Business Address 101
EAST LAKESIDE AVENUE COEUR D'ALENE
Paul Dircksen, Executive Chairman
Randal Hardy, CEO
Timberline Resources Corporation (NYSE Amex:TLR) (TSX-V:TBR - News) ("Timberline" or "Company") today issued a corporate update including its key messages, objectives and goals, and reported on the status of its current corporate and exploration activities, including the Timberline "new look" program.
Corporate Key Messages, Objectives and Goals
Timberline's corporate vision and strategy follows on the successful formation of the Butte Highlands Joint Venture in late 2009, and completion of the acquisition of Staccato Gold Resources Ltd. and its South Eureka, Nevada Property in June, 2010.
The Company's primary focus is based upon its expertise in exploration and development of advanced-stage precious metal properties. With a proven track record of exploration and mining veterans leading the Company and at the board level, together with cash flow from its 100%-owned drilling subsidiary, Timberline Drilling, the Company has reduced risk and provides an attractive investment opportunity.
With a business model centered on its primary focus of advanced exploration and development, Timberline will add value by advancing exploration and then realizing that added value for shareholders by monetizing projects that are ready for development to production. Monetization could be realized by any number of potential transactions ranging from sale to lease to joint venture (as with the Butte Highlands Joint Venture), carried or royalty interest. While becoming a direct producer/operator is not a primary focus of Timberline, the Company's board would nonetheless consider such an option in appropriate circumstances.
Short term goals for Timberline include completion of the programs set out below for both the South Eureka Property and the Butte Highlands Joint Venture, the two key mining assets of the Company at this time. In addition, prudent growth of Timberline Drilling will remain a strategic goal for Timberline in the short and longer terms.
Over the longer term, a substantially increased property portfolio, based on acquisition criteria similar to South Eureka, situated in North America, will be the Company's focus, together with increased market awareness and name recognition.
Paul Dircksen, Executive Chairman of Timberline said, "We are very excited about the prospects for Timberline and its future. We are building on our expertise in exploring and developing, and so we will be looking to future South Eureka-type acquisitions that we believe can quickly create value for our shareholders. The Butte Highlands Joint Venture is an example of the type of transaction we might see as we advance a property -- allowing another company to take the production step, but retaining a significant interest in Timberline for our shareholders. Timberline truly delivers diversified value. We see a time of exciting growth for Timberline, and will be executing a concerted focus on marketing and capital markets awareness given our new TSX-V listing and our representation in Toronto. As part of that process, we will be reviewing shareholder interaction and our website so as to allow greater access to current information and news about Timberline. I would like to take this opportunity to extend my thanks to all our Timberline, Timberline Drilling, and Butte Highlands JV teams for all their efforts, and especially to all our shareholders for your continued support of your company."
South Eureka Property, Nevada
At its flagship South Eureka Property, which is one of the largest undeveloped exploration properties in Nevada, encompassing some 23 square miles, and which is situated within four miles of the Archimedes Mine, Timberline is executing its 2010 Exploration Program, the details of which were set out in a press release dated August 3, 2010.
With a budget for RC and core drilling, along with property payments and additional geophysics and metallurgical analysis totalling approximately USD $2.2 million, it is expected that Timberline will be able to further define and understand, and potentially expand, the previously reported resource estimates. Drilling results are expected by the end of 2010, and the Company intends to prepare and file a NI 43-101 Report by the end of February, 2011. Final completion of an evaluation leading to a Preliminary Economic Analysis is targeted for Q2 2011.
The South Eureka Property encompasses some 15,000 acres and hosts multiple sediment-hosted gold targets in the Battle Mountain/Eureka gold trend, four of which have already been identified by the Company as additional project areas. Before the end of 2010, it is expected that additional targeted drilling will be undertaken to begin testing of other exploration targets and known areas of mineralization.
Butte Highlands Joint Venture, Montana
Timberline is being carried to production and is a 50% joint venture partner in the Butte Highlands Joint Venture, which is located in a prolific gold mining region in southwest Montana known for its world-class deposits. The current status is continued underground development, with underground definition drilling to begin within the next few weeks. For the remainder of 2010 and early 2011, work is to continue on up to 6,700 feet of underground ramps, 60,000 feet of underground core and RC drilling, and a 10,000-ton bulk sample, all of which is being funded by the Company's joint venture partner. Drill results are expected to be released in early 2011.
The required application has been submitted for a Hard Rock Operating permit, and work is continuing on the other associated permits required for the operation. No material permitting obstacles are expected as the project advances toward targeted production. Surface facilities and infrastructure required for development and production are already in place under the Company's exploration permit which has been in place since August 2009.
Butte Highlands is targeted to produce gold commencing in Q3/Q4 2011, with the Company's share expected to be approximately 30,000 ounces per annum over the projected mine life. All mine plan information is based on Company internal analysis such that detailed figures are non 43-101 compliant. As part of the current program of work, the Company intends to prepare and file a NI 43-101 Report by the end of June, 2011.
Timberline's Butte Highlands Joint Venture is the first example of the Company's strategy to enter into creative structures that move production responsibility to other parties while allowing exposure to gold production, where financing has been provided by a third party with proven expertise in underground mine development and operation. This has been achieved with no dilution to Timberline shareholders. As noted, all expenditures relating to the development of the projected underground mine are being paid by Timberline's joint venture partner, with a total expected development budget of USD $17 million.
In addition, during 2010, Timberline is undertaking an exploration program at the property with a goal of extending the mineralized zones by way of drilling seven holes totaling 7,000 feet, geophysics and geochemistry with a total budget of USD $650,000. Results will be released as the Company evaluates assay results during the next two months.
Investments -- Timberline Drilling
Timberline is the 100% shareholder of Timberline Drilling, Inc. ("TDI"), a contract diamond drilling subsidiary in the United States. TDI's specialty is underground diamond drilling, but it provides both underground and surface core drilling to companies with operating mines and advanced development and exploration projects. With its own facilities and management, TDI is a separate business unit reporting to the Company and consolidated with the Company's financial results.
TDI has experienced, dedicated personnel and world-class clients, including Newmont in Nevada. TDI has remained consistently profitable over the last five quarters, despite global economics, and contributes cash flow to the Company while providing priority access for Timberline's drilling activities at attractive rates. Prudent growth is a key goal of Timberline for TDI.
Investments -- Rae-Wallace Mining Company
Timberline is a significant shareholder (18%) in Rae-Wallace Mining Company (OTCPK:RAEW), which holds eight gold-silver properties in Peru. Rae-Wallace has recently announced a funding and strategic partnership with Fronteer Gold Inc. of Vancouver, Canada that adds to its strategic partnership with Timberline.
The Company is pleased to announce the adoption of the first step in its "new look" -- a new corporate logo which reflects both a traditional rock hammer with a gold bar - in a new, modern format.
The new logo is first displayed to the market with this press release, and all corporate communication material will now reflect this "new look". The Company expects to be launching its "new look" website during the fall of 2010.
Market Awareness and Name Recognition
As a result of its TSX-V listing, the Company is concentrating on establishing a presence and market awareness in the Toronto capital markets, while continuing its overall general marketing activities in all other markets. The Company recently completed a trip to Toronto with additional follow-up being planned. Increased exposure of the Timberline brand is planned through investor and issuer conferences, corporate presentations, increased investor relations, and other market facing activities.
Shareholders will be invited to view Timberline's "new look" Corporate Presentation which will be available shortly on the Company's website at www.timberline-resources.com.
Paul Dircksen is a Qualified Person as defined by National Instrument 43-101 and has reviewed and approved the technical contents of this release.
"In June we successfully closed on our acquisition of Staccato Gold Resources," Timberline chief executive officer Randal Hardy said. "As a result, we gained control of the 23-square mile South Eureka property in Nevada's Battle Mountain-Eureka gold trend with a previously-reported resource in excess of 800,000 ounces of gold and significant exploration potential."
Timberline Resources Corporation is pleased to announce that it has mobilized a surface drill and has begun the diamond drilling segment of its exploration program at its recently-acquired South Eureka property in Nevada's Battle Mountain-Eureka gold trend. Timberline also expects to begin a complementary RC drill program there within the next several weeks.
The South Eureka property, including the Lookout Mountain project, was the primary exploration asset Timberline acquired in its acquisition of Staccato Gold Resources, Ltd ("Staccato") in June 2010. A significant exploration plan will be undertaken at the South Eureka property with a focus on the Lookout Mountain project. Lookout Mountain is a typical sediment-hosted gold project with historic gold production and a previously-reported gold resource in excess of 800,000 ounces. Timberline's exploration objective is to confirm the existing resource and apply economic parameters as part of a preliminary study to determine the economic feasibility of the project. Geologic mapping of the property will also continue in order to better understand ore controls, for targeting purposes, and for geologic modeling.
Current drill data, preliminary metallurgical testing, and current gold prices indicate a low-cost, low-grade oxide, heap-leachable gold mine could potentially be developed.
Timberline's exploration program will include in-fill, metallurgical, and geotechnical drilling to establish the continuity of gold mineralization, metallurgical characteristics, and engineering parameters of the deposit. Metallurgical characteristics of collected ore samples will be independently tested and analyzed.
Paul Dircksen, Timberline's Executive Chairman and Vice President of Exploration, said, "We are excited to begin our 2010 exploration and drilling program at the South Eureka property. Our analysis during the Staccato acquisition due diligence indicated a sizeable economic deposit, and our objective with this exploration program is to confirm those indications and further expand the resource. Our drilling will focus on the Lookout Mountain project area, with exploration drilling on other targets within the property."
The Lookout Mountain project is an advanced-stage gold property at the pre-feasibility level, strategically located within the southern portion of Nevada's productive Battle Mountain-Eureka gold trend. The property has an extensive exploration and drill history, including work, beginning in 1981, by Amselco, Barrick Gold, Echo Bay Exploration, Norse-Windfall Mining, and others. A total of 533 holes have been drilled at the project, totaling over 267, 000 feet. The total land package, exceeding 15,000 acres, encompasses a 4-mile strike length of structurally and stratigraphically controlled gold mineralization. All outlined mineralized zones are open and require additional in-fill and step-out drilling in order to initiate a Timberline preliminary economic scoping study. Additionally, a number of identified drill targets will be tested for potential resource expansion.TLR bought "Staccado Gold" back in June 2010...
Ian Cassels commentary on the last deal with Staccato:
"This is a good deal for Timberline. They basically paid 16 million shares ($~20 million) for Staccato CAT.V. In return TLR gets $5m in cash and 600,000 ounces of gold that are pretty defined. Management believes they can get this property into production in 3 years with similar capital costs as Butte Highlands ($15-18 million). The great thing is that in three years TLR will be producing enough cash to self fund this property and own 100% of the potential"
Timberline Resources held a conference call this past week as a follow up to their announcement that they would be acquiring Staccato Gold. The acquisition brings in a second late stage project into Timberline. Timberline’s core asset, Butte Highlands Gold Project of 750,000 ounces of gold (expandable), will be in production Q1/Q2 2011 at a rate of 70,000 ounces per year, around a $450 cash cost. Staccator’s core asset, the Lookout Mountain Project of ~600,000 ounces of gold (expandable), is a project that needs a little more drilling to expand the resource but could realistically be in production in 2.5-3 years. The capex for the Lookout Mountain project would be similar to Butte Highlands (ie $15-20 million), would be a heap leach operation, probably be a 30,000-50,000 ounce/year production potential at $400 cash cost. The combination of the two projects has realistic potential to make timberline a 100,000+ ounce gold producer over the next 3 years.
Listen to the Conference Call