The Butte Highlands Project
* Development-stage gold project with historic (non NI 43-101 compliant) mineralization estimate exceeding 500,000 ounces and excellent potential for significant expansion.
* Joint-venture with Small Mine Development, LLC ("SMD") to begin mine development in summer 2009; Initial production targeted for mid-2010.
* Preliminary in-house financial analysis indicates the potential for robust economics at gold prices as low as $500 per ounce.
In July 2007, Timberline purchased the Butte Highlands Project, located 15 miles south of Butte, Montana within a favorable geologic domain that has hosted several multi-million ounce gold deposits including Butte, Golden Sunlight, Montana Tunnels, and Virginia City. The patented, royalty-free property was extensively drilled by Placer Dome, Battle Mountain, ASARCO, and Orvana Minerals in the 1980s and 1990s, and contains historic mineralization outlined by Orvana (not compliant with NI 43-101 or SEC Guide 7) exceeding 500,000 ounces of gold at a grade of nearly 0.3 ounces of gold per ton (oz/t). Past drilling highlights include gold intercepts of 50 feet of 0.65 oz/t, 31 feet of 1.06 oz/t, and 11.5 feet of 1.99 oz/t.
Butte Highlands In October 2008, Timberline announced an agreement to form a 50/50 joint venture with SMD at Butte Highlands. Under terms of the agreement, Timberline will be carried to production by SMD, which will fund all mine development costs and begin development this summer. Timberline's 50-percent share of project costs will be paid out of proceeds from future mine production. The partnership is mutually regarded by Timberline and SMD as a model for future opportunities in underground mine development and mining as Butte Highlands is considered a good fit for the current market environment and for the unique qualifications of both companies.
Highlights of a recent preliminary financial analysis, conducted by SMD, include production targeted for mid-2010 and a sensitivity analysis indicating robust economics at gold prices as low as $500 per ounce. The analysis assumes the successful confirmation of historic mineralization estimates, including tonnage and average grade.
The analysis considered a 1,000 ton-per-day operation averaging 0.287 ounces of gold per ton, yielding annual gold production of approximately 85,000 ounces per year over a 5-year mine-life. It forecast a 2-year development time, primarily to drive an exploration decline (which may also serve as a production ramp) at an estimated cost of $15-million to $18-million. Although there are suitable sites for an on-site mill and tailings pond on the property, they are not currently envisioned as custom milling capacity is available at existing nearby facilities. The resulting reduction in development lead-time, as well as in permitting and construction costs, will have a substantial positive impact on project economics.Butte Highlands
In 2008, Timberline completed the first four holes (6,757 feet) of a drill program designed to validate and expand the historic resource estimates, to obtain material for petrographic and metallurgical evaluation, and to assess 3-D control for planning and permitting the exploration decline and, ultimately, a producing mine. With the joint-venture agreement in place, a redesigned drill program will likely reduce surface drilling while increasing underground drilling as the exploration decline is advanced.
The most encouraging hole to-date, BH-DDH 08-03, was drilled 100 feet northwest of previously-tested mineralization boundaries. The hole returned several mineralized gold intervals, including 2.0 feet of 0.62 oz/t, 37.0 feet of 0.22 oz/t, 5.0 feet of 0.26 oz/t, 9.0 feet of 0.43 oz/t, and 35.0 feet of 0.14 oz/t. These results demonstrate the northwest extension of the Upper, Middle, and Lower zones, while the latter two intervals comprise a new discovery at depth, a potential offset portion of previously-identified zones. Both the extension and the discovery have the potential to increase mineralization estimates at Butte Highlands.
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