Amarillo Gold Corp (NEX:AGC.H) (“Amarillo”, “the Company”) recently received notice from the TSX Venture Exchange that it had accepted for filing the arm’s length Option Agreement between the Company and Phelps Dodge Do Brasil Mineracao Ltda, (“Phelps Dodge”), whereby the Company may acquire up to a 100% interest in the San Antonio property in Goias State, Brazil. The Company must pay Phelps Dodge US$5,000 and complete a 400m drill program. Amarillo may then proceed to the second stage of the option and earn a 50% interest by completing a 1,000m drill program in the first year and incurring US$250,000 in exploration during the second year. A 70% interest may be earned by incurring US$250,000 in exploration in the third year. A 100% interest may be earned by incurring US$250,000 in each of the fourth and fifth years and presenting a bankable feasibility study by the end of the sixth year. Phelps Dodge will retain a 2% net smelter return royalty. No shares are being issued.
Amarillo is pleased to announce that it has now signed drilling contracts and that a drill rig is being mobilised to the property.
San Antonio property is located 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.
Phelps Dodge previously drilled two holes on the property one was completed to 450.9m depth drilled at 70 degrees dip parallel to the main garimpeiros workings and the other vertical to 240.7m depth. Both holes were drilled to test the concept that a “Telfer” like gold-copper mineralized system may exist on the property. Telfer is a large operating gold mine in Australia, where the mineralisation is stratiform. The drilling was looking for stratiform extensions of mineralization controlled by the sedimentary host extending from the workings using Telfer as a model.
The first drill hole intersected 3m of 0.05% Cu and 44 g/t Ag at surface. Neither drill hole intersected significant gold, however, both had zones of high greater than 1000ppm Arsenic, a common pathfinder of gold. This drilling demonstrated to Phelps Dodge that there was a lowered probability of a “Telfer” like system at San Antonio at a scale that would interest this large-scale miner, however Amarillo believes there is still high potential for a structurally-controlled gold system at a scale more suitable for a junior company.
Amarillo’s Country Manager, Rick Brown, recently visited the property and selected the first drill collars. Amarillo intends to drill test the down dip extension of the steeply dipping vein systems that where mined by the garimpeiros and also returned the encouraging rock chips assays mentioned above.
Amarillo will, at a minimum, honor the 400m drilling commitment of the option. A further commitment to drill greater than 1000m will occur if there is mineralisation evident in the first 400m of drilling. A reconnaissance stream sediment sampling program and inspection and sampling of other garimpeiros workings in the area will completed during the drill program.