Timberline Resources Corporation (NYSE MKT:TLR) (TSX-V:TBR) is pleased to report the results of a positive Preliminary Economic Assessment carried out on the Company’s recently optioned Talapoosa project located in western Nevada. Timberline holds a 30-month option to purchase 100% of Talapoosa.

The PEA confirms Talapoosa’s robust economic potential as an open pit, heap leach gold operation using contract mining at a processing rate of 3.8 million tons per annum (Mtpa). Specifically, using the base case price assumption of $1,150/oz gold and $16/oz silver, Talapoosa has an estimated $209 million after-tax net cash flow, $136 million after-tax net present value at a 5% discount rate, an attractive 39% after-tax internal rate of return (IRR), and a low initial capital cost of $51 million. All currency figures are in US Dollars (US$ or $) unless otherwise stated.

The PEA was prepared by WSP Canada Inc. with technical contributions from Mineral Property Development, Inc. McClelland Laboratories, Inc. Enviroscientists Inc. and DOWL, using the current mineral resource estimate for Talapoosa, which was also prepared by WSP with an effective date of March 24, 2015. The completed PEA technical report will be filed on the Company’s website, EDGAR and SEDAR within 45 days.

Kiran Patankar, Timberline’s President and Chief Executive Officer, commented, “We are extremely pleased to have achieved this important milestone just a short month after having acquired the Talapoosa option. Our technical team capitalized on a well-defined mineral resource that had undergone extensive historic engineering and permitting work to deliver a high quality PEA ahead of schedule. This illustrates the clear advantages of working with a technical group that is actively involved with comparable Nevada gold development projects and had prior experience with Talapoosa.

“The PEA presents a development scenario that demonstrates strong economics using conservative metals price assumptions and, importantly, fits within the scope of the previously permitted operation. As a partially permitted project in a low-risk, pro-mining jurisdiction with estimated average annual gold production of 55,000 oz, all-in sustaining cash costs of $599/oz of gold (net of silver), initial capital costs of $51 million, and potentially significant opportunities for future optimization and resource expansion, we believe Talapoosa is in the top quartile of North American gold development projects. Based on these encouraging results, we plan to further optimize Talapoosa through the completion of a Pre-Feasibility Study, which we expect to complete in Q1 2016.”

The PEA is preliminary in nature and the economic analysis it presents is based, in part, on Inferred Resources that are considered too speculative geologically to have mining and economic considerations applied to them that would enable them to be categorized as Mineral Reserves. Estimates of Inferred Resources may not form the basis of feasibility or pre-feasibility studies, except in rare cases. There is no certainty that the economic forecasts contained within the PEA will be realized. Mineral Resources that are not Mineral Reserves do not have demonstrated economic viability.

Project Design and Economics

The proposed project is a 10,460 ton/day (3.8 Mtpa) heap leach facility fed by a single open pit mine, resulting in a projected 11-year mine life with total metal production of 593,000 oz of gold and 7,365,000 oz of silver. Initial capital costs are estimated at $51 million including a $2 million reclamation bond, $8 million in owner’s costs, and a $6 million contingency cost. This includes mine development, heap leach pad and Merrill Crowe processing plant construction, waste rock management, and all site infrastructure required for the start of mining operations. Projected life-of-mine (LOM) average cash operating costs are $543/oz of gold (net of silver byproduct at the base case $16/oz silver price). All-in sustaining costs are $599/oz of gold (net of silver). Total all-in costs, including all capital expenditures, are $682/oz of gold (net of silver), which is among the lowest per-ounce costs when compared with other gold development projects. A summary of the operating assumptions and highlights are as follows:

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Operating Assumptions/Highlights           (US$ unless otherwise indicated) 

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Mine Life                                                        10.8 years 

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Total Material Mined                                     102.4 million tons 

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Strip Ratio                                                        1.47 : 1 

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Processing Rate                                                    3.8 Mtpa 

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Average Gold Head Grade                                            0.74 g/t 

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LOM Average Gold Recovery                                                66%

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Total Recovered Gold Ounces                                      593,000 oz 

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Average Gold Production                                        55,000 oz/yr 

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Average Silver Head Grade                                          11.6 g/t 

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LOM Average Silver Recovery                                              52%

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Total Recovered Silver Ounces                                  7,365,000 oz 

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Average Silver Production                                     679,000 oz/yr 

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Initial Capital Cost(1)                                       $51.2 million 

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Cash Operating Cost (net of silver)(2)                           $543/oz Au 

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All-In Sustaining Cost (net of                                              

 silver)(3)                                                      $599/oz Au 

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Total All-in Cost (net of silver)(4)                             $682/oz Au 

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(1)  Includes $2 million reclamation bond and $6 million in contingency     

     costs                                                                  

(2)  Mining, processing, G&A, and reclamation costs; $16.00/oz silver price 

(3)  Cash operating cost plus royalties, refining costs, NV net proceeds    

     tax, and sustaining capex; $16.00/oz silver price                      

(4)  All-in sustaining cost plus initial capital; $16.00/oz silver price    

At a gold price of $1,150/oz and a silver price of $16/oz (base case price assumptions), Talapoosa has an estimated $209 million after-tax net cash flow, $136 million after-tax NPV at a 5% discount rate, an attractive 39% after-tax IRR, and a payback period of 3.1 years from first production. The base case economic evaluation used metal prices that are close to current spot prices and lower than historical three-year trailing averages for gold and silver prices. Talapoosa’s economics were also evaluated using a $1,000/oz gold price and a $14.50/oz silver price (the “Downside Case”), as well as using a $1,300/oz gold price and a $17.50/oz silver price (the “Upside Case”). After-tax versions for each case were prepared using the following: a 1% Net Smelter Return (NSR) royalty; a 5% State of Nevada net proceeds tax; depreciation and depletion; and a 35% US Federal income tax. The pre-tax and after-tax results for the base case and other commodity price cases are as follows:

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Project Performance                    Commodity Price Assumption           

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(US$ unless otherwise               Downside            Base          Upside

 indicated)                             Case            Case            Case

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Gold Price                         $1,000/oz       $1,150/oz       $1,300/oz

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Silver Price                       $14.50/oz       $16.00/oz       $17.50/oz

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Pre-Tax:                                                                    

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Net Cash Flow                   $183 million    $278 million    $372 million

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NPV @ 5%                        $114 million    $184 million    $254 million

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  NPV @ 8%                       $85 million    $145 million    $205 million

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IRR                                    30.4%           48.4%           68.4%

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Payback Period                     5.4 years       0.9 years       0.8 years

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After-Tax:                                                                  

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Net Cash Flow                   $138 million    $209 million    $278 million

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NPV @ 5%                         $84 million    $136 million    $188 million

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  NPV @ 8%                       $61 million    $106 million    $150 million

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IRR                                    25.4%           38.8%           52.6%

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Payback Period                     5.5 years       3.1 years       1.0 years

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Mineral Resources

The PEA is based on the current mineral resource estimate for Talapoosa. The technical report, titled Technical Report and Resource Estimate on the Talapoosa Project, Nevada, was published on SEDAR on April 1, 2015. The resource estimate was prepared by WSP, with contributions from McClelland Labs, and has an effective date of March 24, 2015. The Talapoosa resource includes 1.01 million oz of gold and 13.65 million oz of silver in the Measured & Indicated Resources categories, with an additional 0.23 million oz of gold and 2.17 million oz of silver in the Inferred Resource category, and is summarized in the table below:

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                                                  Au          Ag            

                                    Tons    (oz/ton)    (oz/ton)      Tonnes

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Oxide Measured                 3,126,050       0.038       0.553   2,835,890

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Sulphide Measured             14,044,820       0.036       0.481  12,741,180

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Total Measured                17,170,870       0.036       0.494  15,577,070

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Oxide Indicated                1,412,000       0.032       0.416   1,280,900

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Sulphide Indicated            12,681,600       0.028       0.361  11,504,500

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Total Indicated               14,093,600       0.028       0.366  12,785,400

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Total M&I                     31,264,470       0.032       0.437  28,362,470

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Oxide Inferred                 1,762,000       0.027       0.065   1,598,000

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Sulphide Inferred              9,436,000        0.02       0.218   8,560,000

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Total Inferred                11,198,000       0.021       0.194  10,158,000

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                                      Au          Ag          Au          Ag

                                   (g/t)       (g/t)        (oz)        (oz)

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Oxide Measured                      1.29       18.96     117,253   1,728,323

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Sulphide Measured                   1.22       16.50     501,215   6,760,763

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Total Measured                      1.23       16.95     618,468   8,489,086

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Oxide Indicated                     1.10       14.25      45,328     586,999

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Sulphide Indicated                  0.94       12.36     349,005   4,573,274

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Total Indicated                     0.96       12.55     394,334   5,160,273

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Total M&I                           1.11       14.97   1,012,802  13,649,358

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Oxide Inferred                      0.93        2.24      47,745     115,115

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Sulphide Inferred                   0.68        7.48     185,787   2,057,651

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Total Inferred                      0.72        6.65     233,532   2,172,766

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Note: resources estimated using a gold cut-off = 0.013 oz/ton (0.45 g/t)

Capital Costs

Capital costs were developed based on comparable open pit, heap leach gold operations and facilities. The costs are presented in three separate categories: (1) Initial direct capital costs, which cover construction costs to initiate mining and heap leach processing and include a $2 million estimated reclamation bond; (2) Initial indirect capital costs, which include EPCM, start-up owner’s costs, working capital, and initial contingency costs; and (3) Sustaining capital costs, which include vehicle replacement, dewatering infrastructure, contractor demobilization, and associated contingency costs. The estimated capital costs are as follows:

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Capital Costs                                       US$ million  % of Total 

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Initial Capital Costs                                                       

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  Direct Costs(1)                                   $      37.7          73%

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  Indirect Costs (including contingencies)          $      13.5          26%

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Total Initial Capital Costs                         $      51.2          99%

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Sustaining Capital Costs(2)                         $       0.7           1%

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Total LOM Capital Costs                             $      51.9         100%

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(1)  Includes $2 million reclamation bond                                   

(2)  Includes return of $2 million reclamation bond                         

Operating Costs

Operating costs are based on comparable open pit, heap leach gold operations and facilities and include quotations from third-party vendors for contract mining and crushing. The project will be mined by conventional open pit methods. Mineralized material will be crushed in primary and secondary stages with a high pressure grinding roll (HPGR) tertiary stage to produce a nominal -10 mesh product, which will be agglomerated prior to being placed by stacker on the heap leach pad. Pregnant solution from the heap leach pad will be recovered using a Merrill Crowe recovery circuit that will produce a gold-silver dore. Operating cost estimates are as follows:

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Operating Costs (LOM Average)                                   US$/ton feed

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Mining Cost (@ $2.32/ton mined)                                       $ 5.74

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Processing Cost ($/ton processed)                                     $ 3.75

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General and Administrative ($/ton processed)                          $ 0.85

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Reclamation Cost ($/ton processed)                                    $ 0.27

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Total Operating Costs ($/ton processed)                              $ 10.61

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Metallurgy

Analysis of historic data, in addition to test work performed by McClelland Labs, has provided a reliable basis for deriving gold and silver recoveries for the types of mineralized material to be mined at Talapoosa. WSP used gold and silver recoveries specific to each mineralization type as estimated by McClelland Labs. Assumed recovery rates are as follows:

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Average Heap Leach Recovery %                              Gold      Silver 

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Oxides                                                       77%         47%

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Unoxidized Material                                          65%         60%

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Sulfides                                                     59%         45%

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LOM Average                                                  66%         52%

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Permitting

Future mining development at Talapoosa will be subject to federal, state and local permitting regulations. Final permits allowing for the construction of a similar open pit, heap leach mine at Talapoosa were originally obtained by Miramar Mining Corporation in 1996/1997, including an approved Plan of Operations by the US Bureau of Land Management and permits required by the State of Nevada. The PEA contemplates an operation that is consistent with the historic PoO and Enviroscientists considers the PoO to remain in valid standing; however, several permits will require updates including calculation of bond and reclamation fees. Reapplication for State of Nevada permits will also be necessary; however, Timberline expects timely updates to meet current regulatory standards based on historic data.

Major regulatory approvals to be acquired include:

--  Bonding decision for the approved PoO and Nevada Reclamation Permit from

    the BLM and the Bureau of Mining Regulation and Reclamation ("BMRR"),

    respectively; 

--  Right of Way with the BLM for portions of the power line and water

    supply line; 

--  Water Pollution Control Permit with the BMRR; 

--  Air Quality Operating Permit and Mercury Operating Permit with the

    Nevada Bureau of Air Pollution Control; 

--  Water rights from the Nevada Division of Water Resources; and 

--  Special Use Permit from Lyon County. 

No unusual circumstances are recognized at Talapoosa relative to comparable mine sites in Nevada. This suggests that the necessary regulatory approvals are obtainable with appropriate application support.

Opportunities to Improve Results

Opportunities to improve upon the results presented above that may be evaluated as Talapoosa is advanced include:

--  Drilling to bring current Inferred Resources into the Indicated Resource

    category; 

--  Further drilling may also extend the Talapoosa deposit where it remains

    open to resource expansion, particularly on-strike to the southeast; 

--  Implementation of a comprehensive metallurgical column testing program,

    including discrete testing by zone based on the current, updated

    geologic model, to confirm that heap leach processing of the mineralized

    material is the preferred approach; and 

--  Evaluation of a milling scenario, wherein ground material would be

    processed via agitation leaching, flotation, or some combination

    thereof. Flotation concentrates may be direct shipped or require

    additional treatment. 

Risks

Risks associated with the project include:

--  Mineral Resources: This PEA is based on M&I and Inferred Resources;

    there are no assurances that this material will all be converted to

    reserves. Mineral Resources that are not Mineral Reserves do not have

    demonstrated economic viability. However, it should be noted that 81% of

    the known gold resources at Talapoosa are in the higher confidence M&I

    Resource categories. 

--  Metallurgical performance: Although extensive historic and recent

    metallurgical test work has been completed on gold and silver recoveries

    at Talapoosa, potential remains that additional metallurgical testing

    will not support the conclusion of acceptable heap leach recovery levels

    as estimated in the PEA. To mitigate this risk, forthcoming testing will

    evaluate further optimization of heap leach processing as well as

    evaluation of alternate recovery methods that historical data suggests

    may be an acceptable or, possibly, even a preferred alternative for

    unoxidized material. The sensitivity analysis completed in the PEA

    accounts for potential changes in recovery levels for heap leach

    processing.  

--  Sustained and significant reduction in gold price: The PEA contains an

    economic analysis that is sensitive to the gold price. To an extent,

    downside risk is mitigated by a mine plan that provides operators with

    considerable flexibility in responding to short-term price fluctuations.

    Talapoosa demonstrates economic resilience at a $1,000/oz gold price and

    a $14.50/oz silver price, generating $138 million in after-tax net cash

    flow, an $84 million NPV at a 5% discount rate, and a 25.4% IRR. 

--  Capital Cost Overruns: As with all mining projects, financial returns

    are capital sensitive. The current plan for the mining of Talapoosa

    includes contract mining at operational and cost terms based on

    comparable Nevada operations. Should qualified contractors not be

    available, capital expenditures for the project would likely be greater

    than estimated in this study as alternative approaches, including owned

    or leased equipment, would be employed. The sensitivity analysis

    completed in the PEA accounts for these potential changes. 

--  Operating Cost Overruns: The PEA operating costs have been developed

    from contractor, vendor, and expert consultant input. Should industry

    conditions change and influence market rates for products and services,

    the project economics would vary. The sensitivity analysis completed in

    the PEA accounts for these potential changes.  

--  Water and Power: The PEA contemplates access to water and power sources

    similar to those anticipated in the previously permitted operation. In

    follow-up studies to the PEA, advanced review of these sources will be

    completed; however, if anticipated sources are not practical,

    alternatives may increase costs to the project. 

--  Permitting: Although Talapoosa was previously permitted, some risk

    remains in obtaining necessary approvals to commence mining under

    current regulatory standards. The Company anticipates that additional

    waste rock characterization and pit lake modeling may be required to

    update the Talapoosa permits. Neither is anticipated to be unusual as

    per industry standards in Nevada. Timberline has engaged

    Enviroscientists, which has specific permitting expertise in Nevada, for

    guidance in navigating through the federal, state, and local permitting

    process.  

--  Social Acceptance: As with many new mine developments, some risk exists

    that local or regional opposition to Talapoosa could delay its

    advancement toward development. However, the risk is considered

    acceptable as Talapoosa was previously permitted, and potential net

    benefits to the host community are anticipated to be welcomed. Lyon

    County, Nevada is currently engaged with mining companies in support of

    development projects, including a very large proposed open pit copper

    project. In addition, no environmental habitat, cultural status, or

    special land status is known to exist at or near the site which might

    lead to rejection of Talapoosa by the public. 

Further risk factors related to the Company are set out in the Company’s continuous disclosure documents filed on SEDAR and with the United States Securities and Exchange Commission.

Next Steps

Based on the results of this PEA, Timberline expects to advance the project through the completion of a Pre-Feasibility Study in Q1 2016. The Company anticipates that the PFS will build upon extensive historic engineering work and will incorporate several technical advances. Further study will include:

--  Complete step-out and infill drilling to upgrade the current Inferred

    Resource to Measured and/or Indicated Resources and provide material for

    additional metallurgical testing. 

--  Additional metallurgical test work of heap leach and mill recovery

    alternatives. 

--  Completion of a trade-off study to evaluate potential higher metal

    recoveries vs. higher initial capital costs utilizing a milling

    scenario. 

--  Update the waste rock geochemistry characterization and pit lake hydro-

    geochemical model to meet current BLM and State of Nevada permitting

    standards. 

--  Initiate long-lead-time permit applications in parallel with PFS

    technical studies. 

--  Initiate negotiations on water and power supplies.  

About Timberline Resources

Timberline Resources Corporation is focused on advancing district-scale gold exploration and development projects in Nevada, including its recently optioned Talapoosa project in Lyon County. Current mineral resourcesat the Talapoosa project include 1.01 million gold ounces and 13.65 million silver ounces (M&I), plus an additional 0.23 million gold ounces and 2.17 million silver ounces (Inferred). Timberline also controls the 23 square-mile Eureka project lying on the Battle Mountain-Eureka gold trend. At Eureka, the Company continues to advance its reported resource of 508,000 ounces (M&I) and 141,000 ounces (Inferred) of gold at the Lookout Mountain project area, and has recently completed a drill program at the Windfall project area. Exploration potential occurs within three separate structural trends defined by distinct geochemical gold anomalies. Timberline also owns the Seven Troughs property in northern Nevada, known to be one of the state’s highest grade, former producers, as well as a 50% carried-to-production interest in the Butte Highlands high-grade underground gold project in Montana.