South American Silver Announces $16 Million Financing With Asian Based High Technology Manufacturers and Investors

VANCOUVER, BRITISH COLUMBIA--(Marketwire - April 16, 2012) -

NOT FOR DISSEMINATION IN THE UNITED STATES OR THROUGH U.S. NEWSWIRES

South American Silver Corp. (TSX:SAC)(PINKSHEETS:SOHAF) today announced that it proposes to issue approximately 10 million units of the Company, on a committed private placement basis, at a price of $1.60 per Unit (the "Offering"), which represents a 6% premium to the 5 day volume weighted average trading price of the Company's common shares at the time the Toronto Stock Exchange (the "TSX") accepted notice of the transaction. Each Unit consists of one common share of the Company and one-half of one common share purchase warrant of the Company. Each whole warrant will be exercisable to purchase one common share of the Company for a period of 24 months from issuance at a price of $2.00.

The Offering is a strategic investment by a number of Asian based high technology investors, materials manufacturers, and indium/gallium end users from Taiwan, Hong Kong, Japan and Korea. The gross proceeds of the Offering will be approximately $16 million and would go toward the advancement of the Company's Malku Khota silver-indium-gallium project in Bolivia and Escalones copper-gold project in Chile and for general corporate purposes.

Greg Johnson, President & CEO of South American Silver Corp, stated, "This investment is an important step in facilitating the rapid advancement of one of the world's largest silver, indium and gallium projects. These Asian high technology manufacturers and investors see outstanding value and potential in the Company's projects, in particular, the large concentrations of the strategically important metals, indium and gallium, which are critical for their manufacturing of flat panel displays, LED lighting and thin film solar panels, among other applications. An estimated 60-70% of the world's current indium mining and smelting production supply is in mainland China. The Malku Khota project is anticipated to become an important new, long life, low cost, Western source of these metals. "

Mr. Johnson added, "There have been a number of new Asian investments in Bolivia, a country with vast mineral potential, and this complements the recently announced heads of state agreements between the government of Bolivia with China and South Korea to develop other high technology metals projects. With Malku Khota targeted to produce 10% or more of the global indium and gallium supply, the Company may review possible indium/gallium off-take or streaming-type opportunities as a source of project financing after completion of Pre-feasibility studies on the project."

Completion of the Offering will close upon receipt of regulatory approvals and is anticipated to be on or about 20 April 2012. The securities to be issued pursuant to the Offering will be subject to a four-month restricted resale period from the closing date. The Company shall be entitled to accelerate the exercise period of the Warrants, in the event that the common shares of the Company trade on the TSX at a price not less than $2.50 for a period of 10 consecutive trading days, to an exercise period ending at least 30 days from the date notice of such acceleration is provided to the Warrant holders.

About the Malku Khota Silver-Indium-Gallium Project

South American Silver's most advanced project is the Malku Khota silver-indium-gallium project located in the world-class silver and indium mining district of central Bolivia. Malku Khota is one of the world's largest silver, indium and gallium resources with a NI 43-101-qualified Indicated Resource of 255 million tonnes of mineralized material containing 230.3 million ozs of silver, 1,481 tonnes of indium and 1,082 tonnes of gallium at a grade of 28.7 g/t silver, 5.8 g/t indium and 4.3 g/t gallium (43.8 g/t silver equivalent), and an additional Inferred Resource of 230 million tonnes containing 140 million ozs of silver, 935 tonnes of indium, and 1,001 tonnes of gallium at a grade of 18.9 g/t silver, 4.1 g/t indium and 4.3 g/t gallium (33.0 g/t silver equivalent).

An updated Preliminary Economic Assessment study in May 2011 showed robust economics for a bulk-mineable heap leach operation with the potential to be one of the largest new silver, indium and gallium producing mines in development with over 13.2 million ounces of silver, 80 tonnes of indium and 15 tonnes of gallium production annually over the first 5 years. The project is road-accessible, with commercial scale natural gas and electricity nearby.

Pre-feasibility level engineering and metallurgical process work is underway to further optimize the project production levels and process flowsheet. In addition, exploration activities are underway on a planned 20,000 meter drill program that will include infill drilling to convert inferred resources to measured and indicated resources and eventually into reserves and to test further resource expansion at depth and between the two known deposits. To date, only about 30% of the known prospective mineralized host stratigraphy at Malku Khota has been drill tested.

Due to the bulk mineable and heap leachable nature of the deposit, there remains potential to continue to expand production levels beyond the 13.2 million ounces of silver per year level through further optimization of the resource and increases in overall mine throughput. An updated NI 43-101 Economic Assessment based on the work over the past year for Malku Khota is targeted for release in Q2-2012, with feasibility activities scheduled to begin in the second half of 2012.

Escalones Copper-Gold Project

The Escalones copper-gold project is located in the world-class central Chilean mining district which includes the nearby El Teniente deposit - the world's largest underground copper mine. The project is accessible by road and is approximately 100 kilometers south-east of Santiago. A newly defined Inferred Resource of 420 million tonnes of mineralized material contains 3.8 billion lbs of copper, 56.9 million lbs of molybdenum, 610,000 ozs of gold and 16.8 million ozs of silver at a grade of 0.41% copper, 0.05 g/t gold, 1.24 g/t silver and 61 ppm molybdenum using a 0.2% Cu Equivalent cut-off grade (see December 19th, 2011 News Release). This is a copper-equivalent content of 4.5 billion lbs of copper grading 0.49% based on approximate 3-year average metal prices as of December 2011.

A Phase II exploration program is underway with two core drills currently working on the site. Work will focus on understanding the scale of the system by testing both porphyry and replacement-style mineralized zones. Step out drilling will focus on known mineralized areas and test new targets based on the recently completed aerial ZTEM and magnetic surveys. The planned program will include 7,000 meters of drilling to complete a resource update in mid-2012. Initial engineering work including metallurgical testwork is planned to determine recovery of copper, gold, silver and molybdenum and concentrate characteristics for a Preliminary Economic Assessment study targeted for Q4-2012.

About South American Silver Corp.

South American Silver Corp. is a growth focused mineral exploration company creating value through the exploration and development of the Malku Khota (100%) project in Bolivia, one of the world's largest undeveloped silver-indium-gallium deposits, and the large-scale Escalones (100%) copper-gold project in Chile. The Company's approach to business combines the team's track record of discovery and advancement of large projects, key operational and process expertise, and effective community relations to increase shareholder value. The Company's shares are listed on the Toronto Stock Exchange under the symbol "SAC" and on the US OTC market as "SOHAF". Additional information related to South American Silver Corp. is available at www.soamsilver.com and on SEDAR at www.sedar.com

Forward-looking statements

Forward-looking statements look into the future and provide an opinion as to the effect of certain events and trends on the business. Forward-looking statements may include words such as "would", "advancement", "potential", "believe, "can", "develop", "move forward", "advance", "possible", "will", "anticipated", "planned", "prospective" and "targeted" and similar expressions. This release contains forward-looking statements, including statements regarding the proposed Offering and its timing and terms. These forward-looking statements are based on current expectations and various estimates, factors and assumptions and involve known and unknown risks, uncertainties and other factors. Information concerning mineral resource estimates may also be considered as forward-looking statements; as such information constitutes a prediction of what mineralization might be found to be present if and when a project is actually developed.

It is important to note that: Readers are cautioned not to place undue reliance on these statements as the Company's actual results, performance or achievements may differ materially from any future results, performance or achievements expressed or implied by such forward-looking statements if known or unknown risks, uncertainties or other factors affect the Company's business, or if the Company's estimates or assumptions prove inaccurate. Therefore, the Company cannot provide any assurance that forward-looking statements will materialize. Factors that could cause results or events to differ materially from current expectations expressed or implied by the forward-looking statements, include, but are not limited to, the receipt of necessary regulatory approvals for the Offering in a timely fashion or at all, possible variations in mineral resources, grade or recovery rates, metal prices; operating or capital costs; availability of sufficient financing to fund further required work in a timely manner and on acceptable terms; changes in project parameters as plans continue to be refined; availability of equipment; failure of equipment or processes to operate as anticipated; local community support, and political, regulatory, environmental and other risks of the mining industry and other risks more fully described in the Company's annual information form filed and publicly available on SEDAR at www.sedar.com. Although the Company has attempted to identify important factors that could cause actual results to differ materially from those contained in forward looking statements, there may be other factors that cause results to be materially different from those planned, estimated, forecasted, projected or expected. Readers are cautioned not to place undue reliance on the forward-looking statements contained in this press release. Subject to applicable laws, the Company assumes no obligation to update or revise any forward-looking statement, whether as a result of new information, future events or any other reason.

The material assumptions that were applied in making the forward looking statements in this release or referenced in this release include, but are not limited to: the accuracy of estimated mineral resources and the potential for delineation of additional resources through further exploration at the Escalones and Malku Khota projects; the accuracy of current interpretation of drill and other exploration results; and execution of the Company's existing plans or exploration and development programs for its properties, any of which may change due to changes in the views of the Company or if new information arises which makes it prudent to change such plans or programs.

Unless otherwise indicated, forward-looking statements in this release describe the Company's expectations as of April 16, 2012. This press release uses the terms 'measured resources', 'indicated resources' and 'inferred resources' which are terms recognized and required by Canadian regulations (under National Instrument 43-101 Standards of Disclosure for Mineral Projects), however, these terms are not defined terms under SEC Industry Guide 7 and normally are not permitted to be used in reports and registration statements filed with the United States Securities and Exchange Commission. Investors are cautioned not to assume that any part or all of the mineral deposits in these categories will be converted into reserves. In addition, 'inferred resources' have a great amount of uncertainty as to their existence, and economic and legal feasibility. It cannot be assumed that an inferred resource will be upgraded to a higher category. Under Canadian rules, estimates of inferred resources may not form the basis of feasibility or pre-feasibility studies, or economic studies except for preliminary economic assessment as defined under NI 43-101. Investors are cautioned not to assume that part or all of an inferred resource exists, or is economically or legally mineable.

This news release does not constitute an offer to sell or a solicitation of an offer to buy any of the securities in the United States of America. The securities have not been and will not be registered under the United States Securities Act of 1933 (the "U.S. Securities Act") or any state securities laws and may not be offered or sold within the United States or to U.S. Persons (as defined in the U.S. Securities Act) unless registered under the U.S. Securities Act and applicable state securities laws, or an exemption from such registration is available.