Permitting Progress at Butte Highlands Gold Project

COEUR D'ALENE, ID - Timberline Resources Corporation progress by the Montana Department of Environmental Quality (MDEQ) towards completion of the Final Environmental Impact Statement (the "Final EIS") for the Butte Highlands Gold Project. Two key mitigation issues on Fish Creek and Basin Creek have been addressed.

Montana Fish, Wildlife & Parks (MFWP) has responded to the MDEQ regarding mitigations proposed by Butte Highlands JV, LLC ("BHJV") to address potential impacts to fishery resources near the proposed underground mine at the Butte Highlands Gold Project. MFWP expressed initial concerns, in comments on the Draft Environmental Impact Statement ("Draft EIS") as published in October, 2013, of potential impacts to groundwater and adjacent creeks resulting from dewatering of the proposed mine, and from termination of flow to Basin Creek resulting from closure of the historic mine portal.

MDEQ released a letter dated September 16, 2014 in which MFWP notes that "with the purported mitigation approaches and the intensive monitoring planned, we believe that the risks are low and manageable as proposed." BHJV, the operator of the project, has proposed additional water monitoring at strategic sites as indicators of potential groundwater and surface water impacts. Mitigation measures have been developed in consultation with the MDEQ and in consideration of the interests of the consolidated City and County government of Butte-Silver Bow ("BSB").

BHJV has agreed to install three additional monitoring wells for collection of data to provide early warning indication of potential groundwater level decreases and associated stream flow reductions in Fish Creek due to mine dewatering. To support the proposed mitigation, BSB approved a Memorandum of Understanding (MOU) on September 24, 2014, wherein BSB has agreed that if flow reductions are recognized, BHJV will purchase water from BSB for flow augmentation. As necessary, flow will be released from a nearby aqueduct operated by BSB to sustain fish habitats in Fish Creek. The flow augmentation could be required for up to a seven to eight year period before the water table rebounds to its pre-mining level.

MFWP has also proposed mitigation for anticipated impacts resulting from closure of the historic mine portal and the elimination of the existing water discharge to nearby Basin Creek. MFWP has proposed compensation for impacts through trout habitat restoration in nearby Blacktail Creek. MFWP has also recognized that plugging of the historic mine portal will likely result in increased post-mining groundwater elevations and enhanced spring development which will support stream flows in each nearby basin.

The Company also reported that the United States Forest Service ("USFS") has hired Hydro Solutions Inc. (HSI) as an independent contractor to assist with completion of the final Environmental Assessment ("EA") for mineralized material haulage across the Beaverhead-Deer Lodge National Forest. HSI is the same contractor employed by the MDEQ for completion of the Final EIS, so improved coordination between agencies is expected.

The Company was also notified that BSB has signed an MOU with BHJV wherein BSB will pursue a Federal Road and Trails Act ("FRTA") easement with the USFS for portions of the Highland Road, which is expected to be used by BHJV for material haulage. The easement will allow transfer of road jurisdiction to BSB who also agreed in the MOU to enter a Road Use Agreement with BHJV. The Agreement will govern the terms of use of the Highlands Road for mining activities.