Luna Gold Announces Initial Resource Estimate at Cachoeira

Vancouver, December 23, 2010 - Luna Gold Corp. (TSXV-LGC) ("Luna" or the "Company") is pleased to announce a maiden National Instrument ("NI") 43-101 compliant mineral resource estimate at its 100% owned Cachoeira Project in Para State, northern Brazil. The mineral resource has been prepared by Scott Wilson Roscoe Postle Associates Inc. (Scott Wilson RPA) according to the guidelines of the Canadian Institute of Mining, Metallurgy and Petroleum ("CIM"). Cachoeira has an Indicated mineral resource of 12.5 million tonnes at 1.11 grams/tonne Au, or 446,000 ounces gold, and an Inferred resource of 5.4 million tonnes at 1.27 grams/tonne Au, or 221,300 ounces gold.

Mineral Resource Estimate

The Cachoeira mineral resource estimate comprises drilling results from the Tucano, Arara and Coruja deposits and is shown in Table 1. A plan map showing the location of the deposits and preliminary open pit shells has been uploaded to the Luna Gold website at www.lunagold.com or to view directly click here. A technical report will be filed on SEDAR in due course.

TABLE 1 MINERAL RESOURCES - DECEMBER 22, 2010
Luna Gold Corp. - Cachoeira Project

Notes:

1.     CIM definition standards were followed for Mineral Resources.

2.     The Qualified Person for this Mineral Resource estimate is Patti Nakai-Lajoie, P.Geo.

3.     Mineral Resources are estimated at a pit discard cut-off grade of 0.3 g/t Au. Preliminary open pit shells were used to constrain the resources.

4.     The Tucano database consists of 86 diamond holes (DH), 78 reverse circulation (RC) holes, 6 combined RC/DH holes and 221 auger drill holes in addition to 70 surface channels and 32 underground channels.

5.     The Arara database consists of 64 diamond drill holes, 101 auger drill holes, and 8 surface channels.

6.     The Coruja database consists of 33 diamond drill holes, 14 RC holes, 2 combined RC/DH holes, 166 auger drill holes, and 86 surface channels.

7.     High assays were capped at 30 g/t Au at Tucano and 10 g/t Au at Arara and Coruja.

8.     Tucano, Arara and Coruja block dimensions: 10 m E x 10 m N x 5 m high.

9.     Mineral Resources are estimated using a gold price of US$1,238 per ounce.

10.   Bulk densities used were 2.70 t/m3 to 2.75 t/m3 in rock, 2.17 t/m3 to 2.40 t/m3 in the transition zone, and 1.72 t/m3 to 1.89 t/m3 in saprolite.

11.   Numbers may not add due to rounding.

12.   Mineral Resource estimates may be materially affected by environmental, permitting, legal, title, taxation, socio-political, marketing or other factors.

Luna's President & CEO, John Blake, comments, "This initial resource estimate is a significant milestone at Cachoeira, with ample scope to increase the resource Cachoeira is now a new stand-alone project, a solid platform in the development of Cachoeira into mine production. This resource estimate provides Luna Gold with additional value at low cost.

Whittle pit shells were used to constrain all mineral resources and significant mineralization extends beyond the pit constraints, particularly at Arara where 50% of mineralization lies outside the Whittle pit shell, and Coruja where 68% of mineralization lies outside the Whittle pit shell. At Tucano 17% of mineralization is located outside of the Whittle pit shell. While this mineralization cannot currently be considered a resource it demonstrates that strong potential exists to increase the Cachoeira mineral resources."

The Scott Wilson RPA Qualified Person under NI 43-101 is Patti Nakai-Lajoie, P.Geo., who has reviewed and approved this news release as it applies to the mineral resource estimate.

Luna's VP Exploration, Titus Haggan, states, "The Cachoeira exploration team has made excellent progress in 2010 and we are finalizing our 2011 work programs and budgets with the objective of aggressively advancing Cachoeira. Field teams are currently auger drilling newly defined regional gold targets within the Cachoeira Shear Zone and assay results will be reported as they are received. Socio-economic diagnostic studies have been commissioned and we will be assigning key personnel to the project in early 2011."

Geology & Mineralization

Cachoeira is an advanced stage gold project in northeast Par� state, Brazil. Orogenic gold mineralization occurs within a 5 km long north trending shear zone. Three deposits, Tucano, Coruja and Arara, have been defined to date. The Tucano deposit is located within the Cachoeira town urban limit.

Earn-In Terms

In October 2007, as amended in December 2008, January 2010 and August 2010, the Company entered into an agreement to acquire a 100% interest in the Cachoeira project from a consortium (the "Vendors"). To acquire the interest, the Company paid the Vendors 0.5 million BRL (US$0.3 million), committed to incur exploration and eventual project feasibility and development expenditures of approximately 9.5 million BRL (US$5.5 million) by December 2011, and to provide a royalty of 4% of net profits interest. The Company has the right to buy-back 2% of the net profits interest for a payment of US$4.0 million any time prior to the first anniversary of commercial gold production. Commercial production must commence by October 2012 or the Company will pay a fine of $0.2 million each year on a monthly pro rata basis, in lieu of the operating royalty until commercial production is achieved.

At September 30, 2010, Luna had incurred accumulated exploration expenditures of 6.24 million BRL as part of the Company's agreement with the vendors to incur exploration expenditures of 9.5 million BRL. The Company has presented a NI 43-101 compliant resource estimate to the Vendors and satisfied this contractual obligation.

CORPORATE UPDATE

Luna Gold Corp. is pleased to announce that further to its release of December 14, 2010, it has uploaded 3 cross sections from its ongoing resource drill program at the Piaba gold deposit, Aurizona to its website at www.lunagold.com or to view cross sections directly click below:

• Section 000
• Section 200W
• Section 400W

Luna's President & CEO, John Blake, commented, "The sections now displayed on our website relate to the recent results of 7 drill holes at the Piaba deposit. The holes were drilled on sections 000, 200W and 400W and demonstrate continuous mineralisation along 400m strike length to a depth of -300m RL. Drilling continues at Piaba to define further mineralization within the 3 km long orogenic gold deposit and we are confident that we can deliver a significant increase in resources. To provide context, the current Aurizona 2010 FS pit at its deepest point is RL -- 136m. Assay results are expected in late January from trenching and auger drilling programs ongoing at the exploration targets at Aurizona which are located in close proximity to the Aurizona Plant currently in commissioning."

About Luna Gold Corp

Luna is a gold mining and exploration company engaged in the exploration and development of gold deposits and advanced stage gold exploration projects in Brazil. The Company is currently commissioning its Aurizona gold mine in Maranh�o, Brazil.

On behalf of the Board of Directors

LUNA GOLD CORP.

John Blake - President and CEO

Website: www.lunagold.com
For further information contact Investor Relations at (604) 689-7317 or toll free at 1-866-689-7317.

NEITHER 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.

Regulatory Footnotes

Exploration at the Cachoeira Project was initiated in 1985 by Companhia de Minera��o e Participa��es (CMP) and Minera��o CCO Ltda (CCO) and continued through the 1990's with work by Brazilian Goldfields Ltd (BGZ) and Goldfields Ltd (Goldfields). Companhia Vale do Rio Doce (Vale) conducted an exploration program at Cachoeira in 2003. Luna acquired the property in 2007 and commenced exploration soon after. CMP drill core assays were conducted at the Geosol and Delab/MNA Laboratories, Belo Horizonte and the LBPM/Nomos Laboratory in Rio de Janeiro. CCO drill core assays were conducted at Geoser Laboratory, Belo Horizonte. The BGZ and Goldfields drill core assays were conducted at Bondar Clegg Laboratories, Vanvouver. The Vale core assays were conducted at Geosol Laboratories, Belo Horizonte. Luna used ALS Chemex Laboratories in Belo Horizonte, Brazil and Lima, Peru for drill core assays. Luna's QA/QC program consists of blanks, Certified Reference Materials (CRM) and quarter core duplicates.

Patti Nakai-Lajoie, P.Geo., of Scott Wilson RPA is a Qualified Person as defined under National Instrument 43-101. Ms Nakai-Lajoie was responsible for the preparation of the above resource estimate on the Cachoeira Project and is independent of the Company in accordance with NI 43-101.

Titus Haggan Ph.D., EurGeol Certified Professional Geologist #746, Luna's VP Exploration is the Qualified Person as defined under National Instrument 43-101 responsible for the scientific and technical work on the exploration program and has supervised the preparation of and reviewed certain technical disclosure in this press release.

This news release does not constitute an offer to sell or a solicitation of an offer to sell any of the securities in the United States. The securities have not been and will not be registered under the United States Securities Act of 1933, as amended or any state securities laws and may not be offered or sold within the United States or to U.S. persons unless registered under the United States Securities Act of 1933 and applicable state securities laws or an exemption from such registration is available.

Forward-Looking Statements

This release contains certain forward looking statements. Forward-looking statements are subject to various risks and uncertainties concerning the specific factors identified in Luna Gold Corp.'s periodic filings with Canadian Securities Regulators. These factors include the inherent risks involved in the exploration and development of mineral properties, the uncertainties involved in interpreting drill results and other exploration data, the potential for delays in exploration or development activities, the geology, grade and continuity of mineral deposits, the possibility that future exploration, development or mining results will not be consistent with the Company's expectations, accidents, equipment breakdowns, title matters, labor disputes or other unanticipated difficulties with or interruptions in production and operations, fluctuating metal prices, unanticipated costs and expenses, uncertainties relating to the availability and costs of financing needed in the future, the inherent uncertainty of production and cost estimates and the potential for unexpected costs and expenses, commodity price fluctuations, currency fluctuations, regulatory restrictions, including environmental regulatory restrictions and liability, competition, loss of key employees, and other related risks and uncertainties. The Company undertakes no obligation to update forward-looking information except as required by applicable law. Such forward-looking information represents management's best judgment based on information currently available. No forward-looking statement can be guaranteed and actual future results may vary materially. Accordingly, readers are advised not to place undue reliance on forward-looking statements or information.