Mr. Greg Johnson reports

SOUTH AMERICAN SILVER FILES ECONOMIC ASSESSMENT AND RESOURCE ESTIMATE REPORT AND ANNOUNCES APPOINTMENT OF VP OPERATIONS

South American Silver Corp. has filed the detailed NI 43-101 technical report for the preliminary economic assessment on its 100-per-cent-owned Malku Khota silver-indium project. The full report is available on the company's website and on SEDAR.

Economic assessment highlights

• Updated Malku Khota economic assessment study more than doubles mine production over previous studies for the first five years to 13.2 million ounces at a cash cost of $2.94 per ounce net of byproduct credits at "base case" metal prices putting it in the lower quartile of producer costs.
• Annual production also doubled for indium to 80 tonnes per year with first production estimates for gallium at 15 tonnes per year.
• Pretax net present value (NPV) at a 5-per-cent discount rate is $704-million and internal rate of return (IRR) of 37.7 per cent at "base case" metal prices is $18.00 per ounce silver and $500 per kilogram indium, increasing to an NPV 5 per cent of $1.536-billion and IRR to 64.3 per cent at "middle price case" of $25.00 per ounce silver, and to an NPV of 5 per cent of $2.571-billion at the "recent price case" of $35 per cent silver.
• Cash flows for the first five-years increase to average $185-million per year at the base case, to $287-million per year at the middle case and to $430-million per year for the recent price case.
• Updated resource estimate expands measured and indicated resources 60 per cent to 230 million ounces of silver with an additional Inferred resource of 140 million ounces of silver.
• Two thousand ten drill program successfully confirms the geologic model with over 80 per cent of the life-of-mine silver resources classified as the measured and indicated category in the pit model.
• During the construction phase approximately 1,000 new jobs would be created in the region with over 400 employees likely during operations.
• Budget of $16-million approved for 2011 with prefeasibility activities beginning in the second quarter.

The company has appointed James Mallory as vice-president of operations and social responsibility. Mr. Mallory brings over 33 years of mining industry experience in large-scale mine management, operations and construction in North and South America. Most recently, Mr. Mallory was vice-president at Silver Standard Resources working with its start-up Pirquitas silver mine in Argentina, as well as at its advanced development projects in Peru and Mexico. Prior to that Mr. Mallory held management positions in operations and sustainable development with Barrick Gold (Placer Dome) and NovaGold.

"We welcome Mr. Mallory to the South American Silver senior management team and believe his experience in mine operations, construction and implementation of community relations programs, particularly in Latin America, will contribute greatly to the successful growth of the company," stated Greg Johnson, president and chief executive officer. "With the completion of this positive economic assessment on the Malku Khota project, the company is moving into prefeasibility study activities for the remainder of 2011 and into feasibility in 2012. The economic assessment shows the project has the potential to become one of the largest new primary silver producing mines in the world at over 13.2 million ounces of silver per year and would also be one of the largest producers of the high-technology metals, indium and gallium. At conservative base-case metal price assumptions of $18 per ounce silver, the project shows robust economics with cash flows, project valuations and rates of returns all considerably higher than previous studies, highlighting the value of this long-life asset."

Qualified persons

This press release was prepared under the supervision of South American Silver's NI 43-101 qualified persons Ralph Fitch, executive chairman, and Felipe Malbran, PGeo, vice-president of exploration. Qualified persons for the NI 43-101 technical report for the updated PEA and resource estimate include: Mr. Fitch -- South American Silver, Mr. Malbran, PGeo -- South American Silver; Allan Armitage, PhD, PGeo -- GeoVector Management Inc.; Pierre Desautels, PGeo -- AGP Mining Consultants Inc.; Gordon Zurowski, PEng -- AGP Mining Consultants Inc.; and William Pennstrom -- Pennstrom Consulting Inc.

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