Mr. Greg Johnson reports

SOUTH AMERICAN SILVER ANNOUNCES $16 MILLION FINANCING WITH ASIAN BASED HIGH TECHNOLOGY MANUFACTURERS AND INVESTORS

South American Silver Corp. proposes to issue approximately 10 million units of the company, on a committed private placement basis, at a price of $1.60 per unit, which represents a 6-per-cent premium to the five-day volume-weighted average trading price of the company's common shares at the time the Toronto Stock Exchange accepted notice of the transaction. Each unit consists of one common share of the company and one-half of one common share purchase warrant of the company. Each whole warrant will be exercisable to purchase one common share of the company for a period of 24 months from issuance at a price of $2.

The offering is a strategic investment by a number of Asian high-technology investors, materials manufacturers and indium/gallium end-users from Taiwan, Hong Kong, Japan and Korea. The gross proceeds of the offering will be approximately $16-million and would go toward the advancement of the company's Malku Khota silver-indium-gallium project in Bolivia, Escalones copper-gold project in Chile and for general corporate purposes.

Greg Johnson, president and chief executive officer of South American Silver, stated: "This investment is an important step in facilitating the rapid advancement of one of the world's largest silver, indium and gallium projects. These Asian high-technology manufacturers and investors see outstanding value and potential in the company's projects, in particular the large concentrations of the strategically important metals, indium and gallium, which are critical for their manufacturing of flat-panel displays, LED lighting and thin-film solar panels, among other applications. An estimated 60 to 70 per cent of the world's current indium mining and smelting production supply is in mainland China. The Malku Khota project is anticipated to become an important new long-life, low-cost Western source of these metals."

Mr. Johnson added: "There have been a number of new Asian investments in Bolivia, a country with vast mineral potential, and this complements the recently announced heads-of-state agreements between the government of Bolivia with China and South Korea to develop other high-technology metals projects. With Malku Khota targeted to produce 10 per cent or more of the global indium and gallium supply, the company may review possible indium/gallium off-take or streaming-type opportunities as a source of project financing after completion of prefeasibility studies on the project."

Completion of the offering will close upon receipt of regulatory approvals and is anticipated to be on or about April 20, 2012. The securities to be issued pursuant to the offering will be subject to a four-month restricted resale period from the closing date. The company shall be entitled to accelerate the exercise period of the warrants in the event that the common shares of the company trade on the Toronto Stock Exchange at a price not less than $2.50 for a period of 10 consecutive trading days to an exercise period ending at least 30 days from the date notice of such acceleration is provided to the warrantholders.

About the Malku Khota silver-indium-gallium project

South American Silver's most advanced project is the Malku Khota silver-indium-gallium project located in the world-class silver and indium mining district of central Bolivia. Malku Khota is one of the world's largest silver, indium and gallium resources with an NI 43-101-qualified indicated resource of 255 million tonnes of mineralized material containing 230.3 million ounces of silver, 1,481 tonnes of indium and 1,082 tonnes of gallium at a grade of 28.7 grams per tonne silver, 5.8 grams per tonne indium and 4.3 grams per tonne gallium (43.8 grams per tonne silver equivalent), and an additional inferred resource of 230 million tonnes containing 140 million ounces of silver, 935 tonnes of indium and 1,001 tonnes of gallium at a grade of 18.9 grams per tonne silver, 4.1 grams per tonne indium and 4.3 grams per tonne gallium (33.0 grams per tonne silver equivalent).

An updated preliminary economic assessment study in May, 2011, showed robust economics for a bulk-minable 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, 80 tonnes of indium and 15 tonnes of gallium production annually over the first five years. The project is road accessible, with commercial-scale natural gas and electricity nearby.

Prefeasibility-level engineering and metallurgical process work are under way to further optimize the project production levels and process flow sheet. In addition, exploration activities are under way on a planned 20,000-metre drill program that 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 per cent of the known prospective mineralized host stratigraphy at Malku Khota has been drill tested.

Due to the bulk-minable and heap-leachable nature of the deposit, there remains potential to continue to expand production levels beyond the 13.2-million-ounce-of-silver-per-year level through further optimization of the resource and increases in overall mine throughput. An updated NI 43-101 economic assessment based on the work over the past year for Malku Khota is targeted for release in second-quarter 2012, with feasibility activities 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 kilometres southeast of Santiago. A newly defined inferred resource of 420 million tonnes of mineralized material contains 3.8 billion pounds of copper, 56.9 million pounds of molybdenum, 610,000 ounces of gold and 16.8 million ounces of silver at a grade of 0.41 per cent copper, 0.05 gram per tonne gold, 1.24 grams per tonne silver and 61 parts per million molybdenum using a 0.2-per-cent-copper-equivalent cut-off grade (see Dec. 19, 2011, news release). This is a copper-equivalent content of 4.5 billion pounds of copper grading 0.49 per cent based on approximate three-year average metal prices as of December, 2011.

A phase II exploration program is under way 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 metres of drilling to complete a resource update in mid-2012. Initial engineering work including metallurgical test work is planned to determine recovery of copper, gold, silver, molybdenum and concentrate characteristics for a preliminary economic assessment study targeted for fourth-quarter 2012.

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