Note 3 - Property, Mineral Rights, and Equipment

12 Months Ended

Sep. 30, 2021

Notes

Note 3 - Property, Mineral Rights, and Equipment:

NOTE 3 – PROPERTY, MINERAL RIGHTS AND EQUIPMENT:

The following is a summary of property, mineral rights, equipment and accumulated depreciation at September 30, 2021 and 2020:

	Expected Useful Lives (years)		2021		2020
Mineral rights – Eureka	-	$	13,704,608	$	13,701,178
Mineral rights – Other	-		65,000		55,000
Total mineral rights			13,769,608		13,756,178
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		$	13,821,085	$	13,807,655

Depreciation expense for the years ended September 30, 2021 and 2020, was $0 for each period.

During the year ended September 30, 2020, the Company recognized an abandonment expense of $1,218,715 relating to the Elder Creek property for which the Company elected to not make required claims fee payments to McEwen Mining. See the discussion of Elder Creek below.

The Company received lease payments from a third party in two of the Company’s historical leases on the Eureka property. The total amount of these payments received for the years ended September 30, 2021 and September 30, 2020 was $78,570 and $110,487, respectively. The lease terms were modified during the fourth quarter of fiscal year 2021, and the payments ceased. These receipts were recorded as a reduction to mineral rights.

Elder Creek:

Management sought, but was unable to bring in a major company partner to farm into its rights under the agreement with McEwen Mining. A proposed agreement required the consent of McEwen Mining, which was not obtained prior to the June 30, 2020 anniversary deadline for payment of holding costs. McEwen Mining was unwilling to renegotiate the agreement and consent to the assignment to a third party, and due to the Company’s inability and unwillingness to raise additional funds at significantly higher interest rates to pay for the ongoing claims fees, the Company elected to terminate the agreement on the anniversary date. The Company recognized a loss on abandonment of $1,218,715, which was the carrying value of the mineral rights.

Lookout Mountain, LLC:

On July 27, 2019, the Company entered into an 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.

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

PM&G failed to meet its funding obligations for Stage 1 or Stage II. As a result, effective July 29, 2020, PM&G resigned under terms of the Agreement, forfeiting its rights and interests under the Agreement. At July 29, 2020, the Company became the 100% owner of the LLC and all PM&G ownership was forfeited.

Due to the change in ownership and the transfer to the Company of all management and approval responsibilities, the Company began consolidating all balance sheet and expense transactions into its consolidated financial statements as of July 29, 2020. Due to the status of the Company’s investment, Management determined that the acquisition of the remaining portion of the LLC should be accounted for as a transaction between companies under common control.  As a result, the assets of the LLC were recognized in the consolidated financial statements at their net book value upon acquisition date. The net book values of the LLC’s net assets consisted of the following on July 29, 2020:

		Net Asset Value on July 29, 2020
Cash	$	29,770
Advance to the Company		205,194
Mineral properties		7,637,403
Net Assets		7,872,367
Eliminated upon consolidation:
Investment in LM LLC		(7,354,810)
Advance from LM LLC		(205,194)
	$	312,363

The total net asset value of $312,363 was recognized as an increase in additional paid in capital during the year ended September 30, 2020.