Amarillo Gold Receives Pre-Feasibility Metallurgical Report, Defining Gold Recovery Circuit, With 90%+ Recoveries

VANCOUVER, BRITISH COLUMBIA--(Marketwire - May 24, 2011) - Amarillo Gold Corp. (TSX VENTURE:AGC) ("Amarillo" or the "Company") is pleased to announce that it has received the Metallurgical Report from Coffey Mining Ltd.

The Metallurgical Report highlights are as follows:

• Gold recoveries exceeding 93% were readily achieved by using conventional carbon in leach (CIL) technology with the addition of a simple pre-oxidation stage.

• This process will form the base case for the ongoing Pre-feasibility Study. The process will consist of primary, secondary, and tertiary crushing, followed by conventional milling to a P80 of 45 microns. The milled product will then be pumped into a pre-oxidation stage of 12 hours followed by a conventional 24 hour CIL circuit. The dissolved gold would then be absorbed onto activated carbon and then eluted by using a desorption plant.

• The amount of cyanide reagent used for the process is 0.26 kg/t which is low when compared to other mines, and lime requirements for cyanide will be 1.93kg/t which is slightly above the industry average.

• Some further testing for viscosity and thickening is recommended, but these are not required for the PFS.

The full report will be posted on SEDAR and we present the executive summary here:

Executive Summary: "Metallurgical testwork was undertaken on representative samples from the Mara Rosa Project as part of the pre-feasibility study (PFS).

The Mara Rosa metallurgical samples ("Sample") comprised of a free milling component of gold (~75%) and a refractory component, which may be associated with sulphides as well as tellurides (~25%).

Gold recoveries in excess of 93% were readily achieved using conventional carbon in leach (CIL) technology with the addition of a simple pre-oxidation stage (3 agitated tanks) prior to the CIL circuit to account for the refractory gold telluride component in the sample.

Cyanide consumption was low at 0.26kg/t, whilst lime requirements were slightly higher than average at 1.93kg/t. The slightly higher lime requirement is needed to raise the pH to 12 to accelerate the gold telluride oxidation process.

A review of the previous metallurgical testwork found many of the results to be inconsistent and less successful due to a lack of understanding of gold telluride chemistry, which although not overly complex, is rarely seen in practice with less than a handful of plants treating such ores worldwide.

Ores containing gold tellurides simply need to have an allowance for the oxidation of the gold telluride, using agitated tanks similar in size to the CIL tanks. The Mara Rosa material needs to be ground to a P₈₀ size of 45µm prior to a pre-oxidation stage of 12 hours and a CIL stage of 24 hours. The overall plant residence time of 36 hours is strongly influenced by the relatively slow process of gold telluride oxidation. Given recent improvements in the understanding of aqueous sulphide and telluride oxidation, it is considered that there remains considerable scope for a reduction in the residence time of the plant with the completion of testwork to feasibility level.

There were three mineralogical domains identified; main, hanging wall and foot wall, although there were no significant differences between the domains from a metallurgical perspective. The samples tested were in the soft to medium range of competency in terms of milling and displayed no viscosity issues even at finer grind sizes. The abrasion index of the samples was in the medium to high range.

It is proposed that the process flowsheet would include primary crushing followed by secondary and tertiary crushing in closed circuit. Tertiary crushed material would then feed a primary mill and secondary mill utilising cyclone classification to achieve a P₈₀ grind of approximately 45µm.

This material would be pre-oxidised at a pH of 12 for a period of 12 hours in agitated tanks and then leached under conventional CIL conditions for 24 hours during which an average of 93% of the gold would be dissolved and adsorbed onto activated carbon. The adsorbed gold would then be eluted using a convention desorption plant.

Tailings would be thickened to recover a significant proportion of the cyanide in the process solution, with the remaining thickened pulp detoxified to remove residual free cyanide prior to deposition in a tailings storage facility."

Table 1 shows a summary of the key design criteria based on the metallurgical testwork results for the Mara Rosa samples.

The author of the report is Rod Smith, Coffey's principal metallurgical consultant.

Frank Baker, Manager for the Mara Rosa project, said, "We now have the information needed to begin detailed cost estimates required for the Pre-feasibility Study. Initial estimates suggest that the addition of the pre-oxidation step will add about $6m onto the total CAPEX and $0.2/t onto the OPEX (approximately 1% of the operating costs) as compared with a standard CIL 24 hour leach circuit; these extra costs are minor when you consider they're addition lifts gold recoveries from the 80% used in the PEA to 90%."

A number on ongoing metallurgical studies remain to be completed; these mainly concerned with the post gold extraction process, such as thickening for cyanide recovery and viscosity tests. These tests would normally be conducted in the feasibility stage. Amarillo has requested this work commence now so the data is at hand at this time.

The qualified person for this new release is Frank Baker, a metallurgist with over 30 years experience and also a member of AUSIMM and the IOM3.

About Amarillo: Amarillo Gold Corp. is focused on the acquisition, discovery, and definition of gold resources in Brazil. The Company's principal projects are the Mara Rosa Project in the state of Goias, and the Lavras do Sul Project in the state of Rio Grande do Sul. The Posse Deposit at Mara Rosa contains 623,000 ounces of gold indicated from 11.9 MT at 1.62 g/t Au, and 451,000 ounces of gold inferred from 10.1 MT at 1.38 g/t Au (0.5 g/t cut-off grade) (NI 43-101 compliant resource as independently determined by Australian Exploration Field Services Pty. AEFS). The Mara Rosa Gold Project is in the Pre-feasibility stage.

The Posse Deposit was successfully mined by Western Mining Company (WMC) during the 1990s (mined areas are excluded from the above-stated resource figures), and is located in an area of excellent infrastructure approximately 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 Ni laterite project (in construction), 95 km NW of Votarintim's Niquelandia Ni laterite mine, and some 60 km NE of Yamana's Pilar Au project (in Feasibility). Grid power to the site was established during WMC's open pit mining operation, and the Serra da Mesa (450 MW) hydro-electric dam lies 35 km to the east.

The Lavras do Sul Project is an advanced exploration stage property (190 sq. km) comprised of more than 19 prospects centered on historic gold workings, with encouraging gold mineralization discovered and defined by more than 16,000 metres of drilling. The initial resource estimate at the Butia prospect reported 215,000 ounces of gold indicated from 6.4 MT at 1.05 g/t Au, and 308,000 ounces of gold inferred from 12.9 MT at 0.74 g/t Au (0.3 g/t cut-off grade)(NI 43-101 compliant resource as independently determined by Atticus Consulting 2010). Lavras do Sul is also located near excellent infrastructure. The Company also has a portfolio of earlier stage projects and all properties under Amarillo's management are located in areas of good infrastructure and mining-friendly communities.

ON BEHALF OF THE BOARD OF DIRECTORS,

AMARILLO GOLD CORP.

Buddy Doyle, President

Certain information in this press release may contain forward-looking statements. For example although the company has every indication the 2nd tranche will close this information is based on current expectations that are subject to risks and uncertainties until it is completed. The Company assumes no obligation to update the forward-looking statements, or to update the reasons why actual results could differ from those reflected in the forward-looking statements unless and until required by securities laws applicable to the Company.