Amarillo Hitting Gold At Mara Rosa In Brazil

VANCOUVER — Amarillo Gold (AGC-V, AGCBF-O) is pulling some golden rock out of the ground at its Mara Rosa project, in central Brazil’s Goias state.

The Mara Rosa property covers a shear-hosted mesothermal gold mineralized system in a greenstone belt. Small-scale miners and a previous owner operating an open-pit mine have together extracted some 80,000 oz. gold from the property, which Amarillo started exploring in early 2006.

In a recent 14-hole program, Amarillo tightened up drill spacing in the centre of the deposit and expanded it in several directions. Two infill holes returned intercepts typical of the Posse deposit: hole 1 cut 29 metres grading 1.97 grams gold per tonne from 138 metres depth and hole 2 returned 42.4 metres of 2.19 grams gold starting at 97 metres. All intercepts are true widths.

The Posse deposit is actually divided into North and South zones; Amarillo drilled five holes into the ground between the zones looking for additional mineralization. Each hole hit several mineralized intercepts. Hole 5, for example, returned 11 metres from surface grading 0.31 gram gold, then 10.7 metres of 0.99 gram gold from 93 metres, 4.5 metres of 0.72 gram gold from 132 metres, and finally 6.6 metres at 1.05 grams gold from 184 metres. Other intercepts include 3.5 metres of 3.43 grams gold starting at 69 metres in hole 4, 20.8 metres of 0.9 gram gold from 133 metres depth in hole 6, and 12.7 metres averaging 1.38 grams gold from 102 metres in hole 7.

To the south of the South zone, Amarillo encountered “encouraging” gold in three holes. Hole 9 returned 3.6 metres grading 1.03 grams gold from 123 metres depth followed closely by 24.7 metres averaging 1.28 grams gold. Hole 10 cut 13.5 metres of 2 grams gold from 100 metres, and hole 13 returned 1.14 grams gold over 25.5 metres from 187 metres depth.

Another three holes probed the plunge extent of the main orebody just outside the planned shell to the west. Hole 14 returned 19.8 metres of 0.76 gram gold from 242 metres down-hole, followed by 23.3 metres grading 0.72 gram gold. Hole 11 hit 11.3 metres averaging 1.3 grams gold from 292 metres below surface. And hole 12 cut four gold-mineralized intercepts between 224 and 314 metres depth: 1 gram over 3.9 metres, 0.49 gram over 12.2 metres, 0.49 gram over 3.5 metres, and 1.8 grams over 4.9 metres.

An estimate in March 2007 pegged Posse’s resource at 22.5 million inferred tonnes grading 1.35 grams gold; 70% of the contained gold lies within 200 metres of surface.

Amarillo’s other project is the Lavras do Sul property in southern Brazil. The main zone at Lavras is Butia but Amarillo is also working to define and expand the Cerrito and Caneleira zones. The project is a granite complex that hosts multiple areas of historic diggings and small mine workings that tapped into gold mineralization hosted in structurally controlled alteration zones with sericite and pyrite.

At Butia, Amarillo has focused its efforts on expanding the known mineralization. Last July, hole 128 returned 3.52 grams gold over 120 metres from 87 metres depth, including 6.95 grams gold over 57 metres. Amarillo followed up on that hit with hole 132, collared 100 metres south of hole 129, and it hit a new area of gold mineralization, returning 18 metres of 3.91 grams gold from 115 metres depth. Stepping 150 metres to the east, hole 37 cut 88 metres of 1.84 grams gold from 32 metres and hole 36 hit 42.8 metres of 0.82 gram gold from surface.

At Cerrito, 7 km east of Butia, Amarillo has drilled almost 4,000 metres and recently released results from another 10 holes. Holes 26 and 31 were both drilled in the main Cerrito area, where an east-west- trending zone extends 600 metres in length, is up to 70 metres wide, and reaches to 150 metres depth. Hole 26 returned 20 metres of 0.33 gram gold from 43 metres depth followed by 47 metres of 0.57 gram gold from 83 metres, while hole 31 cut 162.4 metres at 0.7 gram gold from 12 metres.

Amarillo also punched four holes into the northeastern extension of the structure, as interpreted from airborne geophysics. All four hit altered rock but only hole 35 returned gold mineralization.

Amarillo plans to return to Cerrito soon to drill some deeper holes, especially where quartz veining has been noted. The company also wants to drill at Caneleira, 1 km north of Butia, where initial drilling returned promising intercepts such as 1.32 grams gold over 39 metres.

The company is earning a 51% interest in Lavras from Iamgold (IMG-T, IAG-N) by spending US$800,000 on exploration over three years; the junior can then boost its ownership to 70% by financing the project through a feasibility study.

In October, Amarillo closed a $1.7- million private placement, selling 2.13 million shares at 80¢ apiece. Near the same time, the company reduced its operating drill rigs to one from three; the move, along with other cost-saving measures, reduced Amarillo’s monthly expenditures by roughly 60%.

Amarillo shares recently traded at 60¢ in a 52-week trading range of 35¢-$1.84. The company has 41 million shares issued.