Amarillo Starts Drilling on the Butia Gold Discovery, Lavras do Sul Project, Southern Brazil

Highlights:

  • Drilling has commenced on our prime prospect, “Butia” within the larger Lavras do Sul project.

  • Amarillo has historically completed 6976m of drilling at Butia generating significant gold intercepts such as 232m @ 1.95 g/t Au and 120m @ 3.23 g/t Au .

  • The new drilling program (minimum 5000m) will define and attempt to further expand the known 250m by 230m mineralized gold zone and explore the 1400m by 500m alteration zone in the target-area.

  • Assay results from the new drilling program are expected within the next 6 weeks.

  • Butia is just one part of a larger mineralization system hosted by the 100km2 Lavras do Sul intrusive complex. With and adjacent to this complex there are at least. 19 separate prospects/targets. To date we have drill tested 5 prospects (Butia being just one), 4 return significant gold intercepts and that require further follow-up. Future work will focus on systematically exploring these other gold prospects/targets as the exploration program on the property advances.

Amarillo is pleased to announce that drilling has started on its Lavras do Sul project, in the state of Rio Grande do Sul in southern Brazil. The Company has signed a minimum 5000m diamond drilling contract with Brazilian-based Geológica Sondagens Ltda after a competitive tender process.

The first phase of drilling will focus on the Butia Prospect about 4km west of the village of Lavras do Sul (pop. 8000).  The purpose of this program is to follow up on the success of our previous work.  From October 2006 to November 2008, Amarillo completed 6976m of drilling resulting in the discovery of a significant gold system. Table 1 lists some of the better drill intercepts.

Table 1: Highlights of Historical Drilling Results from Amarillo’s Butia prospect.

Drill Hole

From (m)

To (m)

Down-hole Intercept (m)

Grade Au g/t

LDH-01

0

157

157

1.05

LDH-122

46

279

232

1.95

LDH-123

80

307

227

1.84

LDH-124

37

76

40

1.75

LDH-125

37

91

54

1.36

LDH-128

87

207

120

3.23

LDH-37

32

120

88

1.83

LDH-134

0

50

50

1.33

LDH-136

0

59

59

1.33

LDH-132

115

133

18

4.12

* NB: More detailed descriptions of the previous drilling are available in previous news releases and on SEDAR within the annual report and MD and A discussions each quarter. All of these holes were drilled, primarily at a dip of minus 60 degrees at 20 degrees azimuth. The width and extent of the mineralization is described below.

Gold mineralization at Butia is hosted in a 1400m by 500m zone of altered granitic intrusive rock. Drilling has focused on the NW portion of the alteration zone, where the host rock is characterized by altered perthitic granite. The gold mineralization as defined by drilling using a 0.3g/t Au cut-off grade occupies a 250m by 230m ellipsoid shaped area beginning from surface and has been defined to a depth of about 150m.  The gold system is open along strike to the east and the west, and is not well defined to the north and at depth. The density of the mineralized rock averages 2.6g/cm3. Free gold has been noted in the core in the higher grade sections, usually with galena. The first phase of drilling is designed to test and better define the higher grade gold zones encountered on sections 4 and sections 5 (see illustrations of these sections and a plan map of the Butia area by following this link: http://www.amarillogold.com/sites/default/files/ButiaPlan-Apr19-09b.pdf).  This drilling should help to define the location of the hanging wall in the north and the dip and plunge of the higher grade mineralization. This information will then be used to define step-out holes within the sections to the east and the west, in order to expand the “high-grade” gold zone.

After this first phase of drilling, step-out drilling will test other promising gold target-areas within the larger alteration system at Butia with the goal of defining other mineralized zones.

All necessary environmental licences have been obtained for the planned drilling program. The company has also engaged the services of a community liaison officer, a semi-retired local geological professional, to help facilitate two-way communication with the local community of Lavras do Sul about the Company’s work program and future plans. .

The Company has installed a new core processing facility a few kilometres outside the village. It is expected that the drill will complete 800m to 1000m a month, with an assay turn-around of about 6 weeks after completion of each drill hole.  Assuming positive drilling results, Amarillo plans to commission an initial independent, 43-101 compliant resource estimate of the gold mineralization at Butia. This would include preliminary metallurgical test work. The Lavras do Sul project is in area of excellent infrastructure. A tarmac road services the village which is a 4.5hr drive from Porto Alegre, the capital of the state. Cellular phones work from the drill rigs. There is good mining infrastructure in the state characterized by numerous open pit coal mines.

Future plans include further drilling of other prospects/targets within the Lavras do Sul project.

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 OF 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,