05/15/07

Timberline Reports $3.83-Million in Quarterly Revenue

Operational Profitability Achieved Ahead of Forecast; Overall Profitability Expected Next QuarterCOEUR D’ALENE, Idaho, May 15, 2007 (PRIME NEWSWIRE) — Timberline Resources Corporation (“Timberline”) (OTCBB:TBLC) today announced financial results for its fiscal second quarter, reporting record revenues of $3.83-million. All revenue was generated by Timberline’s contract drilling subsidiary, Kettle Drilling, Inc. (“Kettle”), including Kettle’s Mexican subsidiary, World Wide Exploration, S.A. de C.V. (“World Wide”). Net of business investments, exploration work, and financing activities, Timberline reported a second quarter loss of about $220,000. Many businesses face a loss in profits at some point in their lifetime, which is where continuous improvement training can be a good investment. It helps you to pinpoint any flaws in your operational system and overall business plan, and build on them to create more consistent success. It’s essential if you want to achieve longevity in your industry.

Kettle and World Wide reported a combined gross operating profit of $1.13-million and a combined overall net profit of about $240,000 for the second quarter. This marks the first profitable quarter for the drilling business since its acquisition by Timberline in March 2006. Kettle’s four new drill rigs purchased in late-2006 have been successfully staged into service. Kettle and World Wide now have 14 drill rigs in the field, serving prominent mining and exploration companies including Barrick Gold, Newmont Mining, Industrias Penoles, Teck Cominco, Kinross Gold, Kennecott Exploration, and U.S. Gold.

Kettle CEO David Deeds stated, “We are pleased with these results and expect the trend of increased revenues and profits to persist through year-end. These results are possible because of our outstanding work force. As part of our strategy to attract and retain high-quality personnel, we have provided enhanced medical and retirement benefit programs to our workers. Beginning this past quarter, we have initiated an incentive bonus program in which Timberline share grants are issued to our workers on a quarterly basis. We believe that our talented work force deserves an ownership stake in the unique ‘blue-sky’ investment opportunity offered by Timberline.”

In its third fiscal quarter, Timberline forecasts that Kettle and Worldwide will generate record revenues of $4.8-million, with a combined gross operating profit of $1.7-million and a combined overall net profit of $600,000.

Timberline’s corporate office reported a net loss of about $460,000 for the second quarter. The loss reflects costs related to the Kettle acquisition, the amortization of certain Kettle assets, stock based compensation, and investor relations activity. The loss also reflects exploration-related expenditures of about $70,000.

Timberline Chairman and CEO John Swallow stated, “We successfully achieved operational profitability one quarter ahead of forecast and our overall loss was sharply reduced. Looking forward, we expect to show overall profitability beginning with the current quarter. As our drilling cash flows have become more predictable, we are now ramping up our exploration activity as we continue the implementation of our stated business model. Our shareholders can therefore expect considerably increased exploration news flow over the coming months.”

Timberline also announced today that it will change from a fiscal year with a September year-end to a calendar year-end, effective in 2008, and that it has recently raised over $500,000 through warrant exercises.

Timberline’s full quarterly report can be viewed in its entirety on the SEC website, which can be accessed from the “Investors” page of the Timberline website at www.timberline-resources.com.

Timberline also provided the following exploration updates:

At Downeyville, the previously-announced ground magnetic survey has been completed with results expected shortly. Rock chip samples from mapped structures and mine dumps during previous exploration at Downeyville have returned values of up to 28-percent zinc, 0.24 ounces per ton (oz/t) gold, and 12.8 oz/t silver.

A modest drill program was recently completed at the Olympic-Sun property under terms of a Memorandum of Understanding with Christopher James Gold Corporation (TSX-V:CJG), announced by Timberline in May 2006. The program did not return sufficiently encouraging results to merit the Company’s continued interest in the drill-tested area and Timberline has subsequently returned the Olympic claims to its vendor.

Finally, Timberline is currently evaluating several new exploration projects ranging from early to advanced-stage. The Company anticipates news on these potential acquisitions by month-end.

Timberline Resources Corporation is a unique, growth-oriented company that combines positive cash flow from its ownership of Kettle Drilling, Inc. with “blue sky” upside from its mineral exploration division. Timberline common stock is quoted on the OTC Bulletin Board under the symbol “TBLC.”

Statements contained herein that are not based upon current or historical fact are forward-looking in nature. Such forward-looking statements reflect the Company’s expectations about its future operating results, performance and opportunities that involve substantial risks and uncertainties. When used herein, the words “anticipate,” “believe,” “estimate,” “plan,” “intend” and “expect” and similar expressions, as they relate to Timberline Resources Corporation, or its management, are intended to identify such forward-looking statements. These forward-looking statements are based on information currently available to the Company and are subject to a number of risks, uncertainties, and other factors that could cause the Company’s actual results, performance, prospects, and opportunities to differ materially from those expressed in, or implied by, these forward-looking statements. Factors that could cause or contribute to such differences include, but are not limited to, such factors, including risk factors, discussed in the Company’s Annual Report on Form 10-KSB, as amended, for the year ended September 30, 2006. Except as required by the Federal Securities law, the Company does not undertake any obligation to release publicly any revisions to any forward-looking statements to reflect.

CONTACT: Timberline Resources Corporation
John Swallow, Executive Chairman
(208) 664-4859
www.timberline-resources.com

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