ARMADILLO COMPLETES ACQUISITION OF FLAGSTAFF GOLD MINE

Mar 25, 2013

Armadillo Resources Ltd. has completed the acquisition of the Flagstaff gold mine near Baker City, Ore., which was announced on Nov. 30, 2012. The property is located one-half mile off a paved highway with ready access to rail and power.

Management has just returned from a visit to the site with Dick Coughren, president of Dimari Enterprises LLC of Pasco, Wash. Together, they finalized the transfer of the mine from Dimari to Armadillo. Additionally, negotiations are under way regarding the securing of a mining contractor with the experience required to establish the drift needed to gain access to the existing tunnels of this historic mine site. The company is also negotiating contracts with Freddie Quimby, the mining contractor, and Brian White, the geologist who wrote two of the reports on the Flagstaff mine.

The company intends to complete an initial program of sampling, trenching and drillin, including an upgrade to the existing tunnels to gain access and verify the existing orebody. After verification, Armadillo will pay $50,000 (U.S.) and issue Dimari 500,000 common shares of the company. A further payment of $50,000 (U.S.) per anniversary date or a 25-per-cent royalty from production, whichever is the greatest, to a maximum total payable of $5-million (U.S.) will also be required.

Mr. Quimby, in a 2006 report prepared for Dimari, noted there are several veins on the property traced for two miles in the valley. The Flagstaff massive quartz vein at the 360-foot level consisted of a body 300 feet deep by 300 feet long, averaging 1.5 feet wide. A total of 13,500 tons of 0.42 ounce per ton gold (5,670 ounces) was estimated. The Big Ledge vein on the property is exposed at the 260-foot level of the mine for a distance of 520 feet. One stope is opened on this level for a length of 125 feet. Values of 0.89 ounce per ton Au were reported. There is an estimated 216,666 tons for a total of 192,832 ounces of gold. In addition, to the 360-foot level of the Big Ledge, it is estimated there are 83,333 tons at 0.89 ounce per ton gold for an additional 74,166 ounces of gold.

In a 1992 report by Brian G. White, PGeo, for Hecla Mining Company, he noted, “Underground examination and sampling of the Big Ledge indicated the possibility of an extensive body of this disseminated mineralization that could average at least 0.20 ounce per ton Au across an average width of 15 to 20 feet, and possibly total several million tons and be exploited by underground mining.”

The data from the reports previously mentioned were not done by a qualified person and are classified as historical estimates, not as current mineral resources, and the issuer is not treating the historical estimate as current mineral resources.

The Flagstaff mine has a long gold production history having been owned by a French company which owned and operated the mine from 1898 until 1914. Labor disputes disrupted production, and the mine permanently closed when the fully timbered, double-compartment elevator shaft and timbers in the tunnels mysteriously caught on fire.

The company also reports that is has terminated the option agreement with Silver Phoenix Resources Inc. to acquire a 60-per-cent interest in the Waverley-Tangier property in the Revelstoke mining division of British Columbia. The company reached this decision after again reviewing the difficulty in maintaining access to the property due to extreme weather conditions and the difficulty in raising financing for its exploration.

We seek Safe Harbor.

http://www.armadilloresources.com/s/NewsReleases.asp