Amarillo provides exploration update on Lavras do Sul Project

Amarillo Gold Corp. (TSX-V: AGC) (“Amarillo”) is pleased to provide an update on its recent exploration activities at its Lavras do Sul gold project in the southern Brazilian state of Rio Grande do Sul. Since the beginning of the year Amarillo has been exploring primarily on the ground optioned from IAMgold in 2008 (the Property) -see NR 23 May 2008. The IAMgold option covers about one third of the Lavras do Sul granite intrusion complex and some of the surrounding volcanic rocks. It includes several areas of historic workings which are listed below:

  1. Valdo Teixeira, on the SE edge of the Lavras do Sul intrusion, consists of at least three parallel E-W siliceous veins with alteration selvedges extending 10’s of metres into the intrusive with some extending into the surrounding volcanic rocks. Previous workers stripped soil near the veins and developed one adit into the central vein when working for gold.
  2. Cerro Rico is hosted in the Hilario volcanics which surround the intrusive complex to the east. There are at least 24 old workings developed into the veins. The workings – which supplied a centralized plant built in the early 1900’s – are quite extensive with shafts galleries and adits developed within 50m of the surface.
  3. Dourada is an area of alteration hosted within the intrusion with several pits and adits.
  4. Mato Feio, is another separate area of alteration hosted within the intrusion with several historic surface workings.
  5. Sao Jose is a 3km linear belt of alteration and workings closer to the centre of the intrusion with sheeted quartz veins and intense alkaline alteration, (episyenite). San Jose was the site of a second processing plant.
  6. Virginia is a 1km zone of sporadic alteration which occurs at the western end of the San Jose zone.
  7. A new area of high interest found using soil sampling and geophysics has been named Sao Domingos. Sao Domingos occurs south and west of the Valdo Teixeira prospect. It consists of a 1.3km zone of geochemi cally anomalous soils.

Amarillo now has access to all 19 known old workings/targets in the Lavras do Sul area through various agreements. Of the 5 targets drilled to date by the Company , 4 have returned significant (>1g/t) gold intercepts that require follow-up work to further define these gold systems.  Amarillo has started field work on all the prospects on the IAMgold ground listed above, with the objective of gathering enough geological information to rank each target based on its gold potential. Targets will then be prioritized andsystematically drill-tested.  A more detailed description of the drill-ready targets at Valdo Teixeira and Sao Domingos is provided below.

Garimpo Valdo Teixeira

This garimpo (artisanal mine working) was operated on a small scale in the 1950’s when the surface was stripped of soil and worked for gold with some hard rock material being fed through the Cerro Rico plant (there are no historic production records for any of the Lavras workings). Valdo Teixeira consists of three parallel E-W trending quartz veins between 0.5 to 2m wide, with associated illite alteration selvedges up to 15m wide on each side of the central vein. The whole system has an exposed strike length of up to 1000m, before becoming obscured by deep soils, and straddles the intrusive/volcanics boundary. The three vein/structures have been named Valdo Sul, Valdo Centro and Valdo Norte. The Sul and Centro workings are 100m apart and the Norte workings are a further 400m to the north. The most extensive workings are on Valdo Sul.

Flooding of the historic cuts and trenches at Valdo Teixeira has made systematic sampling of the vein systems difficult.  Amarillo (and

previously IAMgold) has taken rock float and channel samples from the veins where access is available. Often samples are taken in the walls and not perpendicular to the strike. Amarillo has taken 119 channel samples averaging 1m wide, and 73 rock outcrop and float samples. IAMgold generated 129 channel samples and 7 rock float samples. Eleven samples returned assay values greater than 5g/t Au with the highest gold result being 27.2 g/t Au from a 1m channel. Thirty-three channel samples assayed more than 1 g/t Au. Eighteen of these greater than 1 g/t Au samples come from a 120m long zone in Valdo Sul. In the Valdo Centro vein, only a few rock samples assayed greater than 0.5 g/t. Three samples were taken at Valdo Norte and they returned gold grades of 13.4g/t, 1.3g/t and 0.9g/t respectively.

Valdo Teixeira, and most of the other old workings in the eastern portion of the Lavras do Sul Intrusion have an Au, Ag, Cu, As, Sb, Mo, W, Pb, Zn association of elements accompanied by a white mica /illite alteration with fluorite, barite, carbonate and amphibole accessories. This is markedly different to the Au, Ag, Pb, Zn association of elements encountered in the western part of the intrusion and probably represents a larger scale temperature zonation in the mineralizing system that suggests in a gross sense that the temperature increases from west to east. The silver to gold ratio at Valdo Teixeira  averages 5:1(in the west of the intrusion it averages 1:1). The highest silver value from channel sampling was above 130 g/t Ag with 32 samples registering over 10 g/t Ag. The same areas that had high gold values also contain these elevated silver values. Several samples also assayed over 1% Cu.

A soil sampling program was conducted over the Valdo Teixeira area based on a N-S grid with lines spaced 100m apart and a 25m spacing between samples. This soil grid was extended over a 4km by 3km area centered on Valdo Teixeira. To date 3379 soil samples have been collected and assay results have been received for some 80% of these samples. The results of the soil sampling show that the Valdo Teixeira garimpo lies within a large pathfinder element anomaly (As, Cu, Sb, Mo etc. including Au). Using As (arsenic) as a guide there is a 3500m by 600m As soil anomaly greater than 25ppm elongated N-S coincident with the boundary of the Lavras Intrusion. It is notable that the garimpo veins strike perpendicular to the trend of the pathfinder soil anomaly. There is also a semi-continuous 20ppb Au in soil anomaly (up to 350ppb) coincident with Valdo Sul and Valdo Centro, that stretches for 1.2 km and connects some outcropping quartz veins mapped to the west to these workings. One rock sample, running 0.9g/t Au  was discovered in this area . This suggests further investigation may add to the strike length of the Valdo Sul and Valdo Centro mineralization systems.

There is a second anomalous gold zone >20ppb Au with values up to 270ppb Au that parallels the Valdo Sul soil anomaly over the Valdo Norte area. It has a strike length of 300m.

Sao Domingos Prospect

This prospect was discovered while soil sampling southwest of the Valdo Teixeira garimpo workings. Here a 500m by 200m area of strongly anomalous gold pathfinder elements is defined by high arsenic (100ppm contour, maximum 275ppm) and copper (100ppm contour, maximum 385ppm) as well as the other elements associated with gold in this area (Ag, Sb, Mo, W).  Sporadic gold values up to 174ppb occur within this soil anomaly. The Sao Domingos prospect occurs on a plateau with a deep soil profile but there is outcrop on the northern and eastern flanks, where altered and mineralized rocks have been mapped and sampled.

Of the 51 rock outcrop and float samples collected 14 ran over 0.5g/t Au, with three outcrop samples running 4.0g/t, 3.8 g/t and 1.4 g/t Au respectively.

The Company is excited about this prospect since there is no evidence of previous workings in the immediate area. Management believes this grass-roots discovery demonstrates the exploration potential of the Lavras do Sul project a and opens up the possibility of further new finds over and above the 19 known workings in the area.

Amarillo has completed the first phase earn-in of the Option Agreement with IAMgold whereby the Company committed to spend US$200,000 on surface exploration prior to June 30, 2009. The second phase of the Agreement consists of a minimum 2,000 metre drill program prior to June 30, 2011. Completion of the second phase will entitle Amarillo to earn a 51% interest in the Property.
The Company has applied for environmental licenses which are necessary for drilling permission over the exploration permits which include the Sao Domingos, Valdo Teixeira and Cerro Rico prospects.

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 @ 1.48 g/t Au, 538,000 ounces inferred @ 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.  T he 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.

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


Per: “Buddy Doyle”

Buddy Doyle, President


Amarillo Gold Corp.
+ 1-604-689 1799 (Canada)
+55-31-3261 5974 (Brazil)