DISCOVERY

This is an exciting period in the development of South American Silver Corp. With a diverse portfolio of two 100% owned large scale assets in the early stages of exploration and resource definition, South American Silver is in a position to offer exceptional investment value to shareholders.

Malku Khota

Malku Khota is South American Silver’s most advanced 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 and indium resources with an NI 43-101-qualified indicated resource of 230.3 million ozs silver and 1,481 tonnes of indium and an additional inferred resource of 140 million ozs silver and 935 tonnes of indium.  Recently a new highly mineralized silver-indium zone was discovered, demonstrating the potential for the Malku Khota project to grow even larger. Current drilling is ongoing on the project with the objective to increase the level of confidence in the current resource and to expand the resource both laterally and at depth. As we advance the project through to the production stage, Malku Khota is positioned to be one of the top primary silver and indium producing mines generating more than 13.3 million ounces of silver and 80 tonnes of indium per year on average in the first 5 years of production.

An updated Preliminary Economic Assessment was completed in March 2011 and showed robust economics for a bulk-mineable heap leach operation with the potential to be one of the largest new silver and indium producing mines currently in development. Disseminated silver and indium mineralization at Malku Khota begins at the surface and remains open to further expansion laterally and at depth in a regionally extensive sandstone unit that spans over the entire property. Only about 30% of potential mineralized horizon has been tested to date. The project is road-accessible, with commercial power within 15 kilometers of site. Since completion of an initial PEA study in March 2009, South American Silver’s focus has been on in-fill and expansion drilling at Malku Khota, and ongoing metallurgical and process-related test work to refine the leach recovery characteristics of the silver, indium and associated lead, zinc and copper mineralization in both heap leach and milling approaches. The test work to date supports the amenability of heap leaching and/or milling of the mineralized material at Malku Khota applying the same type of process as used in copper oxide SX-EW heap leach mining or by the indium refineries that process by-product indium from zinc smelting. More detailed engineering studies are underway that will further refine metallurgical recoveries anticipated by representative mineralized zones throughout the deposit and define the potential location of mine facilities, infrastructure required to support the operation and a plan for implementation utilizing local resources as much as possible. This information will be the basis for a number of optimization studies that will be applied to a range of operating scenarios combining different throughput and production rates and leaching processes to be incorporated in the updated Economic Assessment.

Escalones

The Escalones property lies within the well-known central Chilean porphyry copper belt that runs north-south through Chile in the central Andes Mountains. It is located approximately 100 km southeast of Santiago and 35 kilometers due east of El Teniente, the world's largest underground copper mine. The project has excellent infrastructure, including road access and a gas pipeline that crosses the 70 square kilometer property.

The Escalones project hosts a four-square-kilometer area of hydrothermal alteration with coincident geophysical anomalies that has demonstrated significant grades of copper, gold and silver in replacement-style "skarn” mineralization hosted in limestones and in porphyry related mineralization. Road cuts across surface exposures of this mineralization includes 116 meters of 1.4% copper, 0.57 g/t gold and 21 ppm molybdenum (1.83% copper equivalent¹) and drill intersections including 75 to 100 meters wide zones grading over 1% copper.

To date, only limited drill testing has been completed on the property with mineralization open to further expansion laterally and at depth. The extensive scale of the replacement-style mineralization near surface indicates that it may be related to a significant copper porphyry deposit at depth. A single step-out drill hole to test a potential porphyry target under glacial till cover intersected 293 meters of continuous porphyry style mineralization grading 0.36% copper with 0.1 g/t gold (0.42% copper equivalent¹) and included an intersection of 91 meters grading 0.5% copper with 0.1 g/t gold.

The start of a Phase-II exploration program at Escalones has been announced following the completion of Phase I program earlier in the year. The exploration program will include up to 7,000 meters of initial drilling, including both step-out testing of the known mineralized zones and testing new targets based on geochemistry and geophysics including the potential to define a large porphyry copper-gold deposit.We anticipate reporting the first independent NI 43-101-compliant resource estimate defined by the first 30 historic and recent drill holes in the project by the end of 2011.