Mr. Paul Dircksen reports

TIMBERLINE COMPLETES UPDATED BUTTE HIGHLANDS TECHNICAL REPORT

Timberline Resources Corp. has completed an updated technical report on the Butte Highlands property in Montana that it will file on SEDAR later today.

The report was prepared by the company's independent geological consultant, Mine Development Associates (MDA), and provides an updated technical summary of the Butte Highlands project. The report includes an updated description of the property and the regional geology, the permitting requirements and progress, and the exploration and development work that has been accomplished during the past few years. Metallurgical testwork that has been performed is summarized and additional metallurgical testing is recommended.

An historic mineral resource estimate is included in the report, but a qualified person has not done sufficient work to classify any of the historic estimates as current mineral resources. Timberline is not treating these estimates as current mineral resources, and the historic estimates should not be relied upon. There is no current mineral resource or reserves estimate for the Butte Highlands project. The historic mineral resource estimates are described in the report as follows:

The following historic resource estimates were made prior to initiation of National Instrument 43-101 reporting requirements, and MDA cannot determine if they meet the Canadian Institute of Mining (CIM) classification standards. A qualified person has not done sufficient work to classify these historic estimates as current mineral resources, and Timberline is not treating them as current mineral resources. These historic estimates are presented using original resource and reserve terminology. The terminology does not necessarily conform to current mineral resource and reserve classifications defined by the CIM.

Orvana (Roper, 1997) reported that Battle Mountain identified a structurally controlled underground-minable resource of about 200,000 ounces of gold at the Highlands mine in 1989, while Placer Dome discovered a sediment-hosted skarn resource of about 30,000 ounces amenable to open-pit mining at the Chief (Ballarat) mine area east of the Highlands mine in 1991 (the Ballarat mine is not part of Timberline's Butte Highlands project). Orvana's description did not include any information on the assumptions, parameters or methods on which these estimates were based.

Orvana used its drill results and historic drilling data to estimate a geologic resource for the Nevin Hill deposit in June, 1997, using manual cross-sectional methods (Roper, 1997). Twelve northwest-facing cross-sections were constructed on 100-foot centres. Polygons were drawn on the sections to encompass drill hole intercepts greater than 0.1 ounce per ton gold over greater than or equal to 10 feet. The polygons were then projected section to section to achieve a volume. Grade was assigned based on weighted-average intercepts within the shapes, and a rock density of 12 cubic feet/ton was applied to the volumes. The resulting resource estimated by Orvana was 583,253 tons grading 0.335 ounce per ton Au in the measured and indicated categories for a total of 195,208 ounces of gold; Orvana did not separate the two categories of resources. Orvana also calculated an inferred category by projecting 500 feet along trend from the drill hole intercepts, but MDA believes this is not appropriate for the Butte Highlands skarn mineralization and therefore these results are not reported herein. Orvana noted that the Nevin Hill mineralization remained open downdip and along strike (Roper, 1997).

Agreements related to the Butte Highlands project are summarized in the report, including the company's joint-venture operating agreement where Timberline's joint-venture partner has agreed to finance all development costs that might be associated with bringing the mine into production, with Timberline's 50-per-cent share of costs to be paid out of proceeds from future mine production. The company's joint-venture partner at Butte Highlands has decided to advance the project into production without first establishing mineral resources supported by an independent technical report or completing a feasibility study. A production decision without the benefit of a technical report independently establishing mineral resources or reserves and any feasibility study demonstrating economic and technical viability creates increased uncertainty, and heightens economic and technical risks of failure.

The report also identifies recommendations for future exploration work, including exploration drilling to potentially expand mineralization, the preparation of additional studies of the surface geology and mineralization in the area, and geophysical surveys to define undrilled mineralization targets.

Dr. Steven Osterberg, PhD, PG, Timberline's vice-president of exploration, is a qualified person as defined by NI 43-101, and has reviewed and approved the technical contents of this release.

We seek Safe Harbor.