Agreement On Peruvian Projects $2 Million Exploration Program Funded

TORONTO, ON - Caracara Silver Inc. reported that the Company has signed an option agreement with Inversiones Collodi SAC (IC) with respect to Caracara's Peruvian exploration properties. IC is a private Peruvian mineral exploration and development company based in Lima.

Under the terms of the agreement, IC will have the right to earn a 65% interest in Caracara's concessions by making exploration expenditures totalling US$12.5 million over a four-year period. In addition, IC will make cash payments to Caracara's wholly-owned affiliate company in Peru, totalling $1.85 million plus VAT taxes. Caracara has received the first $250,000 payment owing.

"We are bringing together Caracara's advanced stage silver-lead-zinc projects such as Princesa with IC's strong financing capabilities and in depth expertise in operating in Peru's mining industry", Nick Tintor, President and CEO of Caracara commented.

Caracara and IC are planning a 2013 exploration program which will include 6,000 metres of drilling as part of a $2.0 million exploration budget. The first phase of this program is expected to this month with the start of a 3,000-metre drill program at the Princesa project.

Princesa is located 850 kilometres south east of Lima in Puno Province and hosts a 43-101 compliant resource estimate totalling 4.6 million tonnes in the inferred category, grading 90.88 grams silver per tonne and 1.69% zinc and 1.61% lead. Princesa remains open along strike and at depth.

The second part of the program, including 2,000 metres of drilling, will focus on the Pilunani zinc-lead project located 20 kilometres southeast of the Princesa project. Pilunani is a high priority target with potential for hosting near surface zinc-lead mineralization.

Drilling completed by previous operators intersected widespread zinc and lead mineralization associated with a stratabound manto type deposit hosted in Permian limestones and sediments including polymictic breccias.

The Parcuyo project, located approximately 28 kilometres northwest of the Princesa project, is an early stage silver-lead-zinc prospect that will be tested by a 1,000-metre drill program later this year. The target at Parcuyo has been defined by surface mapping and sampling over a 200-metre by 100-metre area.

Mineralization is hosted by diatreme clastic breccias and includes high grading grab samples such as 28% zinc and 18.8% lead and 16% zinc and 12.6% lead. Parcuyo has never been drill tested.