Amarillo and Phelps Dodge do Brazil Mineracao Limitada Modify their Agreement at San Antonio Gold Exploration Property, Brazil

Amarillo and Phelps Dodge do Brazil Mineracao Limitada Modify their Agreement at San Antonio G

Amarillo Gold Corp. (TSX VENTURE:AGC) (“Amarillo” or the “Company”) is pleased to announce that it has signed a modified agreement with Phelps Dodge do Brasil Mineracao LTDA (“Phelps Dodge”) regarding the San Antonio gold property in Goias.

The new agreement terminates the previous signed option agreement (see News Release dated March 10th 2005), and replaces it with a royalty agreement. Consideration for the agreement is $1. The royalty agreement grants a 2% net smelter return (NSR) with regards to the property and the surrounding properties held by Amarillo or may be held in the future by Amarillo within a 10 kilometer radius.

Amarillo has the right to buy out the royalty under certain conditions.

The San Antonio property, located in the Goias State, is centered on the San Antonio River 50km east of the municipality of Minacu. Amarillo has properties totaling 291 km2 in this area. Amarillo was drawn to this area after it signed a deal with Phelps Dodge to test artisanal mine workings in April 2004. The previous mine workers extracted gold from structurally controlled siliceous zones and quartz veins with disjointed pods of sulphide (pyrite, arsenopyrite, and chalcopyrite), hosted in stratiform metamorphosed calcareous shales of Proterozoic age. The miners followed these veins to depth using shafts and adits. The gold was extracted by crushing, gravity separation and amalgam.

Amarillo applied for exploration permits centered on the Phelps Dodge property to include several other gold workings that occur in the area. These where all worked in the 1980’s and 1990’s in what appears to be mini-gold rush. Most of the working consisted of surfaces cuts, shafts and adits that followed the mineralisation to about 50m depth.

In April, 2005 Amarillo completed drilling on the Phelps Dodge property, testing the down dip extension of garimpeiro diggings on the property. Four drill holes were completed totaling 416m. The drilling intercepted mineralisation. These mineralised zones containing the elevated precious metals also contain elevated Copper, Arsenic, Bismuth and Tungsten, which is the same mineral association found in the mining areas. Noteworthy intercepts included, 2m @ 30.9 g/t of silver (Ag) from 14.72m to 16.72m, and 7.6m @ 7.8 g/t silver (Ag) from 47m to 54.6m in the first drill hole. The second drill hole contained 4.06m @ 1.3 g/t of gold (Au) from 10.94m to 15.0m and 4.3m @ 20.9 g/t of silver (Ag) from 6.64m to 10.94m. The fourth drill hole contained, 0.67m @ 2.2 g/t gold (Au) from 32.12m to 32.79m. Drill hole number three did not intercept mineralisation. (See Company news release of September 19, 2005).

The mineralisation intersected by the drilling does not seem to have the widths and the tenor required to sustain the extensive artisan mining at San Antonio. Given the pod-like nature of the mineralisation it is possible the drilling missed the larger intercepts. Drill hole 1 had a large zone of core loss which could have been the drill crossing a mined out area, there are no records of the location and the extent of these workings. Deeper drilling may find more encouragement.

However given that the Company now holds title over 5 other garimpeiro workings, the first task is to define which of these is the most encouraging. Amarillo will map, soil sample and rock chip these gold workings and then decide which deserves the most attention. The entire belt has never been subject to modern exploration methods and the presence of nearby tin bearing granites combined with the mineral assemblage at San Antonio suggests that these might be related. A possible model could be for Alaskan or Pogo style magmatic gold deposits.

Buddy Doyle is the qualified person under the terms of NI 43-101, he has visited the project and is familiar with the geology.