South American Silver Vehemently Denies Recent Allegations Made by the Bolivian Government

VANCOUVER, BRITISH COLUMBIA--(Marketwire - Oct. 9, 2012) - South American Silver (TSX:SAC)(PINKSHEETS:SOHAF) is providing an update regarding certain recent statements made by the Bolivian Government ("Bolivia" or the "Government") related to South American Silver and the Malku Khota project. By Supreme Decree dated August 1, 2012, the Government expropriated the project by revoking the mining concessions held by Compañia Minera Malku Khota S.A. (CMMK). 100% of the shares of CMMK are indirectly held by South American Silver Limited, a Bermudan entity, which is a wholly owned subsidiary of South American Silver Corp. (collectively "South American Silver").

On Wednesday, October 3, 2012, Mario Virreira, the Bolivian Minister of Mines and Metallurgy, denied that Bolivia owed South American Silver any compensation whatsoever for the expropriation of CMMK's mining concessions. At a press conference on Friday, October 5, 2012, Virreira stated that the Government intends to conduct an investigation into alleged wrongdoing by South American Silver and commence legal action for purported damages to the State caused while operating, allegedly illegally, in the country. These statements have been echoed by Edgar Pinto, the newly installed President of the Bolivian State Mining Company (COMIBOL).

South American Silver denies all accusations by the Government which are patently false and have no factual basis. Bolivia's actions clearly violate South American Silver's rights under the international investment treaty between the United Kingdom and Bolivia as well as under Bolivian and international law. As previously announced (see SAC PR 12-13, August 2, 2012), South American Silver will vigorously exercise all of its rights, including through international arbitration, to obtain full compensation, including the fair market value of the Malku Khota project.

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 large scale Escalones copper-gold project in Chile and the realization of value from the Malku Khota project in Bolivia. 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 a focus on community relations and sustainable development. Management has extensive experience in the global exploration and mining industry. 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 "will", "intends", "creating", "realization" and similar expressions. This release contains forward-looking statements. 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.

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 risks of the mineral exploration industry which may affect the advancement of the Escalones project, including possible variations in mineral resources or grade; metal prices; availability of sufficient financing to fund further required work in a timely manner and on acceptable terms; timely receipt of required permits; availability of equipment and qualified personnel; failure of equipment or processes to operate as anticipated; changes in project parameters as plans continue to be refined; the political and economic climate in Bolivia including the attitudes and actions of the Bolivian government related to foreign investment in Bolivia; the non-pursuit by the Bolivian government of stated courses of action, the international arbitration process; and other risks more fully described in the Company's Annual Information Form filed and publicly available on SEDAR at www.sedar.com. The assumptions made in developing the forward-looking statements include: the availability of equipment and qualified personnel to advance the Escalones project; the timely receipt of required permits for Escalones; execution of the Company's existing plans and further exploration and development programs for Escalones, 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, the ability of the Company to realize value from its investments in Bolivia and that statements made by Bolivian government officials reflect the government's intentions. 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. Unless otherwise indicated, forward-looking statements in this release describe the Company's expectations as of October 9, 2012.