South American Silver Corp. Announces Final Closing of $16 Million Financing with Asian Based High Technology Groups

VANCOUVER, BRITISH COLUMBIA--(Marketwire - May 7, 2012) -

NOT FOR DISSEMINATION IN THE UNITED STATES OR THROUGH U.S. NEWSWIRES

South American Silver Corp. (TSX:SAC)(PINKSHEETS:SOHAF) is pleased to announce that it has closed the final tranche of $9.6 million, of its $16 million private placement Offering (the "Offering") of 10 million Units of the Company announced 16 April 2012. The offering was priced at $1.60 per Unit, which represented a 6% premium to the 5 day volume weighted average trading price of the Company's common shares at the time the Toronto Stock Exchange (the "TSX") accepted notice of the transaction.

Each Unit of the Offering 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 until April 20, 2014 at a price of $2.00. The warrants will not be listed for trading.

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

Greg Johnson, President & CEO of South American Silver Corp, stated, "We are pleased with the strong interest from these Asian based high technology manufacturers and investors to facilitate the rapid advancement of one of the world's largest silver, indium and gallium projects. The Malku Khota project is anticipated to become an important new, long life, low cost, Western source of these strategic metals, which are critical for the manufacturing of flat panel displays, LED lighting and thin film solar panels. Bolivia is already one of the largest producers of indium outside of mainland China, supplying material to Japan, Korea and North America. With Malku Khota targeted to produce 10% 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 during the Feasibility process."

As compensation for services, the Company paid an agent a cash commission and granted the agent non-transferable compensation warrants (the "Compensation Warrants"). Each Compensation Warrant entitles the holder to acquire one common share and one-half of a common share purchase warrant at an exercise price of $1.60 per Compensation Warrant until October 20, 2013.

The common shares and warrants issued pursuant to the Offering, as well as the common shares issuable upon exercise of the warrants, and securities issuable upon exercise of the Compensation Warrants, are subject to a four-month restricted resale period, which expires on September 8, 2012. The Company shall be entitled to accelerate the exercise period of the warrants, in the event that the closing price of the common shares of the Company trading on the TSX exceeds $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 holders of warrants.

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 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 "advancement", "anticipated", "may" and "targeted" 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.

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 or 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 http://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.

Unless otherwise indicated, forward-looking statements in this release describe the Company's expectations as of May 7, 2012.

This news release does not constitute an offer to sell or a solicitation of an offer to buy any of the securities in the United States of America. The securities have not been and will not be registered under the United States Securities Act of 1933 (the "U.S. Securities Act") or any state securities laws and may not be offered or sold within the United States or to U.S. Persons (as defined in the U.S. Securities Act) unless registered under the U.S. Securities Act and applicable state securities laws, or an exemption from such registration is available.