AGC Amarillo Gold Corporation

Amarillo Gold Corp. (TSX VENTURE:AGC) 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.


ABOUT AMARILLO:

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 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 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. 


ON BEHALF OF THE BOARD OF DIRECTORS

AMARILLO GOLD CORP.

Buddy Doyle, President

FORWARD LOOKING STATEMENTS:- 

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. 


To view the figure associated with this press release, please visit the
following link: http://media3.marketwire.com/docs/agc_12_14_2010_figure.pdf

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