TIMBERLINE RESOURCES CORP (TLR) SPO
|Company Name||TIMBERLINE RESOURCES CORP|
|Company Address||101 EAST LAKESIDE AVENUE
COEUR D'ALENE, ID 83814
|Company Phone||(208) 664-4859|
|Employees (as of 12/10/2012)||8|
|State of Inc||DE|
|Fiscal Year End||9/30|
|Exchange||American Stock Exchange|
|Shares Over Alloted||0|
|Shareholder Shares Offered||--|
|Lockup Period (days)||180|
|Quiet Period Expiration||1/30/2013|
We estimate that the net proceeds we will receive from this offering will be approximately $0.83 million (or approximately $0.9695 million if the underwriters exercise their over-allotment option in full) after deducting estimated underwriters fees and estimated offering expenses that we must pay and assuming we sell the maximum number of shares offered hereby. We intend to use the net proceeds from this offering for exploration of our Lookout Mountain project in Nevada, exploration and development of other existing or acquired mineral properties, working capital requirements, acquisitions, or for other general corporate purposes. Until such time as the net proceeds of the offering are used as described above, we intend to invest the net proceeds primarily in bank deposits or other substantially similar secure deposits in financial institutions. The actual amount that we spend in connection with each of the intended uses of proceeds may vary significantly and will depend on a number of factors. Depending on opportunities, economic conditions and the results of the activities described above we may use a portion of the use of proceeds allocated above to invest in property acquisitions or complete other corporate activities designed to achieve our corporate goals. Estimated costs and the scope of activities cannot be determined at this time. Accordingly, we will retain broad discretion over the use of proceeds.
The mineral exploration, development, and production industry is largely un-integrated. We compete with other exploration companies looking for mineral properties and the minerals that can be produced from them. While we compete with other exploration companies in the effort to locate and license mineral properties, we do not compete with them for the removal or sales of mineral products from our properties if we should eventually discover the presence of them in quantities sufficient to make production economically feasible. Readily available markets exist worldwide for the sale of gold and other mineral products. Therefore, we will likely be able to sell any gold or mineral products that we identify and produce. There are hundreds of public and private companies that are actively engaged in mineral exploration. A representative sample of exploration companies that are similar to us in size, financial resources and primary objective include such publicly traded mineral exploration companies as Midway Gold Corp. (MDW), General Moly, Inc. (GMO), Klondex Mines Ltd. (KDX.TO), Solitario Exploration and Royalty Corp. (XPL) and Mines Management (MGN). Many of our competitors have greater financial resources and technical facilities. Accordingly, we will attempt to compete primarily through the knowledge and experience of our management. This competition could adversely affect our ability to acquire suitable prospects for exploration in the future. Accordingly, there can be no assurance that we will acquire any interest in additional mineral properties that might yield reserves or result in commercial mining operations.
We are a mineral exploration company. We acquire properties which we believe have potential to host economic concentrations of minerals, particularly gold, silver and copper. We have acquired mineral prospects for exploration in Nevada, Montana, and Idaho mainly for target commodities of gold,
silver, zinc and copper. The prospects are held by both patented and unpatented mining claims owned directly by us or through legal agreements conveying exploration and development rights to us. Most of our prospects have had a prior exploration history as is typical in the mineral exploration industry. Most mineral prospects go through several rounds of exploration before an economic ore body is discovered and prior work often eliminates targets or points to new ones. Also, prior operators may have explored such mineral prospects under a completely different commodity price structure or technological regime. Mineralization which was uneconomic in the past may be ore grade at current market prices when extracted and processed with modern technology. South Eureka Property As of the date of this prospectus supplement, our primary exploration focus is on our South Eureka property in Nevada, which was acquired as part of the acquisition of Staccato Gold Resources Ltd. in June 2010. South Eureka is comprised of several projects included within one of the largest exploration land packages in the Battle Mountain - Eureka Mineral Trend. The South Eureka property has identified exploration potential evidenced by historic workings and gold anomalies throughout the district. Our Lookout Mountain project features a defined section of mineralized material within a large scale structural corridor and numerous high-priority targets to test. South Eureka comprises an area of approximately 15,000 acres or more than 23 square miles. The property’s northern boundary is located approximately 1 mile south of the town of Eureka, Nevada, in the Eureka Mining district within the Battle Mountain – Eureka Mineral Trend, also referred to as the Cortez Trend. The South Eureka property is composed of 845 unpatented and 15 patented claims and several projects including: Lookout Mountain, Secret Canyon/Oswego, Windfall, South Ratto, Hamburg Ridge, and New York Canyon. Historic open pit mines on the property include: the Windfall pit, the Rustler pit, North and South Paroni pits, and the Lookout Mountain pit. Timberline’s database contains over 484,000 feet of drill information from 1,265 drill holes that have been completed on the property from 1970 through September 2011. We continue to work toward completion of a comprehensive technical work program at our South Eureka property. A large part of the Lookout Mountain project and Windfall project areas have now been mapped and sampled, including a detailed program conducted over the main mineralization area. The principal objectives of the mapping and sampling program are to characterize offsets along the main mineralized fault zones at Windfall and Lookout Mountain, identify orientations of mineralized cross structures intersecting the main structural zones, and follow up on soil anomalies. The mapping program, combined with surface sampling and acquisition of historic data, has provided a clearer understanding of the structures along the Ratto Ridge and Windfall areas, as well as identified several significant new exploration target areas. Over 400 drill holes have been re-logged along Ratto Ridge to ensure geologic consistency with surface mapping, and based on this work, new geologic cross sections and plans have been constructed for the entire Lookout Mountain deposit. Geologic grade shells have also been built, and construction of a 3-D model of the geology, based on the results of historic drill re-logging and mapping efforts, is ongoing. This new work has led to an updated mineralization estimate that resolves past technical issues, and provides us with a plan for advancing the property into the scoping/pre-feasibility study phase following one more round of drilling. An exploration Plan of Operations has been approved by the Bureau of Land Management and the Nevada Department of Environmental Protection for the Lookout Mountain project. The Plan of Operations calls for approximately 246 acres of disturbance that can be accessed for use in a phased approach, and covers the entire Ratto Ridge structural zone. The Plan of Operations will allow us to complete additional infill, metallurgical, and exploration drilling necessary to advance the development of the Lookout Mountain project. We are of the opinion that the South Eureka property has excellent potential for continued exploration success both at the deposit scale and on the regional scale. The current Lookout Mountain mineralization is defined over a relatively small area at the north end of a mineralized structural corridor that extends for several thousand feet across the property, and up to 4 to 5 kilometers (2.5 to 3 miles) in strike length. This structure hosts several areas of drill indicated mineralization and the exploration potential in this corridor is strong, as evidenced by historic drilling, and soil and rock geochemical analyses. The Lookout Mountain mineralization itself is open for expansion at depth and along strike, especially to the south. Regionally, several other target areas also exist where historic production and exploration have occurred, but only limited systematic exploration has been conducted. Lookout Mountain 2012 Program With success in the 2010 and 2011 programs at South Eureka, we initiated and completed approximately $4,200,000 of follow-up work in 2012. The 2012 program focused on advancement of mineralization, metallurgical, geotechnical, and permitting studies in preparation for a preliminary economic analysis and included: • 16,965 feet of RC drilling directed at resource in-fill and definition; • 9,175 foot diamond drilling program focused primarily on obtaining drill core for process metallurgical and geotechnical scoping studies; • Drilling and construction of additional groundwater monitoring wells for hydrological characterization; • Initiation of geotechnical pit-wall stability, and heap leach pad alternative studies; and • Initiation of additional baseline hydrology and environmental geochemistry studies directed at State and Bureau of Land Management (BLM) permitting. Key successes of the 2012 drill program include demonstration of strong continuity in mineralization at the Lookout Mountain Project, and initial identification of high grade gold mineralization down-dip of the current mineralization. The favorable results of the 2012 program dictate that we will proceed with a preliminary economic assessment of the Lookout Mountain Project which is planned for completion in 2013. Ongoing metallurgical, geotechnical, and environmental studies will be included in this assessment. The South Eureka property has no known reserves, as defined under Guide 7, and the proposed program for the property is exploratory in nature. Butte Highlands Gold Project We are nearing production at our Butte Highlands Gold Project, where we have entered into a joint venture agreement with Highland Mining, LLC (which we refer to as “Highland”) to create Butte Highlands JV, LLC. Under terms of the joint venture agreement, we will be carried to production by Highland, which will fund all mine development costs. On September 17, 2012, Highland was purchased by Montana State Gold Company, LLC, a privately-owned Montana limited liability company. We continue to own a 50-percent carried-to-production interest in the joint venture. Both our and Highland’s 50-percent share of costs will be paid out of proceeds from future mine production. Activities at Butte Highlands during fiscal 2012 focused on advancing mine permitting. Supplemental baseline data to support the operating permit application was collected and provided to regulators. This data included characterization of wetlands, faunal study, surface water hydrology investigations, geochemistry, and an initial project water balance analysis. In addition, a Montana Pollutant Discharge Elimination System permit application was submitted and officially accepted by Montana regulators. This permit is a critical requirement for further underground exploration and mine operation; permit receipt is anticipated in 2013. Permitting has also advanced during 2012 with submittal of a Special Use Permit application with the United States Forest Service for ore haulage road use. The United States Forest Service completed site investigations and continues processing the application, which is anticipated for completion in 2013. Once the operating and Montana Pollutant Discharge Elimination System permits are approved by the state of Montana, we expect Butte Highlands to transition directly from exploration to gold mining operations. As of September 30, 2012, we have incurred exploration costs to date of approximately $1,600,000. During the 2013 fiscal year, we do not plan to undertake any significant exploration work on the property. The focus at Butte Highlands in fiscal 2013 will be the completion of the permitting process, completion of geologic model and mine planning, and the commencement of mining operations by our joint venture partner, Highland, upon the receipt of the Hard Rock Operating Permit from the State of Montana. The Butte Highlands Gold Project has no known reserves, as defined under Guide 7, and the proposed program for the property is exploratory in nature. On December 10, 2012, we announced that we had received a draft Hard Rock Operating Permit for our Butte Highlands Gold Project from the Montana Department of Environmental Quality (MDEQ). We also received a Compliance Determination setting forth the MDEQ's determination that the completed application for the operating permit complies with the substantive requirements of Montana's Metal Mine Reclamation Act. As noted in the draft permit, the final operating permit is expected to be issued upon the completion of the MDEQ's review pursuant to the Montana Environmental Policy Act and its determination that the project bonding is sufficient. Based on current projections, we expect that the reviews will be completed and the final operating permit will be issued in mid-2013. We expect to receive the water discharge permit and road use permit related to the Butte Highlands Project prior to the receipt of the final operating permit. --------- We were incorporated in the State of Idaho on August 28, 1968 under the name Silver Crystal Mines, Inc., to engage in the business of exploring for precious metal deposits and advancing them toward production. We ceased exploration activities during the 1990s and became virtually inactive. In December 2003, a group of investors purchased 80-percent of the issued and outstanding common stock from the then-controlling management team. In January 2004, we affected a one-for-four reverse split of our issued and outstanding shares of common stock and increased the number of our authorized shares of common stock to 100 million with a par value of $.001. Unless otherwise indicated, all references herein to shares outstanding and share issuances have been adjusted to give effect to the aforementioned stock split. On February 2, 2004, our name was changed to Timberline Resources Corporation. Since the reorganization, we have been in an exploration stage evaluating, acquiring and exploring mineral prospects with potential for economic deposits of precious and base metals. A “prospect” is defined as a mining property, the value of which has not been determined by exploration. On August 27, 2008 we reincorporated into the State of Delaware pursuant to a merger agreement approved by our shareholders on August 22, 2008. In March 2006, we acquired Timberline Drilling, Inc. (“Timberline Drilling”), formerly known as Kettle Drilling, as a wholly-owned subsidiary. Timberline Drilling was formed in 1996 and provides mineral core drilling services to the mining and mineral exploration industries primarily in the western United States. In July 2007, we closed our purchase of the Butte Highlands Gold Project. In October 2008, we announced that we had agreed to form a 50/50 joint venture with Small Mine Development (“SMD”) at the Butte Highlands project. In July 2009, we finalized the joint venture agreement with Highland Mining, LLC (an affiliate of SMD) (“Highland”) to create Butte Highlands JV, LLC (“BHJV”). Under terms of the joint venture agreement, development began in the summer of 2009, with Highland funding all mine development costs through development. Both Timberline’s and Highland’s 50-percent share of costs will be paid out of net proceeds from future mine production. In June 2010, we closed our acquisition of Staccato Gold Resources Ltd., a Canadian-based resource company (“Staccato Gold”) that was in the business of acquiring, exploring and developing mineral properties with a focus on gold exploration in the dominant gold producing trends in Nevada. As a result of this acquisition, we obtained Staccato’s flagship gold exploration project (“Lookout Mountain”), and several other projects at various stages of exploration in the Battle Mountain/Eureka gold trend in north-central Nevada, along with Staccato Gold’s wholly owned U.S. subsidiary, BH Minerals USA, Inc (“BH Minerals”). In September 2010, we closed our drilling services operation in Mexico which was operated by our wholly owned Mexican subsidiary, World Wide Exploration, S.A. de C.V. (“World Wide” or “WWE”), and moved substantially all of the assets of WWE to the United States to be available for use by Timberline Drilling. In September 2011, we announced that we had entered into a non-binding letter of intent to sell Timberline Drilling to a private company formed by a group of investors, including certain members of the senior management team of Timberline Drilling. In November 2011, the sale of Timberline Drilling was completed for a total value of approximately $15 million. We currently maintain an administrative office at 101 East Lakeside Ave., Coeur d’Alene, Idaho 83814. The telephone number of our administrative office is (866) 513-4859 (toll free) or (208) 664-4859. Timberline also maintains a geological staff office at 1112 River St., Elko, NV 89801. Our website: www.timberline-resources.com.
|Auditor||DeCoria, Maichel & Teague P.S|
|Company Counsel||Dorsey & Whitney LLP|
|Company Counsel||The law firm of Dorsey & Whitney LLP|
|Lead Underwriter||Aegis Capital Corp|
|Lead Underwriter||Aegis Capital Corp.|
|Transfer Agent||Corporate Stock Transfer|
|Transfer Agent||Corporate Stock Transfer, Inc.|
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