Amarillo Gold Closes Oversubscribed Brokered Financing

Amarillo Gold Corp. (TSX-V: AGC) (“Amarillo” or the “Company”) announced today the closing of the brokered private placement (the “Private Placement”), further to its press releases dated October 24, 2016, and subsequent increase dated December 2, 2016, for gross proceeds of $3.3 million by issuance of 10,312,500 shares of the Company stock at a price of $0.32 per share.

In connection with the private placement, Pollitt & Co. Inc. (“the Agent”) received a cash commission equal to 6.0% on a portion of the proceeds raised, and non-transferable broker warrants (“Broker Warrants”) equal to 6.0%. Each Broker Warrant will be exercisable into one Share of the Company, for a period of 24 months from the closing date at a price of $0.32 per Share.

The securities issued pursuant to the private placement will be subject to a four-month hold period under the applicable Canadian securities laws.

The Company intends to use the net proceeds of the private placement for general working capital purposes and further development of the Mara Rosa project in the state of Goias, Brazil including: 

  • Update pre-feasibility study (the “PFS”)
  • Tailings facility engineering
  • Advance towards obtaining the installation license (LI) permit
  • Related activities in preparation for a bankable feasibility study (the “BFS”)

Insiders of the Company participated in the private placement and received Shares, which constituted a “related party transaction” within the meaning of Multilateral Instrument 61-101 Protection of Minority Security Holders in Special Transactions (“MI 61-101”). The issuance to the insider is exempt from the valuation requirement of MI 61-101, by virtue of the exemption contained in section 5.5(b) as the Company’s shares are not listed on a specified market and from the minority shareholder approval requirements of MI 61-101 by virtue of the exemption contained in section 5.7(a) of MI 61-101. In that, the fair market value of the consideration of the shares issued to the related parties did not exceed 25% of the Company’s market capitalization.

This news release is intended for distribution in Canada only and is not intended for distribution to United States newswire services or dissemination in the United States. This news release does not constitute an offer to sell or a solicitation of an offer to buy any of the Units, Common Shares or Warrants in any jurisdiction in which such offer, solicitation or sale would be unlawful.

About Amarillo Gold Corp.

Amarillo Gold Corp. is focused on acquisition, discovery, and definition of gold resources in Brazil. It is the Company’s policy to strive to do this in a sustainable, safe way using best practices whilst benefiting our shareholders and the communities we work in. The Company’s principal projects are the Mara Rosa Project in the state of Goias, and the Lavras do Sul Project in the state of Rio Grande do Sul.  The Posse Deposit at Mara Rosa contains 8.887MT @ 1.98 g/t Au Measured, 13.149MT @1.53 g/t Au Indicated and 7.119MT @ 1.26 g/t Au Inferred (0.5 g/t cut-off grade) (A NI 43-101 resource as independently determined by Australian Exploration Field Services Pty. Keith Whitehouse QP July 2016).  The Mara Rosa Gold Project has received a positive economic assessment from a Pre-Feasibility study and Amarillo has obtained the LP, the first stage of a three stage permitting process. The Posse Deposit was successfully mined by Western Mining Corporation (WMC) during the 1990s (mined areas are excluded from the above-stated resource figures), and is located in an area of excellent infrastructure: approximately 35 km NE of Yamana’s Chapada open pit Cu-Au operation, some 80 km NE of Yamana’s Pilar Au project (in feasibility), 95 km NW of Votorantim’s Niquelandia Ni laterite mine, 105 km from NE of Serra Grande’s underground Au mine, and 105 km NNW of Anglo American’s Ni laterite project at Barro Alto.

The Lavras do Sul Project is an advanced exploration stage property (190 sq. km.) comprising of more than 19 prospects centered on historic gold workings, with encouraging gold mineralization discovered and defined by more than 16,000 meters of drilling. The initial resource estimate at the Butia prospect reported 215,000 ounces of gold Indicated from 6.4 MT at 1.05 g/t Au, and 308,000 ounces of gold Inferred from 12.9 MT at 0.74 g/t Au using a 0.3 g/t cut-off grade in a NI 43-101 resource as independently determined by Atticus Consulting in 2010, Anthony Amberg, QP. Lavras do Sul is also located near excellent infrastructure. The Company also has a portfolio of earlier stage projects and all properties under Amarillo’s management are located in areas of good infrastructure and mining-friendly communities.

Frank Baker, a metallurgist with over 30 years’ experience and also a member of the AUSIMM and IOM3 is the qualified person for this news release as per the guidelines of the NI-43-101.

ON BEHALF OF THE BOARD OF DIRECTORS
AMARILLO GOLD CORP.

Per: “Buddy Doyle”
Buddy Doyle, President & CEO

Contacts:

Amarillo Gold Corp.
+1-604-760-0325 (Canada)
+55-31-3261-5974 (Brazil)

Or Scott Eldridge
+1-604-722-5381
scott@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. Forward looking statements in this news release include that we will use the proceeds of the $3.3 million private placement as we currently intend, and that our projects have potential for commercialization. Various factors may prevent or delay our plans, including but not limited to, the company being unable to raise funds from investors, other expenses arising or taking precedence over our current intended expenditures, 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. Permission from the Government and community is also required to proceed with future mining production. Readers should review risk factors applicable to junior mining exploration companies generally to understand the variety of risks that can affect the Company. The Company undertakes no obligation to update publicly or otherwise revise any forward-looking statements whether as a result of new information or future events or otherwise, except as may be required by law.