South American Silver Advances Escalones and Malku Khota Projects

Drilling Underway at Escalones; Updated Economic Assessment in Q2 at Malku Khota

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VANCOUVER, BRITISH COLUMBIA--(Marketwire -02/27/12)- South American Silver Corp. (TSX: SAC.TO - News)(Pinksheets: SOHAF.PK - News) is progressing the exploration and development programs that are now underway at both the Escalones copper-gold and Malku Khota silver-indium projects with 27,000 meters of combined drilling planned at both projects along with engineering and metallurgical test work.

Highlights:

 

--  Escalones copper-gold project NI 43-101 technical report now filed on
    newly defined Inferred Resource of 420 million tonnes of mineralized
    material containing 3.8 billion lbs of copper, 56.9 million lbs of
    molybdenum, 610,000 ozs of gold and 16.8 million ozs of silver using a
    0.2% Cu Equivalent cut-off grade (see December 19th, 2011 News Release).
    The detailed NI 43-101 Technical Report is now available on SEDAR and on
    the Company's website at www.soamsilver.com.
--  Escalones drilling currently underway for Phase II exploration program
    with approximately 7,000 meters of drilling planned into Q2-2012.
--  Escalones resource update targeted for mid-2012 with Preliminary
    Economic Assessment Q4-2012.
--  Malku Khota exploration program underway to support a planned 20,000
    meters of in-fill and expansion drilling.
--  Malku Khota Pre-feasibility level engineering work in progress focused
    on optimization and production level expansion opportunities with an
    updated Economic Assessment study targeted for release Q2-2012.
    Feasibility activities are 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. South American Silver has just filed a detailed NI 43-101 technical report for the Escalones resource estimate in February 2012.

The 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.

The Escalones deposit remains open to expansion laterally and down dip with 90% of the current resource hosted in copper, gold and silver replacement-style mineralization, and one drill hole testing porphyry-style mineralization. Initial interpretation of a ZTEM and aeromagnetic survey shows several large areas of untested conductivity anomalies which may represent areas of potential additional sulfide mineralization related to both replacement style and porphyry mineralization. 2D and 3D modeling and interpretation of these geophysical targets is in progress.

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.

Updates on Escalones will be provided as drill results and geophysical interpretations are completed.

Malku Khota Silver-Indium-Gallium Project

South American Silver's more advanced project is the Malku Khota silver-indium-gallium project located in the world-class silver mining district of central Bolivia, approximately 200 kilometers north of Potosi. 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 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. These studies have looked at increasing overall scale and potentially including a milling scenario for higher grade material that leaches better when milled. An updated NI 43-101 qualified Economic Assessment study based on the work over the past year for Malku Khota is targeted for release in Q2-2012. In addition, exploration activities are underway to support a planned 20,000 meter drill program. With the typical conclusion of the rainy season in February, drill roads and drill pads are being developed with drilling planned to start on the project in March. This drill program 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. The 2012 drill program will also include drilling to test several additional high-priority, near surface targets based on surface sampling and geophysics.

Due to the bulk mineable and heap leachable nature of the deposit, there remains excellent potential to continue to expand production levels beyond the 13.2 million ounces of silver per year level in the 2011 Economic Assessment study through further optimization of the resource and increases in overall mine throughput. Current optimization studies are targeting expansion of annual silver production toward 18 to 20 million ounces per year as part of the updated Economic Assessment and would make Malku Khota one of the largest producing silver mines in the world.

Over the past year South American Silver has significantly broadened its community relations activities and the Company has entered into Impact and Benefit-type agreements with local indigenous communities to facilitate local economic and business development through the various stages of project implementation. The project contributes significantly to the local economy and it is estimated that the construction phase would likely create as many as 1,000 new jobs in the region with over 400 full time workers directly employed during mine operations. Feasibility and baseline environmental work is planned to begin in the second half of 2012. The Company anticipates continuing to build on its community relations initiatives to support the feasibility and permitting stages in 2012 and 2013.

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. 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

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 "plans", "intends", "anticipates", "should", "estimates", "expects", "believes", "indicates", "suggests", "targeted", "scheduled", "will" and "may" 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. Information concerning mineral resource estimates and the interpretation of ZTEM and aeromagnetic surveys results may also be considered as a forward-looking statement; 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, possible variations in mineral resources, grade, metal prices; 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: statements regarding 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 programs for its properties, either 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.

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 February 27, 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.

Contact:

South American Silver Corp.
Investor Relations
604.681.6926 or Toll Free: 1.855.681.6926
www.soamsilver.com

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