Timberline Resources Corp (TLRS)

[ThSeeker]

Gold Breather is Healthy (From Gold Investment Letter )
Good Morning,

I wouldn't be surprised so to see gold get "shaken out" below $1,300 briefly while it rests from the recent move higher. The bullish sentiment needed to cool in order for a new up leg that will test last years $1,375 ish area this fall. The US Dollar has been blasted constantly and was due for a relief rally, which doesn't necessarily mean gold has to go down but during a multi week rally it creates some head wind. This action is all very normal and healthy for gold. Remember that getting in the habit of adding to positions in corrections instead of when the mining stocks are running is imperative.

... I'm very confident that gold will shoot over $1,400 by year end. If you look at the last time gold passed $1,400, it only took 9 months to hit the all time high in the $1,900's (chart attached). This time, I think it will happen faster.
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Timberline Resources (TLRS/TBR) announced positive metallurgical results at their flagship Talapoosa project in Nevada:

https://www.stockwatch.com/News/Item.aspx?bid=U-by475372-U%3aTLRS-20170914&symbol=TLRS®ion=U


???????Why a joint venture partner hasn't locked this down yet is surprising. There are simply not that many 1 million plus ounce projects this far advanced (including permitting) sitting around in Nevada. The metallurgy nor recoveries are an issue as this project stacks up in the top 3 heap leach net gold recovery grades in the US. Meaning, at 1.11 GPT gold and 63% recoveries, the net is .73 GPT gold. I can only find Goldcorp's Coffee project (1.23 GPT) and GSV's Dark Star (1.19) with higher net recovery grades.


Talapoosa has better numbers than Moss (Northern Vertex), Relief Canyon (Pershing), Three Hills (West Kirkland), and another dozen heap leach I've looked at around the SW US. The overhang in Timberline and the reason it trades at a discount to peers is due to the option payments still due in 2018 and 2019. However, with the numbers in the PEA, size of the resource, and advanced stage of the project at Talapoosa, $10MM is a rounding error for a well capitalized partner.


My thesis on Timberline is that they will not be the ones that make the option payments. A partner that wants a big piece of the project will happily pay that off and spend money on drilling to earn into a majority stake. I believe a deal like this with a well capitalized partner is inevitable, the question is when exactly and upon what terms. The higher gold grinds, the more action will be taken by larger mining companies to lock up interest in projects like Talapoosa. Again, there aren't prospects like this one around every corner, especially those that are on the market with still attractive terms.


Worst case scenario, Timberline doesn't find a party to fund TLRS itself for $3-5MM or sign on the JV Talapoosa in the next 7-8 months and they drop the property. I don't think this is likely because the investors (us) would likely finance to make the next payment but the larger payment in 2019 is more the ultimate issue to decide on. But assume Talapoosa implodes from Timberline, they still have nearly 1 million ounces at Eureka! Eureka was the company's flagship asset for years until they acquired the Talapoosa option. I've been to Eureka and there is a lot more gold to be found there. It will cost money to drill but there is no doubt in my mind a couple to few million ounces minimum is there to be resourced.


Lastly, Timberline has the highly prospective Seven Troughs project in Nevada which we're all very excited about ultimately drilling. Appaloosa, adjacent to Talapoosa, is incredibly prospective as well and is a big potential bonus to attract a partner at Talapoosa. It will be fun to see how this shakes out!


I'm long TLRS and may choose to buy or sell shares at anytime without notice.


Gold Investment Letter

Sincerely,
Eric Muschinski
Gold Investment Letter
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