Amarillo commissions initial 43-101 resource estimate on the Butia prospect, Southern Brazil

Amarillo Gold Corp. (TSX-V: AGC)(“Amarillo” or the “Company”) is pleased to announce that it has awarded to Atticus Consulting SAC (Atticus) of Lima Peru, the task of conducting the first resource estimate on the Butia prospect, the most advanced of the numerous prospects that fall within the Lavras do Sul project.

The resource estimate will be NI 43-101 compliant and Tony Amberg (Sociedad Cartografica Limitada, Chile)will be the qualified person compiling the estimate.  Mr. Amberg is a geologist of 24 years experience based out of Santiago, Chile.  He is a graduate geologist, BSc (Honors) of London Imperial College and he also has a MSc. in Geographical and Geodetic information systems from London University and has extensive international and Latin American experience, particularly in gold.  Mr. Amberg is currently visiting the property as part of the 43-101 due diligence process.  Simon Mortimer, geologist and the principal of Atticus, will construct the geological model using the Leapfrog 3-D geological software.  Atticus plan to complete the report prior to the end of June.  The following sections provide a brief summary of the prospect.

Location and Access:The Butia prospect is located 4km west of the village of Lavras do Sol (pop. 8000), in the state of Rio Grande do Sul and is accessible by regional highway from Porto Alegre, the state capital.  The prospect is located on unimproved land grazed by cattle.

Tenure: In October 2006 Amarillo entered an option agreement with Rio Tinto PLC, after an open competitive bid.  The Butia prospect is included in this option agreement. Amarillo has met the prerequisites of the agreement to date.  Future obligations to Rio Tinto include:

  1. A $US880,000 payment on the formation of a Joint Venture with the underlying owners. Payment is triggered by the transfer of title to that JV.
  2. A $US 1,000,000 payment to Rio Tinto within 90 days of completion of a bankable feasibility study.
  3. A $6.50/oz cash payment for every one million ounces of recoverable gold reserves under Amarillo's control.
  4. Rio Tinto has a back-in right to acquire 70% of Amarillo's interest in the property by paying Amarillo three times their expenditure in the event that Amarillo's equity interest contains in excess of 7 million ounces of recoverable gold.

To gain tenure Rio Tinto had an option agreement with various mineral right owners in the area. Amarillo has taken over the Rio Tinto position within this underlying option agreement.  The terms of this option have been met and Amarillo is in the process of implementing a formal joint venture agreements with the various mineral right owners.  These agreements will also consider that the Lavras do Sul project lies within the border area.

The Butia prospect lies on exploration permits 810096 and 810095 both owned by Mineracao Carmec Ltda, (Carmec).  Amarillo has secured a binding letter of intent from the owners that provides for:

  1. Agreement on the general terms of the 60% Amarillo, 40% Carmec, Joint Venture.
  2.  Carmec will dilute and not contribute.
  3. Agreement on the dilution formula,
  4. Once Carmec dilutes to 10% their interest converts to a 1.5% royalty.

 

Geology:  The Butia prospect is hosted within the neo-Proterozoic Lavras do Sul granitic complex.  This complex is 10km by 10km in area and consists of a monzonite/granodiorite core surrounded by a rim of perthitic granite.  Gold mineralization is hosted within the granitic complex and within the surrounding Hilario volcanics to the east.  The mineralization varies from east, where it is hosted in discrete veins systems with a Cu-Ag-Au-W-As association, to west where the gold mineralization is hosted in broad alteration zones with a Pb-Au-Ag association. The presence of micro-crystalline silica and the clay mineralogy (illite, phengite) indicates that the mineralization is epithermal in nature.

The Butia prospect occurs near the western boundary of the intrusive complex within the perthitic granite.  The Butia alteration zone strikes E-W for 1.7km and is 500m wide as mapped by the presence of green sericite and hematite.  The Butia prospect occurs in the western 500m of this alteration zone.  The gold mineralization zone at Butia as defined by the current drilling is associated with intense alkali alteration that forms an episyenite microbreccia.  The gold mineralization forms an "L" shape  at surface controlled by an E-W structure 250m long  and a N-S structure 250m long.  The mineralization, which outcrops at surface, attains its greatest extent at a depth of 70m-90m below surface and then decreases in area at depth.

 History:  The Lavras do Sul area has been the focus of gold rush style exploitation since it was discovered in the 1780's, with a peak of activity from 1901 to the 1930's.  It is not known how much gold was extracted from the Butia area.  Much of the soil over the area of alteration has been overturned and worked in the past.  In the 1930's British and Belgian companies worked the area with hydraulic mining.  The larger workings, of which there are several, typically exceed 50m by 100m in area.  There are also numerous small tunnels and adits associated with the workings.  In the 1980's CBC (a Brazilian state mining company) drilled 1500m in 11 holes at Butia.

In 2005 Rio Tinto completed 891m of drilling in 5 holes at Butia.

Density:  Amarillo has taken 192 densities readings using the displacement method from 5 separate drill holes at Butia. The mean  value of all rock types is 2.65 g/cc.  The mineralized episynite (S.G. 2.68 cc/g) is slightly more dense than the unmineralized perthitic granite (S.G. 2.61 g/cc). 

Drill Results:  Amarillohas completed 11km of drilling in 45 holes at Butia at the time of this release.  The drill is still operating on the prospect on widely spaced step-out drill holes.  If these holes successfully locate further gold mineralization, this data will be incorporated into an updated resource estimate at a later date.  Table 1, appended to this news release, records the composite gold assay results for each hole drilled by Amarillo using a 0.3 g/t cut-off while Table 2 provides the locations and orientation of the drill holes.

Comment:  Amarillolooks forward to generating the first 43-101 resource estimate from its most advanced prospect within the Lavras do Sul project.  However, it is important to recognize that this is only the initial estimate from this project.  After completing the Butia step-out holes  referred to above, the drill will begin resource definition drilling at the Cerrito prospect.  This will allow an updated Lavras resource estimate that includes Cerrito in four to six months time.  There are 19 separate prospects within the Lavras do Sul project represented by areas of old gold workings, it is the company's intent to drill test each one systematically.  The company will  update the Lavras do Sul resource estimate each time the work warrants.  Amarillo's expectation is that one day there will be a centralized plant treating gold ores from a number of the more significant prospects within the Lavras do Sul complex. 

 

This press release was reviewed by Buddy Doyle (B. App. Sc.), a member of AusIMM, with 28 years experience and a qualified person in compliance with National Instrument 43-101.

 

ABOUT AMARILLO:

Amarillo Gold Corp. is a company focused on the acquisition, definition and discovery of gold resources in Brazil. Its principal projects are the Mara Rosa project in the state of Goiás and the Lavras do Sul project in the state of Rio Grande do Sul. The Posse Deposit at Mara Rosa was found by an independent 43-101 compliant preliminary economic assessment study carried out by CCIC to contain 643,000 ounces indicated from 13.5MTonnes @ 1.48 g/t Au, 538,000 ounces inferred from 13.0MTonnes @ 1.26 g/t Au at a 0.5g/t cut-off grade and the project is in the economic evaluation stage.  The Posse deposit is located in an area of excellent infrastructure located some 35 km NE of Yamana’s Chapada open pit Cu-Au operation, 105 km NE of Serra Grande’s underground Au mine, 105 km NNW of Anglo American’s nickel laterite project (in construction), 95 km NW of Votarintim’s Niquelandia nickel laterite mine and approximately 60 kms NE of Yamana’s Pilar Au project (in feasibility). Grid power to the site was established during the previous open pit mining operation and the Serra da Mesa hydro-electric dam lies 35 km to the east. 

The Lavras do Sul project is in the advanced exploration stage with over 15,000m of drilling with encouraging gold mineralization being discovered and defined, also in an area of excellent infrastructure.  The Company also has a portfolio of earlier stage projects. All properties under Amarillo’s management are located in areas of good infrastructure and robust community support.

ON BEHALF OF THE BOARD OF DIRECTORS

 

AMARILLO GOLD CORP.

           

Per:      “Buddy Doyle”                       

          Buddy Doyle, President


 
Contacts:

 
Amarillo Gold Corp.
+ 1-604-689 1799 (Canada)
+55-31-3261 5974 (Brazil)
info@amarillogold.com

 

Neither TSX Venture Exchange nor its Regulation Services Provider (as that term is defined in the policies of the TSX Venture Exchange) accepts responsibility for the adequacy or accuracy of this release.

FORWARD LOOKING STATEMENTS:

This news release contains Forward Looking Statements regarding our intentions and plans. Various factors may prevent or delay our plans, including but not limited to, contractor availability and performance, weather, access, mineral prices and success and failure of the exploration and development carried out at various stages of the program. Readers should review risk factors applicable to junior mining exploration companies generally to understand the variety of risks that can affect the Company.

Table 1: Composite gold assays.  All drill holes completed by Amarillo Butia Prospect.

Hole No. Sub-Zone From (m) To (m) Distance (m) Grade (g/t Au)
LDH-01   0 169.4 169.4 1.00
  including 9.5 10.55 1.0 21.1
  including 53 59 6.0 21.4
LDH-02   1.1 36.5 35.4 0.43
    48.7 55.5 6.8 7.44
LDH-03   42.5 274 231.5 0.76
  including 44.5 54 9.5 2.72
LDH-122   5.5 34 28.5 0.40
    46.0 278.9 232.9 1.95
  including 73.0 278.9 205.9 2.16
  including 107.0 136.0 29.0 4.92
  including 206.0 244.0 38.0 2.91
  including 263.0 271.0 8.0 6.17
LDH-123   43.0 62.0 19.0 1.03
    80.0 307.0 227.0 1.84
  including 147.0 169.0 22.0 8.26
  including 214.0 223.0 9.0 4.72
LDH-124   36.5 226.0 189.5 0.88
  including 36.5 63.0 26.5 2.50
LDH-125   37 91 54.0 1.36
  including 80 86.5 6.5 4.69
LDH-126   139.5 246 106.5 0.53
LDH-127   34.0 50.0 16.0 2.16
  including 34.0 35.0 1.0 1.00
    61.0 88.0 27.0 0.41
    104.0 162.0 58.0 0.93
LDH-128   17.5 30.0 12.5 1.57
  including 26.0 27.0 1.0 8.49
    50.0 71.0 21.0 2.19
  including 52.0 55.0 3.0 11.43
    87.0 207.0 120.0 3.52
    123.0 180.0 57.0 6.94
LDH-130   2.6 13.0 10.4 0.97
  including 11.0 12.0 1.0 7.65
LDH-131   51.5 62.5 11 1.18
LDH-132   85.0 90.0 5 1.04
    115.0 113.0 18 3.91
LDH-36   0.0 42.8 42.8 0.82
LDH-37   32.0 120.0 88.0 1.84
LDH-133   0.0 108.0 108.0 0.63
    145.5 173.5 28.0 0.32
LDH-134   0.0 50.0 50.0 1.82
  including 20 24 4 12.92
    133.0 198.0 65.0 0.50
    227.8 235.0 7.2 0.37
LDH-135   59.0 82.0 23.0 1.01
    79.9 82 2.1 6.7
LDH-136   0.0 59.0 59.0 1.33
  including 0.0 20.4 20.4 2.25
    71.0 78.5 7.5 0.67
LDH-137   0.0 60.5 60.5 0.6
LDH-138   123.0 127.0 4.0 0.4
    160.0 166.0 6.0 0.3
    230.0 249.0 19.0 0.6
LDH-139   194.0 240.0 46.0 0.4
LDH-140   85.5 88.0 2.5 12.0
LDH-141   47.0 53.0 6.0 0.7
LDH-142   0.0 2.5 2.5 0.4
    111.0 114.0 3.0 3.5
  including 113.0 114.0 1.0 9.9
    307.0 309.0 2.0 0.7
LDH-143   1.1 4.1 3.0 0.4
    26.0 34.0 8.0 1.5
    272.0 279.0 7.0 0.9
LDH-38   56.0 81.5 25.5 0.6
    101.0 210.0 109.0 0.4
  including 195.0 198.0 3.0 2.3
LDH-144   174.0 210.0 46.0 0.44
    221.0 296.0 75.0 0.69
  including 237.0 248.0 11.0 2.34
    305.0 309.4 4.4 2.58
LDH-145   133.3 149.0 15.7 0.39
LDH-146   50.0 91.0 41.0 0.49
    128.0 140.0 12.0 0.44
  including 167.0 181.0 14.0 9.51
LDH-147   183.0 189.0 6.0 1.85
    362.0 376.0 14.0 0.32
LDH-148   187.0 197.0 10.0 0.51
    345.0 353.0 8.0 0.33
LDH-149   12.0 20.0 8.0 0.45
    51.0 257.0 206.0 0.63
LDH-150   0.0 21.25 21.5 0.53
LDH-150A   77.0 148.0 71.0 0.54
    215.0 238.0 23.0 0.3
    282.0 290.0 8.0 2.64
    331.0 335.0 4.0 0.82
LDH-151   298.5 310.0 11.5 1.27
LDH-152   0.0 15.0 15.0 0.99
    25.0 146.0 121.0 1.08
    129.0 145.0 16.0 4.12
LDH-153   36.5 49 12.5 0.54
    120 125.5 5.5 0.32
    147 152 5.0 0.45
    164.5 169.5 5.0 0.73
    187.0 192.5 5.5 0.42
    197.2 202.5 5.3 0.89
    274.3 306.0 31.7 1.02
  including 274.3 278.0 3.7 3.21
    327 332.0 5.0 0.31
LDH-154   13.5 19.0 5.5 0.39
    32.0 222.0 190 0.94
  including 90.0 94.0 4.0 3.96
    173.0 176.0 3.0 4.31
LDH-155   87.0 110.0 23.0 1.33
    132.5 170.0 37.5 0.43

Table 2: Drill Holes Completed by Amarillo Butia Prospect.

DRILL HOLE

AZIMUTH

DIP TOTAL DEPTH (m) ELEVATION (m) EASTING NORTHING
LDH-01 20° - 60° 187.4 391 218141 6586458
LDH-02 20° - 60° 104.05 383 218168 6586515
LDH-03 16° - 60° 281.9 397 218127 6586404
LDH-36 16° - 60° 125.8 387 218208 6586490
LDH-37 16° - 60° 150 392 218195 6586436
LDH-38 20° - 60° 299.8 392 218169 6586397
LDH-39 200° - 60° 100.2 395 218156 6586346
LDH-40 75° - 60° 203.15 402 218075 6586300
LDH-41 110° - 60° 147.7 371 218150 6586627
LDH-43 111° - 60° 125 379 218142 6586587
LDH-122 - 60° 302.8 381 218105 6586497
LDH-123 10° - 60° 308.45 387 218094 6586453
LDH-124 10° - 60° 280.65 393 218090 6586403
LDH-125 10° - 60° 158.25 375 218131 6586596
LDH-126 10° - 60° 317.7 398 218072 6586356
LDH-127 11° - 60° 164.75 373 218095 6586582
LDH-128 16° - 60° 233.7 375 218075 6586536
LDH-129 20° - 60° 211.7 379 218051 6586493
LDH-130 12° - 60° 210.5 384 218037 6586437
LDH-131 20° - 60° 210.05 392 218019 6586401
LDH-132 16° - 60° 210.82 400 218002 6586347
LDH-133 290° - 60° 198.55 382.7 218162 6586519
LDH-134 110° - 60° 269.1 375 218029 6586520
LDH-135 20° - 60° 188.7 392 218236 6586404
LDH-136 20° - 60° 138.7 389 218248 6586442
LDH-137 290° - 60° 123.25 389 218134 6586476
LDH-138 20° - 60° 353.3 399 218156 6586346
LDH-139 20° - 60° 469.85 394 218215 6586356
LDH-140 213° - 60° 151.4 394 218215 6586356
LDH-141 114° - 60° 77.15 377 218181 6586571
LDH-142 200° - 60° 359.1 379 218301 6586606
LDH-143 110° - 60° 319.3 381 217980 6586526
LDH-144 200° - 55° 364.28 379 218144 6586763
LDH-145 200° - 60° 256.98 359 218089 6586719
LDH-146 200° - 80° 290.21 375 218162 6586638
LDH-147 200° - 60° 433.33 372 218203 6586698
LDH-148 200° - 60° 383.15 377 218355 6586702
LDH-149 45° - 60° 292.35 386 218091 6586444
LDH-150 200° - 60° 21.25 379 218225 6586619
LDH-150A 200° - 60° 408.5 377 218241 6586653
LDH-151 290° - 60° 356.95 378 218326 6586435
LDH-152 290° - 60° 276.8 378 218156 6586575
LDH-153 290° - 60° 369.4 379 218277 6586553
LDH-154 290° - 60° 308.65 382 218232 6586516
LDH-155 200° - 60° 348.95 380 218280 6586661
TOTAL     11086.37      

Note: Samples include standards, blanks and duplicates, inserted at approximately every 30th drill core sample. The entire length of core is sampled. Those areas that appear to be mineralized are sampled at 1m intervals, all others  at 2.5m. The UTM co-ordinates are given using the SAD-69 system, zone 22.

* Reported in an earlier news release    ** Reported in this news release.

LDH150 was abandoned @ 21.25m as the hole intersected old mine workings.