South American Silver Corp. Enters into an Agreement to Acquire High Desert Gold Corporation - Seite 3

The Arrangement also gives SASC's shareholders, immediately prior to the acquisition of HDGC, a potentially significant new benefit in the form of a Class B Share for each existing share of SASC. The holders of these new shares will collectively receive 85% of the net cash proceeds (after costs, including applicable taxes, and the third party funder's portion of any award or settlement) that is received from any arbitration award or settlement in favour of South American Silver Ltd. arising from the Bolivian government's expropriation of the Malku Khota project in 2012. A Preliminary Economic Assessment published in 2011 (see SASC NR11-03, dated 31 March, 2011) reported pre-tax NPV at a 5% discount rate of $704 million at "base case" silver price of $18.00/oz silver, increasing to a NPV5% of $1.536 billion at the "middle price case" of $25.00/oz silver.

Management of the combined company will be led by Ralph Fitch, as President and CEO, with a management team comprised of Matias Herrero (Chief Financial Officer), Randy Moore (EVP of Exploration - North America) and Felipe Malbran (EVP of Exploration - South America).

Details of the Arrangement

The proposed transactions will be carried out by way of a plan of arrangement under the Business Corporation Act (British Columbia). (the "BCBCA"). Prior to implementing the Arrangement, each of SASC and HDGC will become subject to the BCBCA via a continuance under corporate law, exporting from the Canada Business Corporations Act which currently governs each of SASC and HDGC.

Under the Arrangement, immediately prior to the exchange of the outstanding securities of HDGC for securities of SASC, each SASC shareholder will exchange each of its SASC common shares for one SASC Class A Share and one SASC Class B Share. The Class A Shares will carry voting, dividend and liquidation rights similar to SASC's current common shares, while the Class B Shares will be non-voting and non-participating in regards to dividend and liquidation rights.

Post Arrangement, each pre-Arrangement outstanding SASC option and warrant will be exercisable to acquire one SASC Class A Share and one SASC Class B Share instead of a common share at the same exercise price.

HDGC shareholders (other than SASC) will be issued a total of 19.46 million Class A Shares in exchange for their HDGC common shares, representing approximately 14.4% of the Class A Shares outstanding after the Arrangement. All outstanding HDGC's options and warrants will be replaced or assumed by SASC and exercisable to acquire SASC Class A Shares with the number of SASC Class A Shares and exercise price proportionately adjusted to reflect the consideration to be received by the HDGC shareholders pursuant to the Arrangement.