Amarillo Gold Announces the Sale of an NSR Royalty to Royal Gold for USD $10.8 Million

TORONTO, June 29, 2018 -- Amarillo Gold Corp. (“Amarillo” or the “Company”) (TSX.V:AGC) today announces the entry into an agreement for sale of a perpetual 1.75% Net Smelter Return Royalty on the Mara Rosa gold project (the “Royalty Agreement”) to RG Royalties, LLC, a wholly-owned subsidiary of Royal Gold Inc. (NASDAQ:RGLD) (“Royal Gold”), for USD $10.8 million (approximately CAD$14.4 million).

The proceeds of the sale are expected to be used towards recapitalizing the balance sheet of the Company in the least dilutive manner to shareholders and to further fund ongoing exploration and development activities at Mara Rosa. The Company expects to use a portion of the proceeds from the Royalty to repay the gold-linked credit facility that it entered into on July 31, 2014. The Company’s obligations under the Royalty will be secured by Mara Rosa project assets; however, the Royalty Agreement thoughtfully contemplates and permits a potential future first ranking project financier.

Mike Mutchler, CEO of Amarillo commented: “This highly accretive transaction marks a turning point for the Company by providing a clean balance sheet and a well-funded treasury. In addition, the overall robust economics of the Mara Rosa gold project remain intact. I am very pleased to welcome Royal Gold as a significant stakeholder. Their rigorous due diligence process and well-respected reputation are a testament to the quality of the Mara Rosa assets and a vote of confidence in the Amarillo team. I would like to thank Royal Gold and our existing shareholders for their support, as we transition the Company to an emerging developer.”

The closing of the sale of the Royalty is subject to the approval of the TSX Venture Exchange (the “TSX-V”).

ABOUT AMARILLO

Amarillo is developing an economic, open pit gold resource at its Mara Rosa Project in the mining friendly jurisdiction of Goias State in Brazil. An Updated Pre-Feasibility Study (NI 43-101 technical report) for the Mara Rosa Project was filed on SEDAR on May 4, 2017. The Mara Rosa Project was awarded its main (LP) permit which provides the social and environment permission to mine. Amarillo is progressing toward obtaining an installation permit (LI). The Posse Deposit at the Mara Rosa Project contains 540,567 ounces of gold in the Proven category from 9.27MT at 1.81 g/t Au, and 456,968 ounces in the Probable category from 9.74MT at 1.46 g/t Au, for total Reserves of 997,536 ounces from 19.01 MT at 1.63 g/t Au. In addition to the Mara Rosa Project, Amarillo has an advanced exploration project with excellent grades at Lavras do Sul, Brazil. A Mineral Resource Estimate Study (NI 43-101 technical report) for Lavras do Sul was filed on SEDAR on October 4, 2010. The Lavras do Sul Project is an advanced exploration stage property (190 sq. km.) comprising of more than 22 prospects centered on historic gold workings. The initial resource estimate at the Butia prospect reported 215,000 ounces of gold in the Indicated category from 6.4 MT at 1.05 g/t Au, and 308,000 ounces of gold in the Inferred category from 12.9 MT at 0.74 g/t Au using a 0.3 g/t cut-off grade. Both projects have excellent nearby infrastructure.

Mike Mutchler, the President and Chief Executive Officer of the Company, is a Qualified Person as defined by NI 43-101 guidelines, and has reviewed and approved the scientific and technical disclosure in this news release.

ABOUT ROYAL GOLD

Royal Gold Inc., together with its subsidiaries, acquires and manages precious metal streams, royalties, and similar interests. It focuses on acquiring stream and royalty interests or to finance projects that are in production or in development stage in exchange for stream or royalty interests. As of June 29, 2018, the company owns interests on 192 properties on six continents, including interests on 39 producing mines and 22 development stage projects.

Neither the TSX Venture Exchange nor its Regulation Services Provider (as that term is defined in the policies of the TSX Venture Exchange) accepts responsibility for the adequacy or accuracy of this release.

FORWARD LOOKING STATEMENTS:

This news release contains Forward Looking Statements regarding the Company’s current expectations regarding future events, including with respect to the Company’s business, operations and condition, management’s objectives, strategies, beliefs and intentions, the completion of the sale of the Royalty (as contemplated hereby), the anticipated timing of closing of the sale of the Royalty, the use of proceeds therefrom, the need for any future project financing and the ability of the Company to obtain any such financing in the future. Various factors may prevent or delay our plans, including but not limited to, the trading price of the Common Shares, the TSX-V not providing its conditional or final approval for the sale of the Royalty, certain lenders not advancing funds as required, 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. Permission from the Government and community is also required to proceed with future mining production. Readers should review the Company’s ongoing quarterly and annual filings, as well as any other additional documentation comprising the Company’s public disclosure record, for additional information on risks and uncertainties relating to these forward-looking statements. Readers should also review the risk factors applicable to junior mining exploration companies generally to better understand the variety of risks that can affect the Company. The Company undertakes no obligation to update publicly or otherwise revise any Forward Looking Statements whether as a result of new information or future events or otherwise, except as me be required by law.