Amarillo Options More Ground at Lavras do Sul and Provides Drilling Update on Butia Gold Prospect

Amarillo Gold Corp. (TSX-V: AGC) (“Amarillo”) Highlights:

  • Amarillo has entered into an option-agreement with Maria Ildara Correa Carvalho, ("Maria Ildara") a Brazilian national who has a 100% right to an exploration permit that covers 8655 hectares in the SW of the Lavras do Sul project. (All currency in Brazil Reals). 

  • The option requires a series of annual cash payments and a R$300,000 exploration commitment. Amarillo may opt out of the agreement at any time after making the exploration commitment. Amarillo can earn a 100% interest in the exploration property subject to Maria Ildara retaining a 1% Royalty (NSR).

  • The Maria Ildara ground is strategically located south of the Butia prospect, the current focus of Amarillo’s drilling.

  • Amarillo has started the fourth drill hole of the current >5000m drilling program. A total of 1080m of drilling has been completed to date. All drill holes to date have intersected alteration similar to that which has hosted gold in the past. Visible gold has been logged in a small zone in one of the holes. Historically, Amarillo has completed 6976m of drilling at Butia defining a significant gold system. Material gold intercepts have included 232m @ 1.95 g/t Au and 120m @ 3.23 g/t Au.

  • Material from three of the holes has been set to Acme Laboratories, and results should start arriving soon. The company will release these results in batches of 3-5 holes or when otherwise appropriate.

Amarillo is pleased to announce the following update for our Lavras Do Sul project in the State of Rio Grande do Sul in the far south of Brazil. Maria Ildara option agreement Amarillo has signed an agreement with Maria Ildara securing an option on 8655 hectares of land which will be now be included in the Lavras do Sul project. The land holds a strategic position south of the Butia gold discovery. The company had earlier recognized, anomalous gold in panned concentrate and BLEG samples from a stream emanating from this area. Amarillo has paid Maria Ildara R$20,000 upon signing. Further cash payments are due on the following schedule.

  • R$100,000 before 30 September 2010
  • R$200,000 before 30 September 2011
  • R$200,000 before 30 September 2012
  • R$200,000 before 30 September 2013
  • R$200,000 before 30 September 2014 (this last payment only after transfer of title). Maria Ildara will hold a 1% royalty on gross sales. Amarillo must spend R$300,000 on exploration before 22nd October 2012. Amarillo may withdraw at anytime.

Butia Drilling Update

As detailed in our October 7th news release, Amarillo has mobilized a drill rig to the Butia gold prospect and this drill is now drilling its fourth hole. Table 1 list the drill holes completed in the latest drill program. Drill Hole Section Azimuth Dip Total Depth (metres) Samples sent LDH144 Section 5 200 55 364 307 LDH145 Section 6 200 60 257 166 LDH146 Section 4 200 80 290 202 LDH147 Section 4 200 60 In Progress @ 320 In progress The current drilling program is testing the northern boundaries of the known gold zone. Samples have been sent to Acme Laboratories from the first 3 holes for assaying. Turn around is about 1 week to log and sample each hole, 10 days to transport the samples to a preparation laboratory, 1 week at this laboratory then 1-3 weeks at the assay laboratory. The company will release the holes in batches of 3-5 holes or when otherwise appropriate. Drilling will continue on the Buita prospect with several larger step out holes planned in the next phase of drilling.

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 15000m 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.