Dr. Leanne Baker reports

SUTTER GOLD PROVIDES UPDATE ON MINING, CONSTRUCTION ACTIVITIES AT THE LINCOLN PROJECT, CALIFORNIA

Underground development is well under way at Sutter Gold Mining Inc.'s Lincoln mine project in the heart of California's Mother Lode gold belt. The project is on track for gold production in the fourth quarter of this year, ramping up to full production in the first half of 2013.

"Our mine site has been transformed in the past six months," said Dr. Leanne Baker, president and chief executive officer. "The mill building is closed in and equipment is being installed, the shop and staff services building is progressing, and our new sand barn and tailings thickener are under construction. We continue to hire for new positions. Most exciting, we are advancing mine development, with two new portals coming on and new headings being developed off of our main Stringbean Alley decline."

Mine development

The company received all necessary Mine Safety and Health Administration (MSHA) and California Occupation Safety and Health Administration (CalOSHA) approvals to begin underground development in June of this year. Mine portal construction began in July on the 1,300 level and in August at the 1,200 level. Mark A. Suden Mining Construction began drilling and blasting in September, 2012. As of Oct. 9, 2012, the 1,300-level development was more than 30 per cent complete at 101 feet from portal to face. The 1,200-level drift development was 25 per cent complete at 91 feet from portal to face. Development at the 1,100-level began the same week, with the establishment of a working face at the 1,100 cut-out in the Stringbean Alley decline. Development of the 900 level is set to begin late in October, 2012, whereas the 1,000-level development is scheduled to begin in March of 2013.

Mill progress

The mill building is closed in and equipment installation is progressing. D.G. Granade Inc. continues to perform on schedule and has been awarded subsequent contracts for the tailings thickener and sand plant buildings. Russell Mechanical Inc. is currently installing conveyor belts and has completed the coarse ore bin construction. The six-foot-by-12-foot Marcy rod mill was set by crane on its pedestals in early July. Lloyd W. Aubry Company Inc. is currently completing the rod mill bearing, gearbox and motor installation. Mammoth Mine Services LLC has delivered the belt feeders, scalping screen and disk filter tub, and is currently completing the rebuild of the Denver flotation cells and other milling equipment for on-time delivery.

OtherLtructure

The site is a hotbed of activity, with multiple contractors, company staff and consultants all working diligently toward completing construction this year. The company has and continues to upgrade all site utilities in anticipation of the first gold pour in December, 2012.

Key personnel

The company also announces that Stephen Zahony (age 70), vice-president of exploration and geology, will retire from the company on Oct. 15, 2012. Mr. Zahony has agreed to remain available as a consultant to Sutter. Mr. Zahony led the 2012 exploration drilling project at the Lincoln project, which met its three goals -- infill drilling to increase near-term gold resources, exploring the zone between the Lincoln and Comet segments of mineralization, and probing for extensions of gold mineralization north of the Comet resource area toward the Keystone zone. The company controls a contiguous 3.6-mile-long strike length along the trend of the Mother Lode gold system surrounding the project.

"We wish Steve well in his retirement and thank him for his valuable contributions as we work to bring the Lincoln mine project into production," said Dr. Baker. "He has helped all of us to understand the Mother Lode geology, and we are fortunate to move forward with a mine geology team led by Art Campo, whose experience will stand us in good stead as we begin production and continue to seek to expand our resource base at depth and on our adjacent landholdings."

The material in this news release has been reviewed by Matthew Collins, chief operating officer, a qualified person as defined in National Instrument 43-101.

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