South American Silver Enters Into Arbitration Costs Funding Agreement

VANCOUVER, BRITISH COLUMBIA--(Marketwired - May 28, 2013) - South American Silver Corp. (TSX:SAC) (OTCQX:SOHAF) (the "Company") is pleased to announce that on May 23, 2013 the Company entered into an agreement with a third party funder (hereinafter the "Fund") pursuant to which the Fund will cover South American Silver's future costs and expenses related to the international arbitration proceedings against the Plurinational State of Bolivia for the expropriation of the Malku Khota project. The funding is on a non-recourse basis and includes costs and expenses of the enforcement of any award rendered by the arbitral tribunal. No broker has acted in the transaction.

The Fund specializes in the funding of international arbitration proceedings and in providing assistance in connection with the enforcement of arbitration awards.

South American Silver continues to have control over the conduct of the international arbitration proceedings and to have the right to settle with Bolivia, discontinue proceedings, pursue the proceedings to trial and take any action it considers appropriate to enforce any resulting judgment or award.

Under the terms of the privileged arbitration funding agreement, the Company has given certain warranties and covenants to the Fund and has provided security for its obligations. In consideration for the funding, the Company has agreed to pay to the Fund a portion of any recoveries received pursuant to the arbitration proceedings or any settlement with Bolivia.

Phillip Brodie-Hall, President and CEO of South American Silver said, "This is a significant milestone for South American Silver and is very good news for our shareholders. The fact that a large and respected international investment fund is prepared to put its money at risk to support our case speaks volumes for the validity and value of our claim against Bolivia. This agreement provides us with the funds we need to pursue our case against Bolivia, at the same time freeing-up cash to allow us to actively invest in our core business of acquiring, exploring and developing quality mineral projects."

Details of the Company's dispute with the Bolivian Government can be found in the Company's news releases dated October 23, 2012, December 12, 2012, and April 30, 2013. The aforementioned information is available on www.sedar.com or on the Company's website www.soamsilver.com

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, the pursuit of new opportunities, 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 Limited., owns one hundred per cent of the outstanding shares of Compañía 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 OTCQX as "SOHAF". 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 "continue", "will", 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, non-compliance with the terms of the litigation funding agreement; the political and economic climate in Bolivia including the attitudes and actions of the Bolivian government related to foreign investment in Bolivia and the response of the Bolivian government to the filing of the Notice of Arbitration; the advancement of the international arbitration process in a customary manner; the outcome of the international arbitration process; the 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, timely receipt of required permits, availability of equipment and qualified personnel, failure of equipment or processes to operate as anticipated and changes in project parameters as plans continue to be refined; 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 timely receipt of required permits for Escalones; the availability of equipment and qualified personnel to advance the Escalones project and 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 pursuant to the international arbitration process; the advancement of the international arbitration process in the customary manner; compliance by the parties with the terms of the litigation funding agreement, and the availability of new attractive exploration targets at a cost acceptable to the Company. 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 28, 2013.