Mr. Paul Dircksen reports

TIMBERLINE RESOURCES COMMENCES DRILLING AT EUREKA

Exploration drilling has resumed at Timberline Resources Corp.'s Eureka property in Nevada. The program includes approximately 12,000 feet of reverse circulation drilling to target: (a) higher-grade mineralization associated with the currently defined resource at Lookout Mountain; and (b) mineralization associated with the historic Windfall structural trend. Drilling has commenced at the Lookout Mountain targets and is expected to continue into January, 2015.

At Lookout Mountain, previous drilling intersected over 70 drill intercepts of higher-grade gold (intervals of greater than 0.10 ounce per ton over greater than 10 feet (3.43 grams per tonne over greater than three metres)) that are located in favourable stratigraphy and make up a portion of the company's current National Instrument 43-101-compliant resource. The company's priority is to specifically follow up on two previous holes drilled in 2012, as presented in an attached table.

                From     Length      Gold        From       Length        Gold
Drill hole     (feet)  (feet)(1)  (opt)(2)    (metres)  (metres)(1)    (g/t)(3)

BHSE-151C        501       18.6      0.50       152.7          5.7       17.12
BHSE-152       1,025       15.0      0.14       312.4          4.6        4.73

Notes:
(1) True widths of the drill intercepts have not been determined.
(2) Ounces of gold per ton.
(3) Grams of gold per tonne.

Previous drilling of drill hole BHSE-152 bottomed within gold mineralization. Follow-up drilling will penetrate and sample to additional depth to define the full extent of the mineralization.

At the Windfall trend, where historic gold production exceeded 100,000 ounces, drilling will test the strike extension, and follow up on historic gold mineralization and the exploration target previously disclosed. Historic drill intercepts that merit follow-up drilling at Windfall include an intercept of 75 feet which returned 0.153 ounce per ton gold (22.9 metres of 5.24 g/t gold). The results of this drilling are expected to lead to the calculation of an estimated NI 43-101 resource on the Windfall trend. The anticipated resource on the Windfall trend is expected to confirm the company's exploration target potential and to augment the total gold resource at the Eureka property.

Paul Dircksen, Timberline's president and chief executive officer, said: "The Lookout Mountain trend targets are exciting in the context of deep, high-grade mineralization recognized in Carlin-type gold deposits in the Battle Mountain-Eureka trend, such as ore being mined at Cortez Hills and the significant Goldrush deposit discovery by Barrick Gold. In addition, the targets are associated with known, high-grade gold mineralization in the same favourable stratigraphy as the historic Windfall and Lookout Mountain mines, and other deposits in Nevada."

Timberline's current gold resource estimate at Lookout Mountain, which was prepared by Mine Development Associates (MDA) of Reno, Nev., consists of the estimates set out in an attached table.

                   LOOKOUT MOUNTAIN GOLD RESOURCE (1)(2)
                                                           Grams of
                                                Ounces of  gold per
                                        Metric   gold per     tonne      Gold
Resource category       Short tons      tonnes  ton (opt)     (g/t)    ounces

Measured                 3,043,000   2,761,000      0.035      1.20   106,000
Indicated               25,897,000  23,493,000      0.016      0.55   402,000
Measured and indicated  28,940,000  26,254,000      0.018      0.62   508,000
Inferred                11,709,000  10,622,000      0.012      0.41   141,000

Notes:
(1) A 0.006-ounce-per-ton (0.21 g/t) cut-off was applied to oxidized material
    to capture mineralization potentially available to open-pit extraction 
    and heap-leach processing. A 0.030-ounce-per-ton (1.03 g/t) cut-off was
    applied to unoxidized material to capture mineralization potentially 
    available to open-pit extraction and lower heap-leach recoveries, or 
    sulphide processing.
(2) Rounding may cause apparent discrepancies.
(3) The effective date of the Lookout Mountain updated gold resource is Feb.
    20, 2013.

The full MDA resource estimate with various cut-off grades can be seen at the company's website.

Timberline's district-scale Eureka property is strategically located within the greater Eureka mining district, just four miles from Barrick Gold's multimillion-ounce Archimedes/Ruby Hill mine. The Eureka property features three distinct structural zones and includes past-producing open pits, along with several untested zones and underexplored exploration targets. In addition to the estimated resources shown herein, there is an exploration target totalling 188,000 to 200,000 ounces of gold at the Windfall structural trend that grades approximately 0.024 ounce per ton to 0.027 ounce per ton using a 0.010-ounce-per-ton cut-off.

Note: A qualified person has not done sufficient work to classify the exploration target estimates as current mineral resources. The company is not treating the exploration target estimates as current mineral resources, and the exploration target estimates should not be relied upon. The management estimates of the exploration target at Windfall were determined based on drill results and geologic modelling, using polygonal grade shells with a 0.01-ounce-per-ton cut-off and a non-statistical average grade calculation based on a weighted average grade within each polygon. The estimate is conceptual in nature, and there has been insufficient exploration drilling to define a mineral resource that may be categorized as an indicated, measured or inferred resource. It is uncertain if further exploration will result in the target being delineated as a mineral resource as defined in NI 43-101.

Other areas on the Eureka property that contain drill-indicated gold, and are prioritized for future exploration and drilling, include Rocky Canyon, the Oswego structural zone, Pinnacle Peak, New York Canyon, Hoosac, Hamburg Ridge, Paige Corwin and Secret Canyon. Please see detailed maps at the company's website for site locations.

Steven Osterberg, PhD, PG, Timberline's vice-president of exploration, is a qualified person as defined by National Instrument 43-101, and has reviewed and approved the technical contents of this news release. He has verified the drill results and other data disclosed in this news release, including sampling, analytical and test data. Fieldwork has been conducted under his supervision. The Timberline sampling and analysis program included an industry-standard quality assurance/quality control program. After logging and cutting or dividing the sample intervals in half, the samples were picked up by Inspectorate America Corp. and taken to its ISO 9001-certified assay lab in Sparks, Nev., for analysis. The samples were analyzed for gold using a standard 30-gram fire assay with an atomic absorption finish. Samples returning a gold value in excess of three parts per million were reanalyzed using a 30-gram fire assay with a gravimetric finish.

The Lookout Mountain mineral resources were modelled and estimated by MDA by evaluating the drill data statistically, utilizing geologic interpretations provided by Timberline to interpret gold mineral domains on cross-sections spaced at 50- to 100-foot intervals across the extents of the Lookout Mountain mineralization, rectifying the mineral-domain interpretations on level plans spaced at 10-foot intervals, analyzing the modelled mineralization geostatistically to aid in the establishment of estimation parameters and interpolating grades into a three-dimensional block model.

Mike Gustin is a qualified person as defined by National Instrument 43-101 and is responsible for the resource estimate.

We seek Safe Harbor.