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Timberline Resources Corp (2)
Symbol TBR
Shares Issued 13,347,006
Close 2016-10-19 C$ 0.61
Market Cap C$ 8,141,674
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Timberline, Gunpoint amend Talapoosa option deal

2016-10-20 06:39 ET - News Release

Also News Release (C-GUN) Gunpoint Exploration Ltd

Mr. Steven Osterberg of Timberline reports

TIMBERLINE EXTENDS TALAPOOSA OPTION AGREEMENT

Timberline Resources Corp. has successfully restructured the terms of its option agreement with Gunpoint Exploration Ltd. to acquire 100 per cent of the Talapoosa gold project in Nevada (all amounts are in U.S. dollars).

The company's primary objective in restructuring the option agreement was achieved by extending the option exercise period from Sept. 12, 2017, to March 31, 2019. The requirement to pay Gunpoint $10-million by Sept. 12, 2017, has now been modified and extended to March 31, 2019, thereby allowing near-term expenditures to be focused toward advancement of the Talapoosa gold project.

The following summarizes the amended terms of the option agreement:

  • Payment of $1-million and one million common shares of the company by March 31, 2017;
  • Payment of $2-million and one million common shares of the company by March 31, 2018;
  • A final payment of $8-million and 1.5 million common shares of the company on March 31, 2019;
  • Timberline agrees to undertake cumulative project expenditures of a minimum of $7.5-million by Dec. 31, 2018;
  • Elimination of Timberline's $3-million purchase option of the 1-per-cent net-smelter-return royalty retained by Gunpoint upon Timberline's acquisition of Talapoosa;
  • The contingent payment based on escalating gold prices in the option agreement has been revised such that if gold prices average greater than or equal to $1,600 over any 90-day period within a five-year period commencing on the option exercise closing date, Timberline will pay Gunpoint an additional payment of $10-million of which a minimum of $5-million will be payable within six months of the trigger event, and the remaining $5-million payable within 12 months of the trigger event, with both payments payable with 50 per cent in cash and 50 per cent in shares at Timberline's discretion.

Timberline's president and chief executive officer, Steven Osterberg, commented: "We are very pleased to have extended the Talapoosa purchase option exercise date, which will allow for the completion of additional drilling, metallurgical testing, engineering and permitting. It is anticipated that these required project expenditures will provide for more rapid advancement toward development as an open-pit, heap-leach operation. Given Talapoosa's advanced stage and favourable jurisdiction, we are excited to move forward with this gold project that already has over 1.3 million ounces of gold defined and clear growth potential by way of further drilling. We appreciate the flexibility and willingness of Gunpoint's board of directors to provide this extension, and we look forward to working with them as they continue as a very significant and supportive Timberline shareholder."

Talapoosa highlights

Timberline previously reported the results of a positive preliminary economic assessment, dated April 27, 2015, carried out on the Talapoosa project. Several key findings in the PEA support the project's low-risk profile and robust economic potential, including:

  • Established National Instrument 43-101 resource consisting of 1,012,802 ounces of gold (28.4 million tonnes at 1.11 grams per tonne) in the measured and indicated resource categories, with an additional 233,532 ounces of gold (10.2 million tonnes at 0.72 g/t) in the inferred resource category;
  • Partially permitted open-pit, heap-leach project with extensive historical engineering work;
  • After-tax net present value at a 5-per-cent discount of $136-million and 39-per-cent internal rate of return at $1,150/ounce gold price and $16/ounce silver price;
  • Estimated average annual production of 55,000 ounces of gold and 679,000 ounces of silver for 11 years;
  • Life-of-mine all-in sustaining costs of $599/ounce gold (net of silver byproduct at $16/ounce silver price);
  • Low initial capital of $51-million required to achieve production.

PEA disclaimer

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.

Timberline Resources is focused on advancing district-scale gold exploration and development projects in Nevada, including its Talapoosa project in Lyon county, where the company has completed and disclosed a positive preliminary economic assessment. 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 Lookout Mountain and Windfall project areas.

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