Exploration update for Lavras do Sul Project: New Matilde prospect discovered from soil sampling; Cerro Rico grab sample yields 15.6 g/t Au from outcrop

Amarillo Gold Corp. is pleased to report on its ongoing exploration program at the Lavras do Sul project in the state of Rio Grande do Sul, southern Brazil,  The project is road accessible and is located about 320km WSW of Porto Alegre, the state capital.

The Matilde Prospect

A new gold prospect, known as the Matilde prospect, has been generated through systematic soil sampling of the IAMGOLD option ground and CBC ground at Lavras do Sul.  (See NR May 23, 2008 for a description of the IAMGOLD option agreement and NR September 26, 2006 for a description of the CBC option agreement).  As shown in Figure 1 a new crescent shaped gold in soil anomaly measuring 2.7 km by 1.7 km has been defined.  The anomaly is located about 1.5km south of the village of Lavras do Sul.  The anomaly is open to the west and to the east and also corresponds with a copper and bismuth in-soil response.  There is one set of small historic diggings in the form of a 50 m long trench along the southern edge of the anomaly, where a rare outcrop of alteration occurs.  Elsewhere the anomaly sits on a broad plateau with a well developed deep granitic soil horizon, with sparse outcrop.  The maximum gold result returned from the soil sampling is 2.5 ppm.  Follow the link at the end of this news release to view Figure 1.

The Matilde soil anomaly occurs over a larger area, is higher in tenor and is more cohesive than any other soil anomaly generated on the Lavras do Sul property to date.  For example, soil lines over the Butia, Cerrito and Paredao prospects, where Amarillo has intercepted significant gold mineralization in drilling have either shown no gold in soil response (Paredao) or sporadic erratic results (Butia and Cerrito).  The erratic nature of Butia and Cerrito gold values in the soil was attributed to the area being significantly disturbed by past workings.  Soil sampling over the Valdo Teixeira and Dourada prospects which occur on other less disturbed areas on the IAMGOLD option ground also failed to produce cohesive soil anomalies.  The size and cohesion of the Matilde anomaly is therefore encouraging and the area has been marked for higher priority follow-up work.

Figure 1 shows the location of the Matilde prospect, and illustrates areas of higher gold values within the prospect named Sanga, Matadouro and Matilde Sul.  The location of previous diggings is also shown.  Amarillo’s field crews are currently extending the soil grid to the east and to the west of the main Matilde anomaly and mapping the sparse outcrop in the area.  The Company has applied for environmental permits to conduct trenching and drilling in the area. This process requires permission from two state government departments.  Application for the Matilde area permits required for drilling and trenching were submitted 6 weeks ago.  Current wait time to receive permits after application is in excess of 6 months.

Cerro Rico

Cerro Rico, (Rich Mountain) is an old gold mining area located 7 km east of the village of Lavras do Sul.  It has the most extensive network of old adits, trenches and shafts of the 19 known old gold mining areas in the Lavras do Sul goldfield.  One of three old stamp mills built during the early 1900’s also exists here.  Gold mineralization is hosted in volcanic rocks of the Hilario Formation.  Historically, more than 20 named workings have been documented and are contained within a 1200m by 750m area.  Most of these workings occur along an ESE to WNW trend (285 degrees).  However three workings trend perpendicular to this trend at 15 degrees. Gold mineralization appears to be hosted in quartz veins with sericite selvages.  The prospect is also located on the IAMGOLD option.

Based on work completed by IAMGOLD and Amarillo, a total of 54 channel and outcrop samples have been taken.  The best result returned 15.6 g/t.  In addition, 46% of the samples returned gold grading higher than 0.3 g/t.  The old workings are difficult to sample as they are flooded and generally unsafe to enter. However, Amarillo is planning an initial drill program to test below the larger known workings. The required environmental permits have been received. The drilling rig currently testing the Cerrito prospect will move to the Cerro Rico target early in 2011.

Maria Ildara Ground

In December 2009 (see NR dated Dec 3rd 2009) Amarillo optioned the last remaining ground that covered the Lavras do Sul intrusion that was not under company control.  The Company immediately began work on the property.  This work mainly consisted of mapping and soil sampling.  There were no known historic workings on the property however a prominent NE-SW structural feature as defined in the airborne magnetics that crossed the property was a prime target.  The soil sampling produced some sporadic gold in soil responses.  Rock samples from the area generated weak alteration and no gold values greater than 0.3ppm Au.  The option agreement on this ground required annual cash payments.  Based on the low grade of the gold in soil anomalies in this area, the ground has been returned to the vendor, a local land owner, and Amarillo no longer holds an interest.

The qualified person for this news release is Buddy Doyle, member of the AUSIMM with 29 years experience, meeting the requirements of the NI 43-101 guidelines.

Click to enlarge.


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 contains 623,000 ounces indicated from 11.9MTonnes @ 1.62 g/t Au and 451,000 ounces inferred from 10.1MTonnes @ 1.38 g/t Au at a 0.5g/t cut-off grade, 43-101 compliant resource as independently determined by AEFS.  The project is in the economic evaluation stage.  The Posse deposit was successfully mined by WMC during the 1990’s (mined areas are excluded from the above resource figures) and is located in an area of excellent infrastructure. It is located some 36 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 16,000m of drilling with encouraging gold mineralization being discovered and defined, also in an area of excellent infrastructure.  The initial resource estimate at the Butia prospect reported 215,000 indicated ounces from 6.4MT @ 1.05 g/t Au and 308,000 inferred ounces from 12.9MT @ 0.74 g/t Au at a 0.3 g/t cut-off. 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.



Per:    “Buddy Doyle”
Buddy Doyle, President


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

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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.