Amarillo reports on the discovery of a new, near-surface gold zone on the Caneleira prospect, Lavras do Sul, Brazil

Amarillo Gold Corp. (“Amarillo” or the “Company”), reports on the discovery of a new gold zone on the Caneleira prospect at its Lavras do Sul Project in the state of Rio Grande do Sul, Brazil. The five holes drilled and assayed to date on Caneleira have uncovered broad, low grade gold mineralization spanning almost 400m of strike length. Furthermore, the mineralization on the prospect has been continuously mapped as an alteration zone for 1km and may be apparent as 2.5km linear zone interpreted from the airborne magnetics. Assays are pending for an additional four holes and the drill remains active on the prospect.

The Lavras granite complex hosts numerous areas of historic diggings and small mine workings that were the subject of gold rushes in the 1880’s and 1930’s. Gold mineralization had been drill- confirmed in the 1980’s at Cerrito and Butiá, where it was found to be hosted in structurally controlled alteration zones with sericite and pyrite, +/- sheeted quartz veins. None of the other areas of workings and alteration, (at least 12 identified to date), have ever been drill-tested. Amarillo’s approach has been to dilligently surface map these areas and follow-up, where warranted, with a drill program. Since work began on this project, 43 drill holes (6237m) have tested various prospects and targets associated with the Lavras granite intrusive complex.

Caneleira is one of these areas and the results given here signify the 2nd distinct gold zone discovered during the current exploration phase. The Company has to date drilled nine holes at Caneleira totaling 1673m. Assays have been returned for the first 5 drill holes, all of which reported significant gold mineralization. Of note, drill hole LDH-110 intersected 36.1m @ 1.42 g/t. Au (from 70.4m to 106.5m); drill hole LDH-111 intersected 37.0m @ 1.17g/t Au from surface; and drill hole LDH-114 intersected 266m @ 0.35g/t from 8.0m to 276.0m. This intersection consisted of several higher grade zones, including 12.0m of 0.49g/t from 8.0m to 20m in the oxides/transition zone, interspersed by more weakly anomoulous (sub- 0.3g/t) material. A complete summary of results to date from Caneleira are given in Table 1.


Table 1: Summary of Drilling at Caneleira


Hole No. Total Depth (metres) Az./Dip Zone From (metres) To    (metres) Distance (metres) Grade      (g/t Au) Comments
LDH-110 149.1 190° / -60° Centro 70.4 106.5 36.1 1.42
incl. 78.5 88.5 10.0 3.13
and 98.5 103.5 5.0 2.19
123.0 128.0 5.0 1.01
143.5 144.5 1.0 5.89
LDH-111 130.7 190° / -60° Centro 0.0 37.0 37.0 1.17 Mineralised over entire drill interval  avg  0.43 g/t Au from 0-130.7m
incl. 25.0 27.0 2.0 15.40
63.5 76.5 13.0 0.32
91.5 94.5 3.0 0.60
LDH-112 201.3 190° / -60° Centro 80.0 83.0 3.0 1.27
100.0 106.0 6.0 0.48
121.0 129.0 8.0 0.30
161.0 164.0 3.0 0.41
LDH-113 195.2 190° / -60° Centro 46.0 72.5 26.5 0.58
93.0 105.0 12.0 0.77
LDH-114 302.9 190° / -60° Centro 8.0 274.0 266.0 0.35
incl. 8.0 20.0 12.0 0.49 Oxide /transition zone
and 53.00 83.00 30.00 0.51
and 127.5 132.0 4.5 1.18
and 156.0 166.0 10.0 1.16
and 181.3 198.0 16.8 0.83
and 213.0 250.0 37.0 0.55
and 271.0 272.0 1.0 3.54


Samples sent to Acme Laboratories in Goianna, Brazil, and Vancouver, Canada. Gold is determined using fire assay using 50g aliquots with an ICP finish; if the grade is higher than 3ppm a gravimetric method is used. All samples are subject to a chain of custody and are submitted with standards and blanks to check the assay results. The laboratories also use internal standards and repeat analysis. For the results reported in this release all the standards, blanks and repeats delivered acceptable results. The Company has been targeting larger intersections of 0.3g/t+ gold. Intersections that fall short of this threshold may provide exploration insight and are so given.

The Caneleira prospect lies 4km to the west of the town of Lavras do Sul on pasture lands. The dip of the structures appears to be sub-vertical. The mineralization appears to be controlled by a SE-NW structure striking at 130, similar to that which appeared at the Paredao prospect, about 800m to the NE, where a discovery hole reported 12m at 4.54g/t near surface (see NR October 30, 2007.) The holes reported here for Caneleira were drilled on a 50m+ spacings starting in the west and traversing east. A map of the prospect is available on our website:

These encouraging results will see a drill kept on the Caneleira prospect. Several drill holes are currently planned to test the entire extent of the altered zone. A second rig continues to drill at the Cerrito prospect to the East of the Village of Lavras Do Sul. The Company will provide an update from the Cerrito prospect in the near future.

Amarillo Gold Corp. is a company focused on the acquisition, definition and discovery of gold resources in Brazil. Its principal projects are Mara Rosa in the state of Goias and Lavras do Sul in the state of Rio Grande do Sul. The Posse Deposit at Mara Rosa was determined by an independent 43-101 study to contain 974,000 ounces inferred at a grade of 1.35g/t (0.5g/t cut-off) and 764,000 ounces inferred at a grade of 1.80g/t (1g/t cut-off). A scoping study on the project has been commisioned and results are expected shortly.

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.

The Qualified person for this news release is Buddy Doyle as per the guidelines laid out in the NI 43-101. 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