Rio Alto will subscribe for and purchase on a private placement basis 2.5 million common shares of Santa Barbara at the subscription price of $0.08 per share for gross proceeds of $200,000. On completion of the private placement Santa Barbara will grant a right of participation to Rio Alto entitling Rio Alto to purchase up to 9.9% of the shares issued by Santa Barbara pursuant to all future equity financings, or securities convertible to common shares, as long as Rio Alto maintains the option and joint venture on the Sancos project and has maintained its proportional interest acquired in Santa Barbara through the initial private placement to the date of any further financing.

The net proceeds of the private placement will be used for general corporate purposes. The private placement is subject to certain conditions including, but not limited to, the receipt of all necessary approvals including the acceptance of the TSX Venture Exchange.


Sancos Project:

The Sancos project is located in the mining-friendly Ayacucho Region of Peru. The property hosts a large high-sulphidation epithermal gold-silver mineralized system. Following up on large areas with significant values of gold in trenches, Santa Barbara has drilled 4,533 m at Sancos to date. Gold values have been intersected over more than 200 m vertical extent, starting from surface. Results are encouraging. The best intercepts are 154 m @ 0.45 g/t gold and 94 m @ 0.47 g/t gold, each starting from surface and ending in mineralization, with all intercepts occurring in oxide material. Bulk leach extractable gold metallurgical testwork on drill chips returned 66 % to 93 % gold recoveries with an average of 86 %, obtained from samples up to 232 m down-hole depth (201 m below surface), suggesting excellent leachability to significant depths. Santa Barbara has received a drill permit for the Sancos project from the Peruvian Ministry of Energy and Mines, authorizing the construction of up to 300 individual drill platforms and related access roads over a period of 46 months.

In 2012, a trench and channel sampling program was conducted by Santa Barbara from new rock exposures obtained during construction of access roads and drill platforms at the Sancos Central and Sancos Northwest targets. The potential feeder zone at Sancos Central, indicated by a CSAMT resistivity geophysical survey, continues to deliver high-grade gold mineralization over significant widths, including 13 m @ 5.00 grams per tonne ("g/t") gold and 3 m @ 4.71 g/t gold. Access roads and a total of 22 drill platforms have been constructed.

The Sancos project encompasses 8,200 hectares with 2,000 hectares held directly by Santa Barbara. Santa Barbara has the option, subject to certain back-in rights, to acquire a 100% interest in the remaining 6,200 hectares of the Sancos project from Barrick Gold's Peruvian subsidiary. The terms of the Barrick option, including Barrick's back-in right in certain circumstances, are described in the notes to the annual financial statements of Santa Barbara. During the term of the option and joint venture agreement, Rio Alto will fund Santa Barbara to make cash payments due to Barrick pursuant to the Barrick Option. If Barrick exercises its back-in right after Rio Alto has earned an interest, Santa Barbara and Rio Alto will be diluted pro rata and the back-in purchase price will be paid proportionally to their participation in the joint venture at the time of the Barrick back-in, subject to Santa Barbara recovering three times its expenditures in the Sancos project prior to the date of the signature of the LOI.

The technical content of this news release has been reviewed by Stewart Wallis P.Geo., consultant to the Company, who is the Qualified Person for the Company.


About the Company

Santa Barbara is a South American mineral explorer focusing on Peru and Chile. The Company has 22.8 million shares outstanding.


ON BEHALF OF THE BOARD

"Christoph Lassl"
Christoph Lassl, President and Chief Executive Officer



Please visit the Company's web site: www.sbr-ltd.com. For further information, please contact Christoph Lassl, President and Chief Executive Officer. Telephone: 56-9-81490442 or email: christoph@sbr-ltd.com .


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.

This news release contains certain statements that may be deemed "forward-looking" statements. Forward looking statements are statements that are not historical facts and are generally, but not always, identified by the words "expects", "plans", "anticipates", "believes", "intends", "estimates", "projects", "potential" and similar expressions, or that events or conditions "will", "would", "may", "could" or "should" occur and include, without limitation, statements regarding the Company's plans with respect to the negotiation and execution of an option and joint venture agreement with Rio Alto. The LOI is a non-binding agreement between Santa Barbara and Rio Alto, and is subject to the execution of a definitive option and joint venture agreement between the parties. There can be no assurance that the definitive agreement will be executed. Although Santa Barbara believes the expectations expressed in such forward-looking statements are based on reasonable assumptions, such statements are not guarantees of future performance and actual results may differ materially from those in forward looking statements, including the risk that Rio Alto will not be satisfied with its due diligence review and will not proceed with the option and joint venture agreement. Forward looking statements are based on the beliefs, estimates and opinions of the Company's management on the date the statements are made. Except as required by law, the Company undertakes no obligation to update these forward-looking statements in the event that management's beliefs, estimates or opinions, or other factors, should change.