Two Employees Freed, South American Silver in Discussion With Bolivian Government and Indigenous Authorities

VANCOUVER, BRITISH COLUMBIA--(Marketwire - July 9, 2012) - South American Silver Corp. (TSX:SAC)(PINKSHEETS:SOHAF) today welcomed the confirmation that two of its Bolivian employees, Agustin Cardenas and Fernando Fernandez, and a local policeman have been set free. These are the last people to be freed following a series aggressive acts by a local faction supported by groups from outside the Malku Khota project area.

"Our primary concern has always been the safe return of the hostages to their families and South American Silver will ensure they receive the proper medical attention they deserve," said Greg Johnson, President and CEO of South American Silver.

On Sunday the Bolivian Labor Minister, Daniel Santalla, signed an agreement to secure the release of the final three detained individuals with the indigenous opponents to the project. As part of this agreement the opponents were seeking cancellation of the mining concession, however, the government minister acknowledged that this could be difficult due to the original decree giving South American Silver the rights to the project.

Also on Sunday, President Evo Morales and the Government Minister Carlos Romero agreed that a "prior consultation" among all indigenous communities in the project area would be needed to proceed to determine the direction of the project based on the consensus view of all communities.

At this time there has been no change in the status of the project concession. The Company is continuing to work with the government at all levels and with the local communities to agree on an approach to development that is inclusive of all communities in the project area and allows development of the Malku Khota project to its fullest potential.

As noted in earlier updates, Bolivian government authorities have previously stated that there will be a period of constitutionally mandated consultation with local indigenous communities before the project enters the extraction phase.

On May 28 the Mining Minister Mario Virreyra signed an accord with 43 out of 46 indigenous communities in the project area specifying that the state will not reverse the mining concession and stating that the company should continue exploration activities and that Bolivian authorities should provide increased police security in the region.

The vast majority of the indigenous groups in the project area have formally demonstrated their support for the project and understand the social and economic benefits to their communities that the development of a world class, modern mine at Malku Khota will bring and which will create with thousands of well-paying local jobs.

By contrast, the artisanal mining that has been centered near one of three villages in opposition to the project would provide little economic benefit to the 43 other indigenous communities in the project area and has been cited by the Bolivian Mines Minister as causing local environmental damage.

South American Silver has worked closely with the local indigenous communities over the past several years providing significant direct employment on project related jobs, as well as jointly developing programs with the communities to facilitate job training, education, agricultural enhancement and water management for long-term sustainable development.

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 a focus on community relations and sustainable development. Management has extensive experience in the global exploration and mining industry with much of that focused in Bolivia, Chile, Peru and Argentina. 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

This release contains forward-looking statements which look into the future and to the effect of certain events on the business. Forward-looking statements may include words such as "will", "shall", "seek" and "continuing" and similar expressions. Statements regarding the effects of the efforts of project opponents and supporters may also constitute forward-looking statements. These forward-looking statements are based on current expectations, factors and assumptions and involve known and unknown risks, uncertainties and other factors.

It is important to note that: Readers are cautioned not to place undue reliance on these statements as the actual events may differ materially from any future events 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 assumptions prove inaccurate. Therefore, the Company cannot provide any assurance that forward-looking statements will materialize. Although the Company has attempted to identify important factors that could cause actual events to differ materially from those contained in forward looking statements, there may be other factors that cause events to be materially different from those planned or expected. Factors that could cause events to differ materially from current expectations expressed or implied by the forward-looking statements, include, but are not limited to, changes in the attitudes of the Bolivian government and among local indigenous communities; changes in the political and economic climate in Bolivia; changes in the regulatory environment in Bolivia; and other risks of the mining industry. The assumptions made in developing the forward-looking statements include: continuing support for the Company by the Bolivian national government, by the provincial governor of Potosi and by the local indigenous communities that have signed comprehensive agreements and passed resolutions supporting the project and the adoption of a Mining Law consistent with the current draft Mining Law . 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 July 9, 2012.