Amarillo Gold Corporate Presentation-Prefeasibility Updates


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Amarillo Gold Corporate Presentation-Prefeasibility Updates

  1. 1. AGC: TSX-VDecember 2011 72A: Frankfurt Emerging Gold Producer in Brazil Source: Amarillo The Qualified Persons for Amarillo are Frank Baker, M. IOM3 and MAusIMM. and Buddy Doyle MAusIMM AMARILLO GOLD
  2. 2. Important Notice These presentation materials (“the Presentation Materials”) are being supplied to you for information purposes only on Amarillo Gold. (the “Company”). These Presentation Materials have been prepared by and are the sole responsibility of the Company. The Company have taken all reasonable care to ensure that the facts stated herein are true to the best of their knowledge, information and belief. These Presentation Materials are being distributed only to and are directed at (a) persons who have professional experience in matters relating to investments being investment professionals as defined in Article 19(5) of the Financial Services and Markets Act 2000 (Financial Promotion) Order 2001 (the “FPO”), (b) high net worth companies, unincorporated associations and other bodies within the meaning of Article 49 of the FPO or (c) persons to whom it may otherwise lawfully be communicated (together “Relevant Persons”). Any person who is not a Relevant Person or who does not have professional experience in the matters relating to investments should not act or rely on this document or any of its contents. These Presentation Materials do not constitute, or form part of, a prospectus relating to the Company, nor do they constitute or contain any invitation or offer to any person to underwrite, subscribe for, otherwise acquire, or dispose of any shares in the Company or advise persons to do so in any jurisdiction, nor shall it, or any part of it, form the basis of or be relied on in any connection with any contract. No reliance may be placed for any purpose whatsoever on the information or opinions contained in this document or on its completeness and no liability whatsoever is accepted for any loss howsoever arising from any use of this document or its contents otherwise in connection therewith. Prospective investors are encouraged to obtain separate and independent verification of information and opinions contained in the Presentation Materials as part of their own due diligence. By accepting these Presentation Materials, the Recipient agrees that the information contained herein or sent herewith or made available is for information purposes only. Without prejudice to the foregoing, neither the Company, nor its advisers nor its representatives accept liability whatsoever for any loss howsoever arising, directly or indirectly, from use of this document or its contents or otherwise arising in connection therewith. The distribution of these Presentation Materials in certain jurisdictions may be restricted by law and persons into whose possession these Presentation Materials come should inform themselves about, and observe, any such restrictions. Any failure to comply with these restrictions may constitute a violation of the laws of any such other jurisdictions. Some statements contained in these Presentation Materials or in documents referred to therein are or may be forward-looking statements. Actual results may differ from those expressed in such statements, depending on a variety of factors. Past performance of the Company or its shares cannot be relied on as a guide to future performance. Any forward-looking information contained in these Presentation Materials has been prepared on the basis of a number of assumptions which may prove to be incorrect, and accordingly, actual results may vary.2 AMARILLO GOLD
  3. 3. Amarillo Gold – Committed to Development • Focused on the acquisition and development of gold resources in Brazil • Major Projects: 1. Mara Rosa – moving towards production – 2011 Pre-feasibility Study well underway completion Q3 – 1,174,900 gold ounces, Measured & Indicated categories (1.75 g/t) – 156,400 additional gold ounces, inferred category 2. Lavras do Sul – major gold prospect in southern Brazil – Continuously upgrading our resource estimate (I+I 520K Ounces) every 6 months or so. – Numerous untested ‘garimpo’ gold targets – Drilling ongoing • Seasoned management team with outstanding discovery & acquisition credentials.3 AMARILLO GOLD
  4. 4. Proven Management Team Buddy Doyle – President & CEO • 28 years experience; 23 years with Rio Tinto on numerous global assignments including 13 years as North American exploration manager for diamonds. Exposure to numerous commodities with track record of economic discoveries including: • +30M oz Lihir (Au) deposit discovery/definition team; project leader for the Diavik discovery/ pre-feasibility, >$14B in-situ diamonds • Excellence in Diamond Exploration award in 2007 Rick Brown – Business Development, Director • Exploring South America since 1993; focused on management and property acquisitions • Projects include: Peru- El Hilorico /El Galeno (Au-Cu), Argentina- Calcatreu (Au), Navidad (Ag), Brasil- Mara Rosa (Au) Luis Carlos F. da Silva – General Manager Brazil • 20 years exploration experience in Brazil managing several exploration campaigns • Responsible for drilling off several of Jaguar Mining’s Brazilian gold depositsFrank Baker – Project Development Manager• Graduate of Sheffield University with Masters in Metallurgy, over thirty years experience, Brazil Citizen• Taken three mines from Feasibility into production on three continents, South America, Australia and Africa• Most recent job was commissioning a 2million tonne per year Gold mine in Western AustraliaWaldemar Opalka- CFO Secretary• BA in Quantitative Economics, Tufts University and MBA, University of Massachusetts• former Director of Strategy and Corporate Development at Netia S.A., founder and Managing Director of Polish Broadband LLC, a telecommunications company.4 AMARILLO GOLD
  5. 5. Non-Executive Directors Robert Landis, Chairman • Princeton University, Harvard Law School • Independent investor & member of Golden Sextant Advisor LLC • 10 years Merrill Lynch, 8 years corporate & securities attorney Todd Bruce • Extensive international mining and mine development experience • Previously President and CEO of IAMGold (96-03) and Crystallex (03-07) Mike Durose • Mineral Economist (P.Geo.), former mining analyst (BMO Nesbitt etc.) • Nearly 20 years capital market and mineral exploration experience Patrick Power • 20 years of Venture exchange experience, founder of numerous Venture Co. Companies. Practical regulatory experience. • Over $100m in money raised under his tutelage Through this strong team and their contacts, AGC has been able to finance independently.5 AMARILLO GOLD
  6. 6. Brazilian Opportunities Beckon• Politically mature• Economically stable (investment grade)• Mining friendly with a significant mining community• Foreign investment & personnel welcome• Excellent exploration potential (see table below) Canada Australia Brazil Archean shield (km2) 2,200 1,200 2,600 Production through 1990 (tonnes) 7,600 6,800 2,400 Exploration investment (1970-1990) ($M) $4,968 $2,963 $685 Exploration investment per km ($/km2) $2.26 $2.47 $0.26 Production per $ invested in exploration $1.53 $2.29 $3.50 Source: Mineral Economic Group 20056 AMARILLO GOLD
  7. 7. Project Locations - Brazil Our projects are located in areas of excellent infrastructure. MARA ROSA PROJECT • Federal highway, 320km from Brasilia • Hydroelectric grid power • 35km from 4M oz Chapada mine (Yamana) • 62km from the 1.5M oz Pilar Mine (Yamana) • 100km from 1M oz Serra Grande mine (AngloGold / Kinross) LAVRAS DO SUL PROJECT • Tarmac highway, 320km from Porto Alegre • Hydroelectric and thermal grid power • 70km from coal mining7 AMARILLO GOLD
  8. 8. Mara Rosa Project - Moving Towards Production Posse Gold Deposit The Posse deposit is a Shear hosted gold deposit, with a gneiss hanging wall and greenstone foot wall dipping at 47 degrees to the NW. Source: Google Earth Au mineralization coloured, Looking NE hotter colours higher grades. Source: Amarillo8 AMARILLO GOLD
  9. 9. Exploration Potential Posse Posse K-Channel airborne gamma Soil Geochem, red colours Top 5% of the data Chapada 5km Imbricate Thrust model Geology of the Mara Rosa Area: Greens are the Mara Rosa Belt, volcanic and sediments, Neo-Proterozoic in age, pinks represent gneisses. Gold stars are gold occurrences and garimpos. Amarillo Land holdings shown.9 AMARILLO GOLD
  10. 10. Key Land Position in Competitive Belt Mara Rosa Project • 62,500 ha of exploration permits • 2,600 ha of mining permits • Encompasses the majority of the main trend hosting the Posse • 12 km co-incident K-channel /Au soil anomaly • 5 large mines within 100 km radius • Yamana’s Chapada Cu-Au 35 km • AGC 100% title on all but 4 permits • 2% NSR on Posse trend Town of Mara Rosa • Local community supportive • Environmental certificate from govt.10 AMARILLO GOLD
  11. 11. History Mara Rosa Project 1700’s - Portuguese mining gold 1982 - BHP discovers Posse deposit 1988 - heap leach operation commences 1989 - WMC acquires Mara Rosa project* 1992 - 600 tpd CIL plant commissioned Source: Amarillo 1995 - WMC ceased operations 1998 - WMC sells to Metallica for $1.5 M 2003 - AGC buys Metallica Brasil for $0.45 M *1989-1995 WMC mined 86,000 oz Au oxide Source: Google Earth and sulphide.11 AMARILLO GOLD
  12. 12. Outstanding Infrastructure Mara Rosa Project Sub-Station 4km from Posse Serra Mesa Hydro 450MW Entrance to Mara Rosa Village Turn off to Posse Deposit Chapada mine 32km away BR-153 major N-S Highway Source: Amarillo Source: Yamana website12 AMARILLO GOLD
  13. 13. Posse Deposit Resource Estimate Mara Rosa Project  43-101 compliant based upon 283 drill holes (>33,000 metres) Cut-off = 0.50 g/t Au Average Grade Ounces Au Tonnes (‘000) Measured 5,463 2.04 g/t 358,300 Indicated 15,393 1.65 g/t 816,600 Total (M + I) 20,856 1.75 g/t 1,174,900 Inferred 3,630 1.34 g/t 156,400 Indicated & Inferred Mineral Resource at Posse Deposit Source: AEFS Sept 2011 – 43-101 accredited, Keith Whitehouse Qualified person.13 AMARILLO GOLD
  14. 14. Posse Deposit Reserves Mara Rosa Project Cut-off = 0.50 g/t Au Tonnes (‘000) Average Grade Ounces Au Proven 5,361 1.87 g/t 339,600 Probable 11,739 1.60 g/t 606,600 Total (P + P)* 17,117 1.72 g/t 945,200 Inferred 3,630 1.34 g/t 156,400 I Source: Coffey Mining International Nov 2011– 43-101 accredited, Norman Lock supervising Qualified person * Run of Mine14 AMARILLO GOLD
  15. 15. PFS: Nov 2011 Mara Rosa Project Pit shell $1100 / oz Au • CAPEX (2.5 mtpa plant) $184 M (post-tax) NPV 5 $178 M • Overall costs $24.63/tonne (post-tax) IRR 26.6% • CIL recovery 92% ROI 3 years • Selling costs 4% Cost/oz $524 ($464) • Approx. US/Real 1.8 Av annual Production 124,000 oz  Nominal Tax Rate 34% Mine life 7 years  DCF $1200/ oz Au Pit Dimensions 1.4 km long 0.6 km wide 260m deep 67 hectares HW 55 deg FW 40 deg 15 AMARILLO GOLD
  16. 16. Posse PFS DCF Gold Price and Discount Rate Mara Rosa Project Base Case Gold Price $1000/oz $1100/oz $1200/oz $1300/oz $1400/oz $1500/oz IRR (internal rate of return) 16.8% 21.8% 26.6% 31.3% 35.9% 40.3% NPV0 $M 165 219 274 328 383 437 NPV5 $M (Base Case) 93 136 178 221 264 307 NPV7 $M 71 110 149 188 227 266 NPV10 $M 44 78 112 146 181 215 Pay Back period 5.1 4.1 3.5 3.0 2.7 2.516 AMARILLO GOLD
  17. 17. Mara Rosa Project Production Circuit Primary Crusher gtt Lime addition 2kg/t7000 t/day Cyclone Sizing 45um P80 to Pre-OXPOSSEOREPower in Primary Ball Mill Secondary Ball Mill138KVa Secondary and Tertiary Crushers12.5MW CRUSHING CIRCUIT GRINDING AND SIZING CIRCUIT RESIDENCE:-12hr RESIDENCE:-24hr Loaded Knelson Cyanide in Carbon 0.2kg/t Carbon in O2 in Cyanide reactor Pre-OX Tanks Number:-3 CILTanks PSA Oxygen unit Number:-6 PRE-OX STAGE CIL STAGE GRAVITY CIRCUITTAILINGS Cyanide Detox Thickener Carbon reactivation Unit Carbon recovery electro-win FINES HANDLING, DISPOSAL, DE-WATER CARBON RECOVERY GOLD RECOVERY 290 troy ounces/day AMARILLO GOLD
  18. 18. Mine Plan Mara Rosa Project18 AMARILLO GOLD
  19. 19. Time Line to Production Mara Rosa Project SCHEDULE - Posse Mine 2011 2012 2013=Pre Stripping (Year 0) 2014 = Year 1 (Production) ITEMS DESCRIPTION 4º T 1º T. 2º T. 3º T. 4º T. 1º T. 2º T. 3º T. 4º T. 1º T. 2º T. 3º T. 4º T. 1 ENVIRONMENTAL LICENSES 1.1 Preliminary License (LP) 1.2 Installation License (LI) 1.3 Operational License (LO) 1.4 Feasibility Studies, PFS and DFS 2 ENGINEERING 2.1 Basic Engineering 2.2 Detailed Engineering 3 PURCHASES 3.1 Mills 3.2 Other Equpments/Services 3.3 Construction of 138kv Power Line 4 Pre-Operation 4.1 Pre-Stripping 4.2 Mine Operations 5 CIVIL CONSTRUCTION 5.1 Earth Moving 5.2 Concrete 6 INSTALLATION/TESTS 6.1 Electromechanical Installation 6.2 Testing 7 START UP19 AMARILLO GOLD
  20. 20. Moving Mara Rosa Forward In 2011-2012 Mara Rosa Project • Final PFS report Q4 11, being led by Coffey Mining Pty. • PFS moves to Feasibility and then Decision to Mine 2012 • Estimated Mine build will be 18 months, mining 2014. • Complete Geotech and “shoulder” drilling • Exploration drilling there after, 2 rigs on site. Source: Amarillo One of the three rigs currently working at the Posse deposit Mara Rosa Project20 AMARILLO GOLD
  21. 21. Lavras Do Sul Project Left: Cerro Rico gold processing plant, Centre: Drill rig Butia prospect Bottom: main entrance to villageSource: Amarillo21 AMARILLO GOLD
  22. 22. 300 Years of Mining History Lavras do Sul • Several periods of mining from 1700’s through to 1950’s • 1st wave 1780s 2nd wave 1880s alluvials and soils • 2nd wave 1900s hard rock 3 central stamp mills • 3rd wave 1930 Hydraulics • 1980’s – First exploration drilling campaign (CBC & CRM) • 2005 – Rio Tinto drilled ~3,000 m • 2006 – Amarillo acquires initial interest • 2007 – Completes airborne magnetics over Lavras intrusion • 2008 – Drills 232 m @ 1.95 g/t Au at Butiá target 19 garimpos throughout the mining district Source: Diary of a German mercenary in Brazil, painting from gold rush days 1880’s22 AMARILLO GOLD
  23. 23. LAND DISPOSITION Lavras do Sul Yellow is CBC ground part of Rio Tinto deal. Magenta is Lucia ground part of the Rio Tinto deal. Grey is the IAMGOLD deal.23 AMARILLO GOLD
  24. 24. Numerous Targets – 19 Garimpos Lavras do Sul ADVANCED TARGETS (with highlighted Au drill results) Old Gold Workings CERRITO 135.5m @ 0.85 g/t CANELEIRA 37m @ 1.17 g/t PARADAO 12m @ 4.54 g/t BUTIA 120 m @ 3.23 g/t Digital Elevation in grey, roads in black. Colour image: airborne magnetics showing geology and structure.24 AMARILLO GOLD
  25. 25. Butiá prospect initial resource estimate Lavras do Sul 0.3g/t cut 0.3g/t cut Tonnes Tonnes Grade (g/t) Grade (g/t) Ounces Ounces (mt) (mt) Indicated 6.4 6.4 1.05 1.05 215,000 215,000 Inferred 12.9 12.9 0.74 0.74 308,000 308,000 Total Total 22.1 22.1 0.88 0.88 523,000 523,00043-101 compliant interim resource estimate for the Butia prospect0.3g/t cut-off• This is the first Resource Estimate from one of theProspects at Lavras Do Sul, the Butia Prospect, 1 of 3D Model of19. Butia Zone• Bulk tonnage near surface.• High grade zones cut to 10g/t need to go back and Source: Amarillodrill to determine continuity, statically expected toincrease grade and ounces, but not change thetonnes.• Drill now at Cerrito Prospect, 4 more holes. A 50% increase in• The plan is to put an updated resource estimate our resource basewith Butia and Cerrito.• Next drill target is on IAMgold ground.25 AMARILLO GOLD
  26. 26. Cerrito Prospect: Current Drill Project. Lavras do Sul • Bulk tonnage, low grade, near surface gold deposit • Drilling underway with over 15 holes completed; approx. 5,000 m of drilling completed to date • Gold results incl. 71m @ 1.08 g/t, 143.4m @ 0.75 g/t, 56m @ 1.42 g/t • + 300m strike • up to 80m wide • + 120m depth Source: Amarillo 26 AMARILLO GOLD
  27. 27. Matilde Prospect: Current Drill Project. Lavras do Sul • Image shows new soil anomaly developed 2.5 km south of Lavras do Sul, 0.3ppm contours. • Named the Matilde Prospect. • It is partially on the IAMgold ground and the CBC ground. 1km 27 AMARILLO GOLD
  28. 28. Why Invest in Amarillo Key project milestones in 2011 • Pre-Feasibility Study at Mara Rosa • Continuing 43-101 resource estimates at Lavras do Sul • Vectoring towards a >2 million oz resource base • Generating new exploration 100%-owned projects • Extensive infrastructure in place • Results driven and proven management • Exemplary capital management record • Low market cap compared to Peers, which should change once recognition occurs.28 AMARILLO GOLD
  29. 29. Amarillo Gold Timeline Amarillo Gold Timeline Q4 Q2 Q4 Q2 Q4 Q1 Q1 Q3 Q1 Q3 2 0 5 3 4 11 -1 4 -1 1 2 -1 15 -1 -1 -1 -1 -1 - ay ep eb un an pr p- ul 2010 2011 2011 ov 2012 2012 ec 2013 2014 2014 2015 2015 -M -S -A Se -F -J -J -J N D 29 17 21 25 11 30 15 3- 7- 3- MR* Posse Infill Drilling MR Exploration Drilling MR Pre Feasibility Study MR Feasibility Study MR Decision to Mine MR Mine Construction MR Mine Production LDS** Exploration Drilling LDS Resource Drilling •MR* - Mara Rosa •LDS** - Lavras do Sul •Metallurgical work on each Lavras prospect after resource definition. •PEA to commence (Lavras) when resource stops growing or @ 2million ounces, whichever comes first.29 AMARILLO GOLD
  30. 30. Corporate Information Capital Structure View from the Butia prospect Shares outstanding 64 million Options ($1.35 average) 3.2 million Warrants @$2 3.6 million Market cap. @ $1.45 $92.8 million Major shareholders Board & Management 15% Institutions 45% Mid-tier Producers 5% Source: Amarillo Recent Financings Closing No. Shares Issue Price Warrants Amount May-11 6.7M $1.50 3.35 @ $2 $10.05M Jul-10 8.0M $0.75 None $6M Jul-09 3.0 M $0.70 None $2.1M Oct-08 2.1M $0.80 None $1.68M May-07 6.0 M $1.25 None $7.5M TOTAL $27.32M30 AMARILLO GOLD
  31. 31. Further Information Canada: Brazil: Buddy Doyle Rick Brown President and CEO Business Development Suite 1818 701 W. Georgia St. Praca Carlos Chagas 49 – Salas 504 a 506 PO BOX 10144 Bairro Santo Agostinho – Belo Horizonte - Vancouver BC Canada V7Y 1C6 MG Tel: 1-604-689-1799 Brasil CEP 30170-913 Fax: 1-604-689-8199 Tel: +55 31 3261 5974 Lawyers: Clark Wilson LLP Auditors: 800 – 885 West Georgia Street MSCM LLP (Moore Stephens) Vancouver, BC V6C 3H1 Canada 8th Floor, 701 Evans Avenue Toronto, Ontario M9C 1A3 Canada Source: Amarillo31 AMARILLO GOLD
  32. 32. Rio Tinto Agreement Lavras do Sul Summary of Acquisition terms: - Amarillo must make total payments of US$ 2.07 million through various installments up to April 1(st) 2008 in order to acquire an initial 60% interest in the Property. Completed - Amarillo is required to spend US$ 750,000 on exploration prior to Feb. 1st, 2008. Completed - Upon completing the above payments Amarillo will form a Joint Venture with the underlying owners. If the other parties elect not to contribute then Amarillo will earn a 100% interest in the Property and be required to pay a 1.5% Net Smelter Royalty on production. Letter of intent signed, full formal document in progress. - Amarillo will make a US$ 1,000,000 payment to Rio Tinto within 90 days of a bankable feasibility study being delivered and, - Amarillo will make a US$ 6,500,000 payment for every one million ounces of recoverable gold reserves that is covered by the 60% equity in the Property over which Rio Tinto have an option. - Rio Tinto will have a back-in-right to acquire 70% of Amarillo interest in the project by paying Amarillo three times (3 x) their exploration expenditure in the event that Amarillos equity interest in the Property contains in excess of 7 million ounces of recoverable gold. - Amarillo will issue 2,000,000 warrants - exercisable at 50c - to Rio Tinto within 60 days of signing the final agreement. Expired without exercise32 AMARILLO GOLD
  33. 33. IAMGOLD Agreement Lavras do SulAmarillo can earn a 51-per-cent interest by expending $800,000 (U.S.) on exploration over 3 years which willinclude a minimum of 2,000 metres drilling and of which $200,000 (U.S.) must be spent within the first 12 monthperiod. Amarillo has made the $200K milestone and is currently drilling on the IAMGOLD ground. In the event that IAMGOLD elects not to contribute pro-rata funding after the first earn-in period then Amarillomay earn a further 29% interest (for a total of 80%) by funding any mineral resource discovered on the Propertythrough to feasibility study.At the completion of a feasibility study on the Property, and up to a period of 60 days from this date, IAMGOLDmay either• elect to contribute its pro-rata share to future funding OR• dilute its interest to a 2.0% Net Smelter Royalty (NSR), of which 1.0% may be bought back by Amarillo forUS$1,000,000 at any time up to the commencement of production OR• exercise a one-time back-in right to increase its participating interest to 60% - if Amarillo has established a totalmineral reserve in excess of 2.5 million ounces of gold on the Property – and become operator by paying threetimes Amarillo’s exploration costs up to the date of IAMGOLD exercising its back-in right.Border Zone: Brazil has a border defense zone (like most South Am, countries), that extends 150km from the borderwhere more than 50% foreign ownership in any property or business is not permitted. Many foreign companiesoperate in this zone, including Aura (former Yamana assests) and in the recent past Rio Tintos Iron mines as well asmany Foreign owned factories, forestry and agricultural interests. Lavras lies approx. 120km from the border.There is a push to change this law, from 150k to 50km, (it has been altered in the past from 300km to 150km), andthis proposal has already past the senate, and awaits hearing in the lower house. In the meantime Amarillo willpursue the same solutions that other companies have used, which include a combination loans to a Brazilianpartner and contract mining.33 AMARILLO GOLD