Amarillo Gold Corp. (“AGC”) is pleased to announce that it has signed an option with Phelps Dodge Do Brasil Mineração LTDA. (“Phelps Dodge”) on Phelps Dodge’s San Antonio property in the Goias State, Brazil. The property consists of 1931 Ha of exploration permits within which there are gold and copper stream, soil and rock-chip anomalies hosted in carbonates in a promising structural setting 1km by 3km in area. This area was in the past worked by garimpeiros, who left behind shallow trenches and shafts as evidence of their activities. Rock chips from these workings have returned values of up to 22m of 8.80 g/t Au, and 5m of 11.7 g/t with up to 1.23% Cu and 115g/t Ag. The option agreement calls for a US$5000 payment and a minimum of 400m of drilling within 12 months. AGC earns a 50% interest in the property if it completes 1000m of drilling during the first year of the option and expends US$250,000 during the second year of the option. Amarillo can earn a 70% interest by spending US$250,000 on exploration in year three. It will acquire a 100% interest by spending US$250,000 in the fourth and fifth years and presenting a bankable feasibility study by the end of the sixth year. Phelps Dodge then will retain a 2% NSR.
The management of AGC views this option as an excellent low-risk addition to AGC’s other properties in the Goias state.
As announced in an earlier release, AGC has entered an agreement with Metallica Resources Inc. (“Metallica”) to purchase the Mara Rosa gold property. This project encompasses 28,567 hectares with 3 mining leases, 19 exploration permits and 1 exploration application and occurs only 145km from the San Antonio property mentioned above.
The Mara Rosa gold property was operated by Western Mining from 1992 to 1995 at which time they extracted 86,000oz of gold from the Posse deposit. Metallica purchased the property in 1997 and conducted a detailed evaluation. This evaluation indicated that remaining mineralization at the Posse deposit was in the magnitude of 12.7 million tonnes grading 1.77g/t Au containing 726,000 ounces at a 0.5 g/t cut-off. The estimate was based on over 200 drill holes with over 20,000 metres of drilling. While the above is deemed reliable by AGC, it has not been independently verified by an independent Qualified Person and has not been the subject of a 43-101 report at this stage.
Additional gold potential occurs in the current AGC land package at Mara Rosa, which captures the extension of the Posse deposit host rocks for 25km along strike.
Detailed IP-resistivity and ground magnetics surveys along with anomalous soil geochemistry support the presence of potential gold mineralization elsewhere on the property. The terms of the Metallica transaction provide for AGC to acquire the project for US$450,000 in staged payments to be completed no later than July 20, 2004. AGC has transferred $US 350,000 to Metallica to date. Underlying interests on the property include two separate 1% NSR royalties to Newmont Mining Corporation and to BHP/Billiton respectively.
Once the purchase of Mara Rosa project is complete, AGC’s proposed focus will be as follows:
At the San Antonio Gold Project:
a) Drill test the down dip extension of the San Antonio gold anomaly with at least 400m of drilling,
b) Complete surface mapping and sampling,
c) Assay this drill core while drill moves to Mara Rosa, and
d) Be prepared to complete more drilling if these assays are encouraging, returning the drill rig from the Mara Rosa project.
At the Mara Rosa Gold project:
a) Search for nearby extensions to the Posse deposit by exploration drilling,
b) Test some of the other higher priority IP/geochemical targets on the property with drilling and further geochemical sampling, and
c) Begin due diligence studies on the previously defined mineralization.
AGC is focused on becoming a predominant gold explorer and producer in Brazil, but is also opportunity driven elsewhere.
Management views the Mara Rosa and San Antonio gold properties as good candidates towards achieving this goal.
A finders fee will be payable on the San Antonio property within the guidelines of the Toronto Ventures Exchange and NEX. This release contains forward looking statements.
The company would also like to thank Nelson Fry for his services. Nelson recently gave his notice of resignation as one the directors of AGC.