The following is a summary of property, mineral rights, and equipment and accumulated depreciation at September 30, 2019 and 2018:

	Expected Useful Lives (years)		2019		2018

Mineral rights – Eureka	-	$	13,703,651	$	13,678,940
Mineral rights – Elder Creek	-		1,218,715		1,146,000
Mineral rights – Other	-		50,000		50,000
Total mineral rights			14,972,366		14,874,940

Equipment and vehicles	2-5		53,678		53,678
Office equipment and furniture	3-7		70,150		70,150
Land	-		51,477		51,477
Total property and equipment			175,305		175,305
Less accumulated depreciation			(123,828)		(123,828)
Property, mineral rights, and equipment, net		$	15,023,843	$	14,926,417

Depreciation expense for the years ended September 30, 2019 and 2018, was nil and nil, respectively.

During the year ended September 30, 2019, the Company recognized an abandonment expense of $48,500 relating to two patented mining claims that the Company had ceased making advance royalty payments on.

During the year ended September 30, 2018, per an amended agreement, the Company was required to pay $2 million and issue one million common shares of the Company by March 31, 2018 to maintain its interest in the Talapoosa property. The Company did not make the payment of $2 million nor issue the one million common shares of the Company by March 31, 2018, and, therefore, the amended agreement was terminated per its terms on March 31, 2018. As a result, on March 31, 2018, the Company wrote off the Company’s entire investment of $3,231,700.

During the year ended September 30, 2018, the Company’s management and Board of Directors determined that certain payments received by the Company from a third party in two of the Company’s leases beginning in August 2017, which had been held and not recorded or deposited pending an expected resolution of circumstances relating to two historical leases at the Company’s Eureka property, should be deposited. The total amount of these payments received for the year ended September 30, 2019 and September 30, 2018 was $102,791 and $112,902, respectively. Monthly payments in the amount of $8,500 are expected to continue to be received, recorded and deposited until the situation concerning the leases is resolved. These receipts are recorded as a reduction to property, mineral rights, and equipment.

On May 23, 2018, the Company executed a definitive agreement with AGEI (the “Definitive Agreement”) for the purchase of interests in two mineral properties in Nevada (the “Transaction”). The mineral properties include the Elder Creek project, currently owned by McEwen Mining Inc., which includes an option to acquire up to 65% of the project interest, and an approximate 73.7% interest in the Paiute property (formerly ICBM), with LAC Minerals (USA) LLC, a wholly owned subsidiary of Nevada Gold Corporation. The Company is the operator at both of these projects.

The consideration for the Transaction consisted of ten million shares of the Company’s common stock, valued at $0.0806 per share, or $806,000, and five million non-transferrable Class D-2 share purchase warrants (the “Consideration Warrants”), with each warrant exercisable to acquire one share of the Company’s common stock for $0.24 for a period of three years. The warrants were fair valued at $240,000. (See Note 11 – Commitments & Contingencies)

In addition, the amendment to the Definitive Agreement required the Company to deliver to AGEI, subject to any required regulatory approval, an additional 5,000,000 common stock purchase warrants with the same terms and in the same form as the Consideration Warrants if and when the earlier of the following occurs: (i) the Company enters into an arrangement with a funding partner for the advancement of the Elder Creek Joint Venture, or (ii) the Company meets the 2018 work commitment of $500,000. The Company met the 2018 calendar year’s work commitment, and issued 5,000,000 Class G warrants, fair valued at $176,000 on December 31, 2018.

The fair value of the warrants issued in connection with the purchase of mineral rights was estimated with a Black-Scholes option-pricing model using the assumptions noted in the following table:

	Warrants Issued September 30, 2019	Warrants Issued September 30, 2018
Expected volatility	137.40%	130.70%
Stock price on date of grant	$0.06	$0.08
Exercise price	$0.14	$0.14
Expected dividends	-	-
Expected term (in years)	3	3
Risk-free rate	2.46%	2.67%
Expected forfeiture rate	0%	0%

On May 9, 2019, the Company entered into a non-binding Letter of Intent to form a Limited Liability Company (the “Agreement”) with PM&Gold Mines, Inc. (“PM&G”) for the advanced exploration, and if determined feasible, the development of the Company’s Lookout Mountain Gold project. A final Agreement received regulatory approval from the TSX Venture Exchange on July 27, 2019. PM&G is a private firm incorporated in Nevada with an interest to explore and advance gold projects to production. The parties executed a binding definitive Limited Liability Company Agreement (the “LLC” and the “LLC Agreement”) effective June 28, 2019 following completion of business and technical due diligence.

The LLC Agreement calls for PM&G to fund exploration and development activities in two stages for an earned equity in the project. Timberline will contribute certain claims that constitute the Lookout Mountain project and adjacent historical Oswego Mine area (the “Project”) to the limited liability company in exchange for its ownership position. Timberline will manage the project at least through Stage I of investment. PM&G shall retain the right to manage all Stage II activities with or without Timberline’s participation.

Concurrent with completion of the Agreement, PM&G also participated in a private placement and acquired 3,367,441 shares, or 4.99%, of Timberline’s common shares. The placement includes the right of PM&G to maintain its position in Timberline by pro-rata participation in future financings. The initial interests in the LLC are 51% PM&G and 49% Timberline. The Company accounts for its investment in the LLC on the cost basis. PM&G’s contribution to the LLC must be earned-in as follows:

Stage I – Earn 51%: PM&G will earn 51% of the Project in consideration of incurring exploration expenditures of $6 million dollars, $3 million in year one and another $3 million in year two, to be directed towards advance of the low-grade oxide and high-grade oxide and refractory mineralization over a two-year period. The primary focus of the expenditure will seek to identify any near-term production potential (oxide/high-grade mineralization). This exploration will also test expansion of both high-grade and oxide mineralization outside the defined resource. The plan and effort have been developed and agreed upon through a joint Management Committee appointed by the Company and PM&G.

Stage II – Earn 70%: PM&G will earn a 70% interest in the Project when a bankable feasibility study is completed. PM&G would fund tasks at its sole expense to support the feasibility study including initiating permitting, metallurgical studies, trade-off studies, and other technical work deemed reasonable and appropriate, along with annual holding fees if Stage I has been completed. Work towards the feasibility study will be completed within 3 years of completing Stage I or as mutually agreed upon by both companies. To ensure the Project continues to advance, the Technical Committee will prepare an annual budget to implement prudent and appropriate activities.

Timberline Option to Participate 51- 49%: When the $6 million expenditure is reached (Stage I), Timberline has the option to participate in subsequent expenditures at the 49% level. Should Timberline determine to participate, all future costs incurred to bring the Project to production will be split on a pro-rata basis.

If Timberline should choose not to participate, its ownership will be further diluted and PM&G will earn 70% ownership by completing the above activities defined as Stage II.

Timberline Option to Participate 70 – 30%: At the end of Stage II, Timberline may elect to participate in subsequent expenditures at the 30% level or may elect one of the following options:

If PM&G determines not to advance beyond the 51% following completion of Stage I, it may elect one of the following options:

· Participate at the 51 percent level or be diluted to a 30 percent interest by TLRS completing the Stage II activities as defined above or

· Sell its remaining interest in the Project to Timberline at a price agreed between the parties following completion and evaluation of Stage I exploration, per terms of the Mutual ROFR defined below.

Mutual Right of First Refusal (ROFR) – The Agreement will include a mutual ROFR wherein either JV partner may acquire the other partner’s interest at fair market value or as mutually agreed. Both partners will have a right to exercise the ROFR should either receive a 3rd party offer.

During the fourth fiscal quarter of 2019, Timberline paid $118,525 for Stage I exploration costs incurred by Lookout Mountain LLC. The advanced funds were included as an Account receivable on the Company’s balance sheet and were fully collected subsequent to the end of the fiscal year. The Company does not intend to continue such advances in the future on behalf of PM&G.