South American Silver Notifies Bolivian Government of an Investment Dispute Over the Expropriation of Malku Khota Mining Concessions

VANCOUVER, BRITISH COLUMBIA -- (Marketwire) -- 10/23/12 -- South American Silver Corp. (TSX: SAC)(PINKSHEETS: SOHAF) announced today that its wholly-owned subsidiary, South American Silver Limited, has delivered a formal letter to the Plurinational State of Bolivia notifying it of an investment dispute between South American Silver and Bolivia. The dispute has arisen as a result of acts of the Government of Bolivia including the issuance of Supreme Decree No.1308 on August 1, 2012. The Decree revoked mining concessions held by Compania Minera Malku Khota S.A. (CMMK), a wholly-owned subsidiary of South American Silver Limited.

South American Silver Limited is a protected investor under the Bilateral Investment Treaty between the Government of the United Kingdom and the Government of Bolivia, and the actions of the Bolivian Government are in violation of that Treaty and of international law. Notification of the investment dispute triggers a six-month cooling-off period during which the disputing parties may negotiate a settlement. If settlement cannot be reached within the cooling-off period, South American Silver intends to file for international arbitration under the Arbitration Rules of the United Nations Commission on International Trade Law (UNCITRAL) claiming full compensation based on fair market value of the Malku Khota project.

Phillip Brodie-Hall, President and CEO of South American Silver said, "We had made significant investments in Bolivia leading to the discovery of the Malku Khota silver-indium gallium deposit to which we added substantial value through the application of our exploration expertise and our unique processing technology. It is most unfortunate that development of the project has been cut short by the nationalization of our concessions but we are confident that the international arbitration process gives us the means to recover the full value of our project."

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. South American Silver Limited is a company incorporated in the Bermuda Islands, an overseas territory of the United Kingdom, which through its wholly owned Bahaman subsidiaries: Malku Khota Ltd, G.M. Campana Ltd. and Productora Ltd., owns one hundred per cent of the outstanding shares of Compania Minera Malku Khota S.A., a Bolivian company, holder of the Malku-Khota mining concessions until their nationalization by the Bolivian Government. 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", "intends", "creating", "realization" 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.

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 pursuit by the Bolivian government of stated courses of action, 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, the ability of the Company to realize value from its investments in Bolivia and that statements made by Bolivian government officials reflect the government's intentions. 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 October 23, 2012.

Contacts:

South American Silver Corp.

Phillip Brodie-Hall

Chief Executive Officer

604-681-6926 or 1-855-681-6926 Toll Free


South American Silver Corp.

Robert Gill

Investor Relations

604-681-6926 or 1-855-681-6926 Toll Free