Amarillo to Commence Drilling at Lavras do Sul; Executes Formal Option Agreement with Rio Tinto

Amarillo Gold Corp. (TSX VENTURE:AGC)("Amarillo") is pleased to announce that the diamond drill rig contracted for the Phase 1 exploration program at its Lavras do Sul Gold Project in the south of Brazil has arrived on-site and that drilling is expected to commence within the next 24 hours.

The Company also reports the execution of a formal option agreement over the 9,000 hectare property with Rio Tinto Desenvolvimentos Minerais Ltda. (Rio Tinto), and with the underlying titleholders, Cia. Brasileira de Cobre ("CBC") and Maria Vidal de Souza & Family. The option agreement has the same terms as the letter of intent which was the subject of the news release September 26th, 2007.

Amarillo's Phase 1 exploration program for Lavras do Sul is expected to be completed by the end of the 1st quarter of 2007 and will consist of resource definition drilling, closely spaced soil sampling grids, local geological mapping and property wide BLEG sampling.

The current drill campaign will comprise 22 diamond drill holes - for a planned total 2,900 metres - to be carried out over the Cerrito and Butia mineralized zones where previous drilling by Rio Tinto and CBC reported extensive intersections of continuous gold mineralization from surface (see September 26 new release). It will have two specific objectives:

1. To improve drill data confidence over the Cerrito and Butia zones such that a 43-101 compliant resource can be estimated;

2. To determine the potential for a viable near-surface oxide resource which can be fast-tracked into production. Previous drilling determined that the oxide was mineralized, however some of the core recovery from the typically friable and unconsolidated material was poor and assay data unreliable. Amarillo plans to optimize recovery by means of controlled drilling using a large diameter PW core-barrel.

The soil sampling grid will comprise 25 metre spaced samples taken along lines of 100 to 200 metres separation and will cover the western strike extension of the Cerrito mineralization. This extension has never been drilled but it displays extensive alteration over an area of 800 metres x 500 metres and of 63 rock chip samples collected, 31 ran better than 0.50 g/t Au, with a highest value of 57.9 g/t Au.

The BLEG sampling will initiate a property wide exploration campaign designed to detect and prioritise new areas of mineralization within the 100 sq. km monzonite intrusion that hosts Cerrito and Butia. Under the BLEG sampling technique, stream sediment samples are taken from targeted first or second order streams on pre-established sampling sites having, on average, catchment areas ranging between 1 and 2 sq. km.

Amarillo expects to announce the first drill assay results in January 2007.

This news release was written by Buddy Doyle, CEO, and Rick Brown, Country Manager Brazil. Both are qualified persons for the Lavras do Sul Project, as such term is defined by the NI 43-101.

ON BEHALF OF THE BOARD OF DIRECTORS

AMARILLO GOLD CORP.

Per: Buddy Doyle, President

Legal Notice Regarding Forward Looking Statements

Statements in this news release that are not historical are forward looking statements. It is important to note that the Company's actual outcomes may differ materially from those statements contained in this press release. Factors which may delay or prevent these forward looking statements from being realized include misinterpretation of data; that we may not be able to get equipment or labor as we need it; that we may not be able to raise sufficient funds to complete our intended exploration; that we may not obtain permits to drill or environmental requirements are too onerous; that our contractors fail to perform; that weather, logistical problems or hazards may prevent us from exploration; that analysis of data cannot be done accurately and at depth; that results which we have found in any particular location are not necessarily indicative of larger areas of our property; and that despite encouraging data there may be no commercially exploitable mineralization on our properties.

For further information please contact us directly.