The company did not disclose the name of the lenders, but said each loan is repayable on demand, provided that the lender will not make the demand before 6 months after the date of the loan.
Interest is payable quarterly at a rate of prime plus 2% per year. Interest can be paid through common shares, Southern Silver said, at its choice.
The loan can also be repaid through common shares if the lender makes demand for repayment, and Southern Silver is unable to pay in cash.
As addition consideration, the company has agreed to give each lender a bonus, giving a total of 96,000 bonus shares to both lenders at a price of 5 cents each.
The loan agreements are still subject to the approval of the TSX Venture Exchange.
In August, Southern Silver reported that drilling at its Cerro Las Minitas project in Durango State, Mexico extended the depth projection of mineralization at the Blind Zone deposit.
The company revealed drill results from two core holes that tested the Blind Zone deposit at depth.
The first returned a 3.7 metre interval grading 159 grams per tonne (g/t) silver, 1.5 g/t gold, 4.1% lead and 4.5% zinc, or 475 g/t silver equivalent in hole 12CLM-032.
The second intersected a 2.6 metre interval averaging 160 g/t silver, 3.7% lead and 2.9% zinc, or 377 g/t silver equivalent from hole 12CLM-062.
Both holes were drilled in the central part of the deposit beneath previously reported mineralization in drill holes 12CLM-019, which returned 1.3 metres at 126 g/t silver, and 12CLM-022, which hit 1.4 metres at 528 g/t silver.
The company noted at the time that geological modeling of the Blind and El Sol deposit has identified "multiple distinct mineralized structures with a 820 metre cumulative strike-length", with a depth projection of up to 300 metres below surface.
Southern Silver scheduled additional core drilling in 2012, with the goal of completing an NI 43-101 compliant resource on these deposits by the fourth quarter of this year.
The company also owns the Dragoon property in Arizona and the Oro property in New Mexico.