U.S. Markets closed

South American Silver Announces New Copper Oxide Zone at the Escalones Project in Chile and Plans for Resource Expansion Drilling

VANCOUVER, BRITISH COLUMBIA--(Marketwire - Sep 19, 2012) - South American Silver Corp. (SAC.TO)(SOHAF) (the "Company") is pleased to announce the results of a 5 hole diamond drilling program and the interpretation of the ZTEM Conductivity and Magnetic geophysical surveys at the Escalones copper-gold project, approximately 100 km southeast of Santiago, Chile and 35 km east of El Teniente, the world''s largest underground copper mine. Escalones, as previously announced and supported by a NI 43-101 technical report, contains a 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 19, 2011 News Release). The detailed NI 43-101 Technical Report is available on SEDAR under the Company''s profile and on the Company''s website at www.soamsilver.com.

New Copper Oxide Zone at Escalones

Diamond drill hole ES-35, located 300 metres E of ES-24, intersected 71 metres of near surface, oxide copper mineralization averaging 0.64% copper equivalent ("CuEq"). This near surface mineralization correlates with a ZTEM conductivity anomaly which is approximately 500 metres wide and at least one km long. Drill testing, starting when the snow clears in November, will further test this target. ZTEM is a geophysical tool that helps to identify mineralized areas that are conductive. Results from diamond drill hole ES-35 are shown in the following table:

Drill Hole From
cum L
Gold g/t Silver
Gallium g/t Indium g/t Copper Eq%
ES-35 14.2 85 70.8 0.010 0.17 0.61 23 16 6 0.64

Diamond drill hole ES-35 also intersected high grade skarn mineralization at 456 metres intercepting 4.5 metres of copper mineralization averaging 4.32% CuEq within a 9.25 metres zone averaging 2.39% CuEq. A copper skarn is a carbonate rock that has been "cooked" and mineralized by the heat and fluids from nearby copper bearing intrusions. Examples of copper porphyry plus skarn deposits include the well-known Bingham Canyon Mine in Utah and the Twin Buttes Mine in Arizona.

The skarn at Escalones has now been traced by drilling approximately 1.7 km horizontally and 1.1 km vertically. A large magnetic anomaly is associated with much of the known skarn mineralization and this anomaly extends several hundred meters further to the north of the drilled area, at least 500 meters to the south and approximately 500 metres further east. The anomaly also extends to a depth of several km, many hundreds of metres below the level of current drilling.

Drill Hole From (m)   To (m) cum L (m) Gold g/t Silver g/t Copper % Molybdenum g/t Gallium g/t   Indium g/t Copper Eq%
ES-35 456.3   460.8 4.5 0.14 31.5 3.81 6 11   69 4.32
ES-35 456.3   465.5 9.3 0.07 17.2 2.11 5 7   37 2.39

Ralph Fitch, Executive Chairman, stated "This is the first time we have located a good thickness of near surface copper oxide mineralization at Escalones. The importance of this type of mineralization is that it is often the least expensive type of copper to recover because it is typically heap leachable. If future drilling shows that this zone is extensive it will be an important new body of mineralization that is not in the present resource. This new zone combined with that found on the west side of the property in holes ESC-26 (46m@0.53% copper) and ESC-28 (34m@0.52% copper) represents an important part of the mineralized system found to date at Escalones because of its likely low cost leachability. Also, the deep skarn intercept is important, both because of its grade and also because it demonstrates the huge column of copper mineralization present at Escalones which extends from surface to depths of greater than one kilometer. Our upcoming drill program will start to convert this vast column of mineralization into a resource."

Additional Drilling Results

Of the five holes drilled only two reached their planned depth, two were not completed due to hole collapse and the third (ES-35) was not completed due to the need to evacuate the location after heavy snow.

ES-31 and ES-32, located on the south side of the Meseta as shown in the following link, were geological holes drilled to locate porphyry-related to the skarn. They both penetrated approximately 1,000 metres of mineralization typically in the 0.1 to 0.3% copper range with occasional better intervals such as 33 metres of 0.7% CuEq in DDH ES-31 and 46 metres of 0.5% CuEq in ES-32 in the top 100 metres of the hole. ES-32 also had long intervals of 100-400 g/t molybdenum, clearly showing the porphyry copper-molybdenum association.


Holes ES-33 and 34 did not reach their depth targets of 1,000 metres, designed to test the area stratigraphically below the magnetite skarn intersected by prior drilling. These holes were collared in skarn and so did penetrate interesting skarn mineralization, including an interval of copper-zinc mineralization in ES-33.

Drill Hole From
  cum L
Zinc % Mo* g/t Gallium g/t Indium g/t Copper Eq%**
ES-31 687   720   33 0.009 0.9 0.59   31 15.5 0.98 0.69
ES-32 29.4   38.7   9.3 0.045 0.1 0.46 - 162 14.3 1.58 0.54
ES-32 39.1   85.5   46.4 0.040 3.2 0.42 - 83 13.8 3.95 0.53
ES-32 89.15   97.3   8.15 0.042 0.2 0.38 - 122 7.0 0.5 0.45
ES-33 181.5   210   28.5 0.018 1.8 0.40 1.1 1 1.0 41.3 0.72
including 181.5   192   10.5 0.041 3.7 0.83 1.5 0.9 0.9 50.3 1.28
ES-34 24   34.5   10.5 0.038 4.0 0.37 - 92 22.2 3.4 0.5
ES-34 187.1   215   27.9 0.105 0.1 0.33 - 117 18.8 28.4 0.43
ES-34 273.8   305.5   31.7 0.102 0.9 0.52 - 43 23.4 38.3 0.61
**this does not include the value of the gallium and indium

Phillip Brodie-Hall, President and CEO stated "Drilling continues to show the giant size of the Escalones copper system and we are preparing to have a substantial drill program in the November-April window in which we plan to expand the present resource, provide material for further metallurgical testing and support the development of a substantive Preliminary Economic Study in the fall of next year.

Metallurgical Test Program

A program of metallurgical testing has been started. These tests will focus on recovery of the copper, gold, silver and molybdenum by conventional flotation and conventional sulphuric acid leaching (typically heap-leaching). The Company will also test its patented acid chloride leach technology developed at Malku Khota in Bolivia to evaluate whether this patented technology can be used to recover the gallium and indium that occur in some of the Escalones mineralization. The highest individual assays of gallium and indium found on the property to date include 54 g/t gallium in hole ES-35 and 104 g/t indium in hole ES-34.

Upcoming Drilling Campaign

The Company plans to commence a four diamond drill rig program starting when the snow clears, likely in November. Up to 30 holes are planned to confirm and expand the resource in the 3 categories reported previously, oxide/sulphide, skarn and porphyry. The results from this drilling will be combined with earlier results and an updated resource will be developed and reported in compliance with NI 43-101.

The qualified person for this press release is Felipe Malbran, Executive VP of Exploration, South American Silver Corp., and he has reviewed and approved the content of this press release.

The true thickness of the intercepts reported is not known at this time.

Magnetic susceptibility anomalies are only an indication of the presence of the skarn mineralization and the reader should not assume that "ore grade" mineralization will be intersected.

ZTEM conductivity anomalies are only an indication of the presence of mineralization and the reader should not assume that "ore grade" mineralization will be intersected.

Samples were analyzed by Andes Analytical Assay Laboratory located in Santiago, Chile. Gold was analyzed using fire assay and the AA (Atomic Absorption) method while silver, copper, gallium, indium, molybdenum and 38 additional elements were analyzed by ICP AES HF43 method with a four-acid digestion. The copper equivalent has been calculated using the following prices: copper $3.50/lb, gold $1,600/troy oz, silver $30.00/troy oz, molybdenum $11.00/lb, lead $0.90/lb and Zinc $0.90/lb. Values have not been adjusted for metallurgical recoveries.

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", "often", "typically", "expand", "plan", "likely", "future", "ahead", "creating", "realization" and similar expressions. Information concerning mineral resource estimates and the interpretation of exploration results may also be considered forward-looking statements as such information constitutes a prediction of the mineralization that may be present at the project. 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 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 and the ability of the Company to realize value from its investments in Bolivia. 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 September 19, 2012.