Amarillo’s Posse Deposit Estimated at 643,000 Ounces Indicated, 538,000 Inferred

Vancouver, B.C., March 2, 2008 – Amarillo Gold Corp. (TSX-V: AGC) (“Amarillo” or the “Company”), reports that it is in receipt of its Preliminary Economic Assessment (“PEA”) on the Posse deposit at the Company’s Mara Rosa Project in the Goias State, Brazil, as prepared by Caracle Creek International Consultants Inc. (CCIC). Results, estimates and observations contained in the report are briefly discussed here.

A revised resource estimate was prepared. Using a 0.5 g/t cutoff, the estimate breaks down as follows:

Tonnes (mt) Grade (g/t) Ounces
Indicated 13.5 1.48 643,000
Inferred 13.0 1.26 538,000
@ 0.5 g/t cutoff

Using a 1.0 g/t cutoff results in the following estimate:

Tonnes (mt) Grade (g/t) Ounces
Indicated 9.1 1.83 536,000
Inferred 7.3 1.68 397,000
@ 1.0 g/t cutoff

This resource was calculated by means of the Ordinary Kriging using samples drawn from 154 core holes, 25 of which were drilled by Amarillo.

The deposit has a strike length of about 1.2km, dips to the northwest at approximately 40-45° and varies in true width from 15-30m. This estimate has included consideration of hanging wall material that was not considered in a preliminary estimate dated March, 2007. Re-categorization of the estimate is based on further compilation and detailed study of historic data and a revised estimation methodology.

The Posse deposit was mined by Western Mining (WMC) between 1992 and 1995. Mining was concentrated in two pits (“North” and “South”) where two higher grade chutes could be accessed. Approximately 388,000 tonnes were removed at a grade of 2.47g/t. Barrick, in a due diligence report written in 1996, noted production recoveries from CIL circuit of between 85% and 90% at observed millhead grades of between 4.2g/t and 2.6g/t. The mine closed as a result of depressed gold prices. All infrastructure, save for administrative buildings, was dismantled and the area reclaimed. The required remediation for mine closure were met and accepted by apposite governmental authorities.

In addition to the revised resource estimate, CCIC has completed a Preliminary Economic Assessment of the gold resources outlined in the Posse deposit. A series of pit optimization studies were performed to gauge the deposit’s economic response to a variety of input parameters. The primary baseline parameters were assumed as follows: initial capital cost of $80m; mill recoveries of 80%; maximum pit slopes of 60°; mining costs of $1.50/t; milling costs of $7.50/t. Mill throughput was assumed at 2 million tonnes per year (approximately 5500 tonnes per day.) Waste throughput was allowed to fluctuate without constraint. It was felt that these inputs reflected reasonable estimates at the time of writing given the level of precision required by a PEA. Under these assumptions, the following table provides the model’s pre-tax cash flows discounted at 0% and 5% at varying gold prices:

Ounces in
respective pit shell
Strip ratio NPV-5% NPV-0%
@ $600/oz 697,000 3.82:1 $12.3m $25.3m
@ $900/oz 932,000 4.93:1 $153.6m $209.1m
@ $1200/oz 1,085,000 5.85:1 $312.9m $438.9m

An extensive sensitivity analysis was also undertaken. The deposit appears most sensitive to, respectively, the gold price, operating costs and mill recoveries. Results are detailed at length in the NI43-101 Technical Report, now posted on Sedar.

CCIC observes that the deposit could be serviced by the local power grid and a water supply could be secured from the local utility. The town of Mara Rosa, with a population of about 11,000, is located about 2km from the deposit and 11km from the Brasilia-Belem Federal highway. A portion of any required labour force could presumably be sourced here. The claims are currently held under a mining lease, subject to periodic renewal. Several mines have been permitted in the area and are now operational, including Yamana’s Chapada mine (about 35km to the south), and Anglogold’s Crixas mine (about 100km to the southwest).

The Company is encouraged by these results and expects to make a decision regarding the commissioning of a pre-feasibility study in the coming months. The Company remains well-financed with about $4m in cash on hand as of February’s month-end.

Iain Kelso, P. Geo., geologist with CCIC, is a Qualified Person in accordance with NI 43-101 guidelines and has reviewed the technical information presented in this news release. Mr. Kelso, who is independent of Amarillo, is the author of the NI 43-101 compliant Technical Report on the Mineral Resource Estimate and PEA for the Mara Rosa Project, dated February 29th, 2008.

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 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.

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.