Timberline Receives Positive Hydrogeologic Test Results At Its Butte Highlands Gold Project

Timberline Receives Positive Hydrogeologic Test Results At Its Butte Highlands Gold Project

Timberline Resources Corporation announced the completion of a hydrogeologic study at its 100-percent owned, royalty-free Butte Highlands Gold Project in southwestern Montana. The positive results of the study represent a significant milestone in the permitting process and the proposed underground exploration and development schedule. The study was a requirement for permit application and Timberline anticipates submitting the underground permit application to the State of Montana Department of Environmental Quality in the first quarter of 2009.

In support of the study, the Company drilled a 1,167-foot groundwater monitoring well to identify groundwater quantity and quality at the project site and sampled surface water from local stream systems. The borehole tests yielded 12 gallons of water per minute for the full length of the monitoring well which is within the range anticipated by Timberline and Small Mine Development LLC . The hydrogeologic study considered local geology, precipitation, hydrologic basins, and other pertinent information needed to predict water inflow into the anticipated underground workings. Resulting data was used by AMEC Geomatrix to develop a Conceptual Hydrological Model of the deposit to predict potential mine inflow during planned exploration and mine production activities.

Butte Highlands is located 15 miles south of Butte, Montana within a favorable geologic domain that has hosted several multi-million ounce gold deposits including Butte, Golden Sunlight, Montana Tunnels, and Virginia City. The property was extensively drilled by Placer Dome, Battle Mountain, ASARCO, and Orvana Minerals in the 1980s and 1990s, and contains historic mineralization outlined by Orvana (not compliant with NI 43-101 or SEC Guide 7) exceeding 500,000 ounces of gold at a grade of nearly 0.3 oz/t. Past drilling highlights include gold intercepts of 50 feet of 0.65 oz/t, 31 feet of 1.06 oz/t, and 11.5 feet of 1.99 oz/t.

Timberline recently announced plans to form a 50/50 joint-venture with SMD at Butte Highlands. Under terms of the agreement, Timberline will be carried to production by SMD which will fund all project development costs and begin development this summer. Timberline’s 50-percent share of project costs will be paid out of proceeds from future mine production. The partnership is mutually regarded by Timberline and SMD as a model for future opportunities in underground mine development and mining.

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