Timberline Resources CP (TLR)

Item 1.01 Entry into a Material Definitive Agreement

Effective August 28, 2008, Timberline Resources Corporation, an Idaho corporation (“Timberline Idaho”) completed its reincorporation in the state of Delaware (the “Reincorporation”) by merging with and into its wholly-owned subsidiary Timberline Resources Corporation, a Delaware corporation (“Timberline Delaware”), pursuant to an Agreement and Plan of Merger dated August 22, 2008 (the “Merger Agreement”). The Merger Agreement is attached hereto as Exhibit 2.1 and is incorporated by reference herein. The Reincorporation was approved by the shareholders of Timberline Idaho at the annual meeting of shareholders held on August 22, 2008.

In the merger, each outstanding share of Timberline Idaho’s Common Stock (“Timberline Idaho Stock”) was converted into one share of Common Stock of Timberline Delaware (“Timberline Delaware Stock”). As a result, holders of Timberline Idaho Stock are now holders of Timberline Delaware Stock, and their rights as holders thereof are governed by the General Corporation Law of the State of Delaware and the Certificate of Incorporation and Bylaws of Timberline Delaware. For a description of the differences between the rights of holders of Timberline Idaho Stock and Timberline Delaware Stock, see “Comparison of Shareholder Rights Before and After the Reincorporation Merger” in Timberline Idaho’s Definitive Proxy Statement on Schedule 14A, filed with the Securities and Exchange Commission (the “SEC”) on August 1, 2008, which description is incorporated by reference herein.

The Reincorporation did not result in any change in the business or principal facilities of Timberline Idaho. Upon completion of the merger, the address of Timberline Delaware’s principal executive offices is 101 E. Lakeside, Coeur d’Alene, Idaho 83814. Timberline Idaho’s management and board of directors continue as the management and board of directors of Timberline Delaware. Timberline Delaware will continue to be listed on the American Stock Exchange under the symbol “TLR.” Shareholders may, but will not be required to, exchange their Timberline Idaho Stock certificates for certificates representing an equivalent number of shares of Timberline Delaware. Until each shareholder has exchanged its certificate, each outstanding Timberline Idaho Stock certificate will represent the number of shares of Timberline Delaware Stock.

1.01 Entry into a Material Definitive Agreement

On June 24, 2008, Timberline Resources Corporation (the “Company”) and Auramet Trading, LLC (“Auramet”) signed an Indicative Term Sheet (the “Term Sheet”) under which Auramet would provide an $8.0 million loan to the Company, at the Company’s request, at any time before June 30, 2008.  Pursuant to the fee terms of the Term Sheet, the Company paid a fee equal to 4% of the principal amount of the loan and issued 160,000 common shares of the Company to Auramet after the Company’s drawdown of the loan on June 27, 2008.  The shares were issued to Auramet pursuant to Section 4(2) of the Securities Act of 1933, as amended (the “Securities Act”) and Rule 506 promulgated thereunder.  Auramet has represented that they are an accredited investor and the securities issued to Auramet are “restricted securities” within the meaning of Rule 144 of the Securities Act.  

On June 27, 2008, pursuant to the Term Sheet and subject to the terms laid out in the Promissory Note (as described below), Auramet provided $8.0 million to the Company, $7.5 million of which was used to repurchase 3,525,000 shares of Series A Preferred Stock from Douglas Kettle, the sole holder of the Series A Preferred Shares, pursuant to the Preferred Shares Repurchase Agreement (the “Series A Preferred Shares Agreement”) between the Company, Douglas Kettle and Auramet.  Of the 4,700,000 Series A Preferred Shares held by Mr. Kettle, the Company repurchased and cancelled 3,525,000 Series A Preferred Shares for $7.5 million.  Pursuant to the Series A Preferred Shares Agreement, the remaining 1,175,000 Series A Preferred Shares were converted to 1,175,000 common shares of the Company and purchased from Mr. Kettle by a private investor. The purchaser of the common shares has no rights previously associated with the Series A Preferred Shares.  Upon closing of the above transactions, no Series A Preferred Shares remain outstanding.

On June 27, 2008, in accordance with Auramet providing the Company with $8.0 million ($7.5 million of which was paid to Mr. Kettle as described above), the Company entered into a Promissory Note (the “Note”) with Auramet, the material terms of which are described in “Item 2.03 – Creation of a Direct Financial Obligation or an Obligation Under an Off-Balance Sheet Arangement of a Registrant” below.

Item 1.01 - Entry into a Material Definitive Agreement.  

On March 10, 2008, Timberline Resources Corporation (the “Company”) entered into an agreement (the “Agreement”) with Douglas Kettle and David and Margaret Deeds (the “Stockholders”) providing for (i) severance arrangements relating to the resignation of Messrs. Kettle and Deeds, the President and CEO, respectively, of our subsidiary Kettle Drilling, Inc. (“Kettle Drilling”); and (ii) the repurchase by the Company of all of the Series A Preferred Stock (the “Preferred Stock”) of the Stockholders.  

Under the terms of the Agreement, we will pay $10.0 million in aggregate to repurchase the 4,700,000 shares of Preferred Stock held by the Stockholders.  In connection with the resignations, we will pay each of Mr. Kettle and Mr. Deeds a cash severance amount of $600,000 at the time of their resignation, an additional cash severance of $300,000 paid out over installments during 2008, as well as the balance of their 2007 bonuses ($135,822 each).  Additionally, we will also transfer certain personal property to Mr. Kettle and Mr. Deeds.  

The terms in the Agreement related to the severance arrangements and the repurchase of the Preferred Stock of the Stockholders is contingent upon our ability to raise sufficient funds to complete our previously announced proposed acquisition of Small Mine Development, LLC.  

This report does not constitute an offer of any securities of the Company for sale. Any securities to be issued in the acquisition transaction and sold in the private sale of the Company’s securities will not be registered under the Securities Act and may not be offered or sold in the United States absent registration or an applicable exemption from the registration requirements of the Securities Act.

ITEM 1.01.  Entry into a Material Definitive Agreement.

On February 23, 2008, Timberline Resources Corporation, an Idaho corporation (“Timberline”) entered into a Stock Purchase Agreement (the “Agreement”), in which it agreed to purchase from Ronald Guill, all of the outstanding membership interests of Small Mine Development, LLC, (“SMD”) a Boise, Idaho based underground mine contractor.  Mr. Guill has served on the Timberline Board of Directors since November 2007.  Pursuant to the Agreement, upon closing Mr. Guill will enter into an employment agreement with Timberline to continue to lead SMD.

The purchase price is $80.0 million, consisting of $45.0 million in cash, $15.0 million in common stock of Timberline (the “Common Stock”), and $20.0 million in deferred cash payments payable over four years on the anniversary of closing, subject to certain purchase price adjustments.  The Common Stock has not been registered under the United States Securities Act of 1933, as amended, however, there are certain limited registration rights attached to the Common Stock.  The closing is subject to Timberline obtaining financing to consummate the transaction, approval by Timberline’s shareholders, completion of due diligence by the parties, and other customary closing conditions.

Entry into a Material Definitive Agreement.

On May 18, 2007, Timberline Resources Corporation, an Idaho corporation ("TBLC" or the “Registrant”), entered into a Asset Purchase Agreement, as of May 17, 2007, wherein it agreed to purchase from Butte Highlands Mining Company, a publicly  held, Delaware corporation, (the “Seller”) certain mining claims located in Silver Bow County, Montana, known as the Butte Highlands Gold Project. These claims are located 15 miles south of Butte in southwestern Montana.  In total, the claims are composed of eight patented claims and eight unpatented claims. In addition to the mining claims, the purchase also includes certain related water rights and all papers, documents and instruments in the Seller’s possession, custody or control relating or pertaining to the mining claims and water rights.

The purchase price is $621,000, consisting of $405,000 in cash and $216,000 in restricted common stock of TBLC (108,000 shares) (the “Purchase Shares”). There are certain limited registration rights attached to the Purchase Shares. The closing, which is subject to completion of due diligence by the parties and approval of the Seller’s shareholders, is expected to take place within 30 days of the effective date.

The above described executed Asset Purchase Agreement is attached hereto and incorporated by reference as Exhibit 10.1.

Entry into a Material Definitive Agreement.

On September 22, 2006, the Registrant (“TBLC”), entered into a binding Memorandum of Understanding (“MOU”) with Steve Van Ert and Noel Cousins (the “Sellers”), residents of California and Arizona, respectively. The MOU memorialized certain verbal terms and conditions informally agreed upon by the parties on August 7, 2006. Pursuant to the MOU, TBLC has the right to explore and develop the Conglomerate Mesa Project, Inyo County, California within T16-17S, R38-39E, Mt. Diablo Meridian (the “Project Area”) which is comprised of 104 unpatented mining claims. The MOU contemplates the parties entering into in a more definitive formal agreement (Lease Option to Purchase Agreement) no later than October 15, 2006.

The MOU also provides TBLC with the right to purchase a 100-percent interest in the Project, subject to a 4-percent NSR production royalty of which 1-percent may be purchased for $1-million. In the first year of the proposed agreement, TBLC is obligated to make an option payment of $75,000 and issue 100,000 shares of its common stock to the Sellers, along with a commitment to $100,000 in exploration expenditures. The option payment will continue at $75,000 in 2007, and then increase by $25,000 per year annually to a cap of $250,000. Annual share payments and work commitments will remain fixed at 100,000 and $100,000, respectively.

The MOU also includes a provision wherein:

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TBLC agrees to indemnify the Sellers from any and all claims and other liabilities arising from TBLC’s activities within the Project Area; and

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A Quit Claim Deed of the Project Area back to Steve Van Ert will be held in escrow pending the occurrence of an event of default by TBLC or termination of the MOU or the aforementioned definitive formal agreement prior to completion..

A copy of the MOU as executed is attached hereto as Exhibit 10.1 and incorporated by reference hereto.

Entry into a Material Definitive Agreement.

On August 16, 2006, the Registrant (“TBLC”) exercised its option and entered into a  Mining Lease and Option to Purchase Agreement (“Mining Lease”) with Diversified Inholdings LLC (a Nevada limited liability company) (“Diversified”) regarding Diversified’s East Camp Douglas property located along the Walker Lane Mineral belt in south central Nevada. This property is comprised of 87 unpatented mining claims, totaling more than 1,700 acres. Drilling by previous operators included intercepts of 60 feet of 0.47 ounces per ton (oz/t) gold and 10 feet of 0.19 oz/t gold, with select rock chip samples grading up to 4.9 oz/t gold.  Two separate areas of low-sulphidation quartz-adularia and high-sulphidation quartz-alunite alteration and mineralization have been explored on the property.  The property is located at the intersection of the regional west-northwest Pancake / Cerro Duro Lineament (Bodie, Aurora, and Borealis mines) and the northwest trending Walker Lane Structural Belt (Rawhide, Paradise Peak, Tonopah, and Goldfield mines).

The Mining Lease was part of and an exhibit (Exhibit B) to the Exploration License and Option to Lease Agreement (“Exploration License”) that TBLC entered into with Diversified effective June 30, 2006. (See TBLC’s Current Report on Form 8K filed on July 7, 2006). The Exploration License granted TBLC the right to explore the property wherein it had a 45 day due diligence period to compile and evaluate all historic data from the project, and then conduct detailed geologic, structural, geochemical, and alteration mapping in anticipation of a late season drill program. TBLC entered into the Mining Lease because it had determined that the results of the aforementioned due diligence, evaluations and mapping were satisfactory.  The Mining Lease provides for annual advance royalty payments to Diversified of $15,000 escalating to a cap of $75,000 and annual work expenditure obligations for TBLC of $50,000, escalating to a cap of $100,000. Pursuant to the Mining Lease, upon completion of a positive feasibility study or a production decision, TBLC may purchase the Property for $10,000 subject to a 3-percent Net Smelter Returns (NSR) royalty, of which 1-percent may be purchased for $2-million.

A copy of the executed Mining Lease and Option to Purchase Agreement is attached hereto as Exhibit 10.1 and incorporated by reference hereto.

2

Entry into a Material Definitive Agreement.

Effective June 30, 2006, the Registrant (“TBLC”), entered into an Exploration License and Option to Lease Agreement (Exploration License”) with Diversified Inholdings LLC (a Nevada limited liability company) (“Diversified”)  regarding Diversified’s East Camp Douglas property located along the Walker Lane Mineral belt in south central Nevada. This property is property is comprised of 87 unpatented mining claims, totaling more than 1,700 acres. Drilling by previous operators included intercepts of 60 feet of 0.47 ounces per ton (oz/t) gold and 10 feet of 0.19 oz/t gold, with select rock chip samples grading up to 4.9 oz/t gold.  Two separate areas of low-sulphidation quartz-adularia and high-sulphidation quartz-alunite alteration and mineralization have been explored on the property.  The property is located at the intersection of the regional west-northwest Pancake / Cerro Duro Lineament (Bodie, Aurora, and Borealis mines) and the northwest trending Walker Lane Structural Belt (Rawhide, Paradise Peak, Tonopah, and Goldfield mines).  

The Exploration License grants TBLC to explore the property wherein it will have a 45 day due diligence period to compile and evaluate all historic data from the project, and then conduct detailed geologic, structural, geochemical, and alteration mapping in anticipation of a late season drill program. Upon the completion of due diligence with results satisfactory to TBLC, the parties intend to enter into a Mining Lease and Option to Purchase Agreement (“Mining Lease”) (Exhibit B to the Exploration License).  The Mining lease will provide for annual advance royalty payments to Diversified of $15,000 escalating to a cap of $75,000 and annual work expenditure obligations for TBLC of $50,000, escalating to a cap of $100,000. Pursuant to the Mining Lease, upon completion of a positive feasibility study or a production decision, TBLC may purchase the Property for $10,000 subject to a 3-percent Net Smelter Returns (NSR) royalty, of which 1-percent may be purchased for $2-million.

Other provisions of the Exploration License include:

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A non-refundable $15,000 payment due on the effective date;

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A term of 45 days unless earlier terminated or cancelled, or unless extended; and

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An option exercise price of $15,000 which will be credited against TBLC’s future royalty obligations;

A copy of the Exploration License and Option to Lease Agreement as executed is attached hereto as Exhibit 10.1 and incorporated by reference hereto.

2

Entry into a Material Definitive Agreement.

Effective July 1, 2006, the Registrant (“TBLC”), entered into a binding letter of intent (“LOI”) with Nevada residents, Susan K. McIntosh and Larry L. McIntosh, husband and wife (the “Sellers”) owners of twenty-two unpatented mining claims located in Mineral County, Nevada located in Sections 8, 9, 20, 21, 28, 29, TSN and R36E (the “Property”). Pursuant to the LOI, TBLC agreed to lease the Property and entered into an option to purchase it. The terms and provisions of the LOI are intended to serve as the basis for a more definitive and formal agreement entitled “Mining Lease and Option to Purchase Agreement”.

The LOI calls for:

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TBLC to maintain the Property;

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A signing bonus grant of options to purchase 25,000 shares of TBLC’s common stock at $1.00 per share;

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A term of 20 years unless terminated, canceled or extended (in five year increments);

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Lease Payments of:

1.

$20,000 due on the effective date;

2.

$25,000 due on July 1, 2007;

3.

$30,000 due on July 1, 2008;

4.

Annual increases of $5,000 until July 1, 20012 (i.e. leveling at $50,00 per year);

5.

$50,000 annually thereafter, if and until the purchase option is exercised;

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An option exercise purchase price of an additional $500,000;

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Production royalty payments to the Sellers of two percent of the Net Smelter Returns (“NSR”) which under certain conditions, at NSR of $1,000,000, may be reduced to 1%;

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Termination: by TBLC upon 60 days written notice (if TBLC has not been in default); by the Sellers upon 60 days written notice (if TBLC has been in default).

A copy of the binding letter of intent as executed is attached hereto as Exhibit 10.1 and incorporated by reference hereto.

Item 1.01 - Entry into a Material Definitive Agreement.

As of February 23, 2006, Timberline Resources Corporation (an Idaho corporation) (the “Registrant” or “TBLC”), certain of its principal shareholders (the “TBLC Shareholders”) and the sole shareholders of Kettle Drilling, Inc. (the “Kettle Shareholders”), a privately held Idaho corporation (“Kettle Drilling”) entered into a Stock Purchase and Sale Agreement (the “Agreement”). Pursuant to and subject to the Agreement, the Registrant agreed to purchase 100% of the issued and outstanding equity of Kettle Drilling from the Kettle Shareholders. The agreed upon consideration from TBLC is $2,800,000 (cash) (currently being raised in a private placement offering of the Registrant’s securities, the completion of which cannot be assured) and the issuance to the Kettle Shareholders of 5,000,000 shares of convertible preferred stock (the “Convertible Preferred Stock”) that are initially convertible into 5,000,000 shares of TBLC common stock (subject to possible adjustment thereafter). The Convertible Preferred Stock will have a liquidation preference of $.55 per share and a preferred annual dividend of $.032 per share (cumulative after December 31, 2006).  It is further agreed, among other provisions, that:

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Kettle Drilling will become a wholly-owned subsidiary of the Registrant (subject to certain terms and provisions that allow the Kettle Shareholders to purchase back Kettle Drilling under certain conditions);

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the Kettle Shareholders will remain as officers and directors of Kettle Drilling for a three year term and act as informal advisors to the TBLC Board of Directors;

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the common stock underlying the  Convertible Preferred Stock will have both “piggy-back” and “demand” registration rights attached to them; and

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the Convertible Preferred Stock will have agreed upon voting, dividend and liquidation rights and are redeemable under certain agreed upon conditions.

The closing of the transaction provided for under the Agreement is agreed to be on or about March 1, 2006, and subject to certain customary conditions and to approval by the Board of Directors of both Kettle and the Registrant. If the Registrant does not raise sufficient funds in its current private placement, there is no assurance that the acquisition transaction can be completed in its present form or at all.

The foregoing description of the Agreement and its exhibits, schedules and/or other attachments does not purport to be complete and is qualified in its entirety by the terms and provisions of the Agreement filed as Exhibit 10.17 to this Current Report on Form 8-K and incorporated by reference herein. The  to the  exhibit include: Employment Agreements (two) for each of the Kettle Shareholders, a Registration Rights Agreement, opinions of counsel on behalf of Registrant and the Kettle Shareholders, respectively, Series A Preferred Stock Resolution, Voting Trust Agreement, Schedules A and B (which contain exceptions to the respective parties’ representations and warranties that are contained in the contract documents)and Selling Shareholder information (description of the Kettle Shareholders’ equity ownership positions in Kettle Drilling).