Mr. Kiran Patankar reports

TIMBERLINE'S TALAPOOSA PEA INDICATES $136M AFTER-TAX NPV AND 39% IRR AT $1,150/OZ GOLD WITH $51M PRE-PRODUCTION CAPITAL COSTS

Timberline Resources Corp. has released results of a positive preliminary economic assessment carried out on the company's recently optioned Talapoosa project, located in western Nevada (all amounts are in U.S dollars). Timberline holds a 30-month option to purchase 100 per cent 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. Specifically, using the base-case price assumption of $1,150/ounce gold and $16/ounce silver, Talapoosa has an estimated $209-million aftertax net cash flow, $136-million aftertax net present value at a 5-per-cent discount rate, an attractive 39-per-cent aftertax internal rate of return and a low initial capital cost of $51-million.

The PEA was prepared by WSP Canada Inc. with technical contributions from Mineral Property Development Inc. (MPDI), 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 ounces, all-in sustaining cash costs of $599/ounce 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 prefeasibility study, which we expect to complete in first quarter 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 prefeasibility 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 million tons per annum) 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 ounces of gold and 7,365,000 ounces 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/ounce of gold (net of silver byproduct at the base case $16/ounce silver price). All-in sustaining costs are $599/ounce of gold (net of silver). Total all-in costs, including all capital expenditures, are $682/ounce 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 in as shown in the table.

                       OPERATING ASSUMPTIONS/HIGHLIGHTS 

Mine life                                                        10.8 years 
Total material mined                                     102.4 million tons 
Strip ratio                                                          1.47:1 
Processing rate                                                    3.8 Mtpa 
Average gold head grade                                            0.74 g/t 
LOM average gold recovery                                                66%
Total recovered gold ounces                                      593,000 oz 
Average gold production                                        55,000 oz/yr 
Average silver head grade                                          11.6 g/t 
LOM average silver recovery                                              52%
Total recovered silver ounces                                  7,365,000 oz 
Average silver production                                     679,000 oz/yr 
Initial capital cost(1)                                       $51.2-million 
Cash operating cost (net of silver)(2)                           $543/oz Au 
All-in sustaining cost (net of                                              
silver)(3)                                                       $599/oz Au 
Total all-in cost (net of silver)(4)                             $682/oz Au 

(1) Includes $2-million reclamation bond and $6-million in contingency 
costs.                                                                  
(2) Mining, processing, general and administrative, and reclamation costs; 
$16.00/ounce silver price. 
(3) Cash operating cost plus royalties, refining costs, NV net proceeds 
tax and sustaining capital expenditures; $16.00/ounce silver price.                      
(4) All-in sustaining cost plus initial capital; $16.00/ounce silver price.    

At a gold price of $1,150/ounce and a silver price of $16/ounce (base-case price assumptions), Talapoosa has an estimated $209-million aftertax net cash flow, $136-million aftertax NPV at a 5-per-cent discount rate, an attractive 39-per-cent aftertax 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/ounce gold price and a $14.50/ounce silver price, as well as using a $1,300/ounce gold price and a $17.50/ounce silver price. Aftertax versions for each case were prepared using the following: a 1-per-cent net-smelter-return royalty; a 5-per-cent State of Nevada net proceeds tax; depreciation and depletion; and a 35-per-cent U.S. federal income tax. The pretax and aftertax results for the base case and other commodity price cases are as shown in the table.

                             PROJECT PERFORMANCE   
           
                                          Commodity price assumption           
                            
                                    Downside            Base          Upside
                                        case            case            case

Gold price                         $1,000/oz       $1,150/oz       $1,300/oz
Silver price                       $14.50/oz       $16.00/oz       $17.50/oz
Pretax                                                                    
Net cash flow                   $183-million    $27- million    $372-million
NPV @ 5%                        $114-million    $184-million    $254-million
NPV @ 8%                         $85-million    $145-million    $205-million
IRR                                    30.4%           48.4%           68.4%
Payback period                     5.4 years        0.9 year        0.8 year
After tax                                                                  
Net cash flow                   $138-million    $209-million    $278-million
NPV @ 5%                         $84-million    $136-million    $188-million
NPV @ 8%                         $61-million    $106-million    $150-million
IRR                                    25.4%           38.8%           52.6%
Payback period                     5.5 years       3.1 years       1.0 years

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 ounces of gold and 13.65 million ounces of silver in the measured and indicated resources (M&I) categories, with an additional 230,000 ounces of gold and 2.17 million ounces of silver in the inferred resource category, and is summarized in the table.

                               MINERAL RESOURCES

                                    Tons          Au          Ag      Tonnes           
                                             (oz/ton)    (oz/ton)      

Oxide measured                 3,126,050       0.038       0.553   2,835,890
Sulphide measured             14,044,820       0.036       0.481  12,741,180
Total measured                17,170,870       0.036       0.494  15,577,070
Oxide indicated                1,412,000       0.032       0.416   1,280,900
Sulphide indicated            12,681,600       0.028       0.361  11,504,500
Total indicated               14,093,600       0.028       0.366  12,785,400
Total M&I                     31,264,470       0.032       0.437  28,362,470
Oxide inferred                 1,762,000       0.027       0.065   1,598,000
Sulphide inferred              9,436,000        0.02       0.218   8,560,000
Total inferred                11,198,000       0.021       0.194  10,158,000

                                      Au          Ag          Au          Ag
                                    (g/t)       (g/t)        (oz)        (oz)

Oxide measured                      1.29       18.96     117,253   1,728,323
Sulphide measured                   1.22       16.50     501,215   6,760,763
Total measured                      1.23       16.95     618,468   8,489,086
Oxide indicated                     1.10       14.25      45,328     586,999
Sulphide indicated                  0.94       12.36     349,005   4,573,274
Total indicated                     0.96       12.55     394,334   5,160,273
Total M&I                           1.11       14.97   1,012,802  13,649,358
Oxide inferred                      0.93        2.24      47,745     115,115
Sulphide inferred                   0.68        7.48     185,787   2,057,651
Total inferred                      0.72        6.65     233,532   2,172,766

Resources estimated using a gold cut-off of 0.013 ounce/ton (0.45 gram per 
tonne).

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: Initial direct capital costs, which cover construction costs to initiate mining and heap-leach processing, and include a $2-million estimated reclamation bond; initial indirect capital costs, which include EPCM, start-up owner's costs, working capital and initial contingency costs; and sustaining capital costs, which include vehicle replacement, dewatering infrastructure, contractor demobilization and associated contingency costs. The estimated capital costs are as shown in the table.

                                 CAPITAL COSTS
                         (In millions of U.S. dollars) 
 
                                                                  % of total 
Initial capital costs                                                       
Direct costs(1)                                     $      37.7          73%
Indirect costs (including contingencies)            $      13.5          26%
Total initial capital costs                         $      51.2          99%
Sustaining capital costs(2)                         $       0.7           1%
Total LOM capital costs                             $      51.9         100%

(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 minus-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 shown in the table.

                         OPERATING COSTS (LOM AVERAGE) 
                       
                                                                  $/ton feed

Mining cost (at $2.32/ton mined)                                      $ 5.74
Processing cost ($/ton processed)                                     $ 3.75
General and administrative ($/ton processed)                          $ 0.85
Reclamation cost ($/ton processed)                                    $ 0.27
Total operating costs ($/ton processed)                              $ 10.61

Metallurgy

Analysis of historic data, in addition to testwork 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 shown in the table.

                         AVERAGE HEAP LEACH RECOVERY %   
           
                                                            Gold      Silver 

Oxides                                                       77%         47%
Unoxidized material                                          65%         60%
Sulphides                                                    59%         45%
LOM average                                                  66%         52%

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 Corp. in 1996/1997, including an approved plan of operations (PoO) by the U.S. Bureau of Land Management (BLM) 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;
• 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;
• 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 per cent of the known gold resources at Talapoosa are in the higher confidence M&I resource categories.
• Metallurgical performance: Although extensive historic and recent metallurgical testwork 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 alternative recovery methods that historical data suggest 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/ounce gold price and a $14.50/ounce silver price, generating $138-million in aftertax net cash flow, an $84-million NPV at a 5-per-cent discount rate and a 25.4-per-cent 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 modelling 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 EDGAR.

Next steps

Based on the results of this PEA, Timberline expects to advance the project through the completion of a prefeasibility study (PFS) in first quarter 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 testwork of heap-leach and mill recovery alternatives;
• Completion of a trade-off study to evaluate potential higher metal recoveries versus 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.

Independent qualified persons

QPs who have prepared or supervised the preparation of the technical information relating to the PEA include:

• Todd McCracken, PGeo (WSP Canada);
• Joanne Robinson, PEng (WSP Canada);
• Richard Jolk, PE (MPDI);
• Richard DeLong, PG (Enviroscientists);
• Jack McPartland (McClelland Laboratories);
• Michael Henderson, PE (DOWL).

Dr. 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 disclosure of the technical contents of this news release.

Conference call

A conference call to discuss Timberline and the PEA will be held at 11 a.m. PT on April 27, 2015. Interested parties are invited to participate by connecting to the call using one of the following dial-in numbers:

North American toll-free dial-in number:  866-901-2585

Local/international dial-in number:  404-835-7099 (use outside of North America)

Access code:  5869350

A digital recording of the conference call will be available for replay two hours after the call's completion and for 30 days thereafter. The recording can be accessed via the company's website.

We seek Safe Harbor.